Swiss insurer Zurich Financial Services Group is drawing U.S. commercial clients away from financially beleaguered rivals, a company executive for North America said on Friday.
“We have seen higher submissions and higher win rates,” Mike Foley, chief executive of Zurich North America Commercial, said in an interview. Zurich’s stronger financial position is helping it lure business away from competitors that have taken a beating from investment losses, he said.
Foley declined to name rivals that may be losing business.
American International Group Inc., the giant insurer saved by a U.S. government bailout in September, and XL Capital, which has posted large losses this year, say they have lost some customers.
While more commercial customers are turning to Zurich, Foley said his company is not immune to the economic downturn. He expects business in his unit to shrink in the coming year as customers such as construction firms, retailers and automotive companies buy less insurance.
“We will see less demand,” he said, adding that it will also be harder to generate returns on investments.
Foley said he cut his division’s staffing by more than 4 percent earlier this year. He said he continues to keep a tight rein on expenses and hopes to save money by running operations as efficiently as possible rather than making further job cuts.
Zurich supports the appointment of a federal regulator for the U.S. insurance industry, giving companies the option of federal regulation or the current system of state-by-state regulation, Foley said.
He said he is “pretty optimistic that this could come together” in 2009. The U.S. Treasury earlier this year said it was looking at the possibility of adding a federal insurance regulator, something that international carriers widely support because it could reduce the red tape involved in dealing with a different regulator in each state. Some U.S. insurers and state regulators oppose creation of a federal regulator.
Foley said he expects the economy to remain in a slump into next year, and perhaps longer.
“We see ourselves in a challenging economy but are well positioned in the marketplace with our financial stability,” he added.
Zurich North America Commercial’s policy sales were about $10.5 billion in 2007, Foley said. The business accounted for more than 20 percent of the insurer’s overall business.
Zurich, the largest Swiss insurer, said net profit fell 32 percent through the first nine months of 2008, to $2.8 billion. It had a profit of about $100 million in the third quarter, despite claims from hurricanes and investment writedowns.
Others fared worse: Dutch group ING and German insurer Allianz AG posted losses in the latest quarter, as did numerous U.S. insurers, including Hartford Financial Services Group and Allstate Corp,
(Editing by John Wallace)