Zurich CEO Senn Resigns; de Swaan Appointed to Interim Role After ‘Setbacks’

By and | December 1, 2015

Zurich Insurance Group AG’s Chief Executive Officer Martin Senn resigned, acknowledging “setbacks” in recent months as losses forced the company to abandon a high-profile takeover bid for RSA Insurance Group Plc.

Chairman Tom de Swaan has been named interim CEO with immediate effect, the Zurich-based company said in a statement Tuesday. The resignation won’t affect the insurer’s strategy or financial targets, Zurich said, adding it was “confident” it would attain if not exceed its goals through 2016.

The company will look for a replacement among outside candidates with deep knowledge of the industry, de Swaan said on a call with journalists. He hopes to recruit a successor “relatively” soon.

Zurich fell as much 1.2 percent and was down 0.5 percent at 11:23 a.m. Before Tuesday, the shares had dropped about 13 percent this year.

Senn joined Zurich as chief investment officer in 2006 and became CEO in 2010. In 2011, he oversaw the purchase of a 51 percent stake in Banco Santander SA’s insurance division. He had been under pressure to increase profit as the stock declined even as the company increased its dividend.

Last month, the company posted a 79 percent drop in third-quarter profit after booking $275 million in losses from the Tianjin disaster and setting aside $367 million in reserves to cover mainly North American auto and construction liabilities. That led to a $183 million operating loss in general insurance and prompted the company in September to abandon its offer for the British insurer.

Zurich simultaneously announced an overhaul of non-life insurance that includes job cuts and plans to exit some businesses.

“There have been some setbacks in recent months, but I am convinced that we have put in place the right measures for Zurich to reach its targets,” Senn said in Tuesday’s statement. He will leave the company at the end of the year.

“Management has missed its operating ROE target every year since Senn took over and is almost certain to miss again in 2015,” said Thomas Seidl, an analyst at Sanford C. Bernstein & Co. in London, referring to the company’s return on equity. Zurich will probably cut its dividend, said Seidl, who has an underperform rating on the stock.

De Swaan said the company has no plans to change its policy of paying “a sustainable and attractive dividend.”

Zurich said it will elaborate on plans for deploying $3 billion in excess capital when it publishes full-year results in February. It would prefer to spend it on organic growth, with an acquisition the second-best option and a shareholder payout the least preferred, de Swaan said on the call.

In further industry consolidation, “it’s clear that Zurich would be on the consolidator side” of mergers and acquisitions, de Swaan said.


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