Zurich brings in Generali's Greco early after profit slump

Reuters with

Zurich Insurance is bringing in Generali's Mario Greco as chief executive earlier than first announced after posting a steep drop in 2015 profit and acknowledging it would not hit one of its three financial targets.

CFO George Quinn told CNBC the group faced "a number of challenges".

"If you look at the steps we are taking, it's all about renewal, tackling underperforming accounts and, in fact, we're already starting to see the first signs of progress," he said.

It would take a large part of a year to start to demonstrate the progress the group was making however, he said.

Gianluca Colla | Bloomberg | Getty Images

Zurich has been without a permanent chief executive since Martin Senn left in December and full-year earnings released on Thursday are a reminder of the task awaiting Greco, who is now set to take charge of Zurich on March 7.

Zurich had said last month he would join the company in May.

The Swiss insurer posted a 53 percent drop in net profit to $1.8 billion, compared to the average estimate in a Reuters analyst poll for $1.997 billion.

Zurich saw a $424 million loss for the fourth quarter.

"Our key priorities in 2016 will be turning around our general insurance business and continuing actions to position the group for 2017 and beyond, including enhancing efficiency and sharpening the group's retail footprint,"

Chairman and interim Chief Executive Tom de Swaan said in a statement.

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"We have an excellent management team in place that will be further strengthened with the arrival of Mario Greco, who will lead preparations for the new strategic cycle."

Quinn said the group remained a relatively conservative investor and the recent volatility had not changed its fairly positive long-term outlook.

"We're not looking for places we can move the money around to make a quick buck," he said.

In a bright spot for investors, Zurich unexpectedly left its 2015 dividend unchanged. Analysts had seen Zurich cutting its dividend to 16.40 francs.

However, Zurich said it had opted against immediately returning cash reserves to investors in order to maintain "capital strength and flexibility" in the current climate.

Zurich added its was unlikely to hit its business operating profit after-tax return on equity target of 12-14 percent in 2016 due to the weak performance of its general insurance business, its biggest unit.

It said it was on track to hit its two other 2014-2016 targets, which are for cumulative cash remittances of more than $9 billion over the three-year cycle and a Zurich-Economic Capital Model ratio of between 100-120 percent.

In a $1 billion-plus cost-cutting drive, Zurich said around 8,000 jobs across the company would be affected by the end of 2018. Zurich has around 55,000 employees.

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