Zurich Financial Services


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Case Details:

Case Code : BSTR113
Case Length : 24 Pages
Period : 1990 - 2002
Organization : Zurich Financial Services
Pub Date : 2002
Teaching Note :Not Available
Countries : Switzerland
Industry : Financial Services

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"The only people who buy Zurich shares now are traders speculating on whether Hüppi will go."

- Julia Münchschwander, an analyst at Metzler Bank, a Frankfurt private bank.1

"The industry has to come together and deliver to policyholders what it said it would. The cost will be huge. But that is what clients pay for and it is our job to deliver what we said we would during times of trauma."

- Sandy Leitch, UK chief of Zurich Financial Services.2

Introduction

Zurich Financial Services (Zurich), based in Switzerland, was Europe's third largest insurance company with revenues of US$38.477 billion in the financial year 2001. The company had emerged as a major player in property and casualty insurance, life insurance, and fund management in Switzerland, the US and the UK.

Founded in 1872, Zurich had offices in more than 60 countries and employed more than 70,000 people who served 38 million customers worldwide. Zurich offered a wide range of products and services in financial protection, insurance, risk management and asset management. In 2001, Zurich's gross written premiums, policy fees and insurance deposits amounted to $56.2 billion. The company's revenues rose from $37.41 billion in the financial year 2000 to $38.48 billion in 2001, recording an increase of 2.85 percent. However, the company recorded a net loss of $387 million in 2001 as compared to the net profit of $2.32 billion in 2000. On December 31, 2001, Zurich had $403.45 billion worth of assets under management including funds managed for the third party institutional and retail customers.

According to the Fortune 500 ranking conducted in 2000, Zurich was rated as the world's fourth3 largest company in the insurance industry in terms of revenues. In a Forbes 2002 survey, Zurich ranked 12th among the world's most admired insurance companies.

The companies were judged on the basis of the following nine attributes - innovativeness, employee talent, use of corporate assets, social responsibility, quality of management, financial soundness, long-term investment value, quality of products/services and the extent of globalization. In the survey, the company was ranked 7th for its globalization initiatives. Since the late 1990s, Zurich was facing several problems. The company's expenses were rising much faster than its revenues as it added more and more head-office staff to look after its expanding operations. The price of Zurich shares fell down significantly from $1100 in 1999 to a low of $300 in late 2001. The company's CEO, Hüppi was held responsible.

Zurich Financial Services - Next Page>>

1] In an article "Zurich Financial's Fallen Star" in BusinessWeek dated March 04, 2002.

2] Commenting on the role of insurance industry after the September 11, 2001 terrorist attacks in the US.

3] The top three players in the insurance industry included Allianz ($71.0 billion), the American International Group ($45.97 billion) and the Munich Re Group ($40.67 billion).

 

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