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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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

Analysts felt that Hüppi had not managed the group well and was not willing to delegate key responsibilities, which led to the exodus of several senior executives in 2001.

To add to Hüppi's problems, Zurich recorded a net loss of $387 million for the financial year ending December 2001. The September 11, 2001 attacks on the US cost Zurich an estimated $900 million in insurance payouts. Because of the significant price decline in technology stocks and poor performance in the equity markets across the globe, Zurich's realized capital gains from equity investments also fell down by $2.3 billion in 2001.

Analysts considered it to be a result of Zurich's overexposure to Internet stocks. With lot of criticism against the mismanagement of Hüppi and the company coming into losses, the Board of Directors of Zurich finally appointed James J. Schiro as the CEO on May 17, 2002.



Zurich was founded in 1872 under the name Versicherungs-Verein in Zurich. On May 1, 1873, the Versicherungs-Verein started providing reinsurance4 services to Schweiz Insurance. In 1875, Zurich entered the accident insurance segment and the company was renamed Transport & Unfall-Versicherungs-Actiengesellschaft "Zurich." Since its inception, Zurich had focused on establishing international presence.

The company believed in providing quality services to its customers, and offering them innovative products on a continuous basis. By 1880, almost 80 percent of Zurich's revenues came from outside Switzerland. Germany was the biggest market for Zurich contributing to 60 percent of its revenues, while the remaining revenues came from France, Austria, Denmark, Sweden and Belgium. By 1894, Zurich had expanded its operations in Prussia, Norway, Holland, Spain, Poland, Belorussia, Russia, Italy, Luxembourg and Liechtenstein. In the same year, Zurich changed its name to "Zürich" Allgemeine Unfall & Haftpflicht-Versicherungs-Aktiengesellschaft (as a result of shifting from marine insurance to accident and liability insurance)...

Excerpts >>

4] An agreement between insurance companies under which one company accepts all or part of the risk or losses of the other. Most primary companies insure only part of the risk on any given policy. The remainder of the policy limit is covered by reinsurance entities.


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