Zurich Insurance launches plan to cut $1.5 bn costs

Zurich Insurance Group said Thursday it aims to boost profit and save about $1.5 billion over the next few years by cutting costs under its recently-installed chief executive Mario Greco.

The Zurich-based insurer also said it plans to maintain an annual dividend of 17 Swiss francs ($16.95).
The new plan replaces a previous goal to save at least $1 billion by the end of 2018. Zurich Insurance will also target a payout ratio of 75% of net income after tax, the firm said in a statement on Thursday.
The insurer expects to take restructuring charges of $500 million on average in both 2017 and 2018 as the firm reviews its technology systems and procurement processes for shared services, according to the statement. Zurich is targeting an after-tax return on equity of more than 12% next year. 

In March, former Assicurazioni Generali SpA Chief Executive Mario Greco assumed the CEO role at Zurich Insurance after a difficult period for the Swiss insurer under his predecessor.

Greco delivered one important thing on Thursday: a pledge that the dividend won’t be cut in the next few years. “The insurance industry has a cost issue,” Greco said in an interview with Bloomberg Television. “We decided to attack it.” 

“The name of the game there is simplification,” the CEO said in the interview. The “business has become very, very complicated over the last years and I’m trying to slim it down and make it simple again.”
The CEO wants underwriting performance to improve in the commercial business and to improve the firm’s digital offerings. He will also seek new retail partnerships.