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UPDATE 1-Zurich Insurance says on track for $500 mln cost cuts
November 29, 2012 / 7:26 AM / 5 years ago

UPDATE 1-Zurich Insurance says on track for $500 mln cost cuts

* 2013 targets remain unchanged

* Growth market targets on track (Adds CEO comment, growth details)

ZURICH, Nov 29 (Reuters) - Zurich Insurance Group said it was on track to reduce costs in mature markets by $500 million by 2013, with expenses cut by $200 million to date.

Zurich Chief Executive Martin Senn also said on Thursday the group was making good progress towards achieving its targets for 2013, which were unchanged.

“These are very ambitious targets given that the environment in which we are operating has become even more challenging in 2012,” Senn said in a statement ahead of an investor briefing.

Zurich said its Global Life business is on track to reach its 2013 target for 30 percent of new business to come from Latin America, Asia Pacific and the Middle East, with the value already at 41 percent if Zurich Santander business is included.

The company said it was confident it could maintain an attractive and sustainable dividend.

It reiterated its long-term target for a business operating profit after tax return on equity of 16 percent, though it said in the current tough environment returns could be reduced by two percentage points.

Zurich has the highest dividend yield among the stocks in the Swiss large cap index, with a payout of 7.4 percent against Swisscom’s 5.7 percent and 4.5 percent for Swiss Re.

In the third quarter, a reassessment of the German operation’s loss reserves drove down net profits by $400 million.

Many insurance claims, such as cases involving long-term illness or medical negligence, are not made until years after a policy has expired, and insurers routinely put money aside to cover these so-called “long tail” liabilities. (Reporting by Martin de Sa‘Pinto; Editing by Helen Massy-Beresford)

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