China capital curbs reflect buyer’s remorse over market reforms

Last year the reformist head of China’s central bank convinced his Communist party bosses to give market forces a bigger say in setting the renminbi’s daily “reference rate” against the US dollar. In return, Zhou Xiaochuan assured his more conservative party colleagues that the redback would finally secure coveted recognition as an official reserve currency […]

Continue Reading

Capital Markets

Mnuchin expected to be Trump’s Treasury secretary

Donald Trump has chosen Steven Mnuchin as his Treasury secretary, US media outlets reported on Tuesday, positioning the former Goldman Sachs banker to be the latest Wall Street veteran to receive a top administration post. Mr Mnuchin chairs both Dune Capital Management and Dune Entertainment Partners and has been a longtime business associate of Mr […]

Continue Reading


Financial system more vulnerable after Trump victory, says BoE

The US election outcome has “reinforced existing vulnerabilities” in the financial system, the Bank of England has warned, adding that the outlook for financial stability in the UK remains challenging. The BoE said on Wednesday that vulnerabilities that were already considered “elevated” have worsened since its last report on financial stability in July, in the […]

Continue Reading


China stock market unfazed by falling renminbi

China’s renminbi slump has companies and individuals alike scrambling to move capital overseas, but it has not damped the enthusiasm of China’s equity investors. The Shanghai Composite, which tracks stocks on the mainland’s biggest exchange, has been gradually rising since May. That is the opposite of what happened in August 2015 after China’s surprise renminbi […]

Continue Reading


Hard-hit online lender CAN Capital makes executive changes

The biggest online lender to small businesses in the US has pulled down the shutters and put its top managers on a leave of absence, in the latest blow to an industry grappling with mounting fears over credit quality. Atlanta-based CAN Capital said on Tuesday that it had replaced a trio of senior executives, after […]

Continue Reading

Categorized | Insurance

Zurich boss launches plan to cut costs by $1.5bn

Posted on November 17, 2016

Zurich Insurance’s new chief executive has launched a plan to strip cost and risk out of the business, eight months after he was drafted in to turn it round.

Mario Greco — who joined the Swiss group from Italian rival Generali — told the Financial Times that while Zurich was still a “sound” company, it had lost control of some parts of its business.

Zurich’s net income more than halved last year, partly because of underwriting problems in its US general insurance division.

“What went wrong is that the company had created an excessive cost base,” Mr Greco said on Thursday. “There were a lot of IT projects and a lot of growth projects in a world that was not growing. Complexity grew a lot.”

Mr Greco had already announced plans to simplify Zurich’s complicated organisational structure. On Thursday, he added financial targets. He wants return on equity, which fell to 6 per cent last year, to increase to 12 per cent.

He also plans to cut $1.5bn, or 15 per cent, of the group’s costs between 2017 and 2019.

Analysts at Keefe Bruyette and Woods pointed out that Zurich’s cost base, at 35 per cent of its income, is much higher than the sector average of 25 per cent.

Much of the saving will come from streamlining operations — for example, by reducing the number of data centres the company runs from 70 to eight. Mr Greco did not rule out job losses among the group’s 55,000 employees, but suggested that there would be some “natural attrition” as staff turnover is about 12 per cent a year.

“We have no target for employee numbers,” he said.

Zurich pledged to maintain its dividend at SFr17 per share and, for the first time, gave a firm target on future dividends, saying it would pay out 75 per cent of net earnings to shareholders.

“Zurich is an income stock … and has to remain so,” Mr Greco told investors and analysts at a presentation in London.

This relatively high payout ratio would, he said, leave little spare cash for acquisitions although he added that Zurich remains interested in deals if the opportunity arises and would ask shareholders to finance large transactions if necessary.

However, Mr Greco stressed that the company would not chase growth. “A company like Zurich does not have to chase top line growth ever. We should have targets for profits and loss ratios, but not for growth.”

Zurich’s shares rose 2 per cent in morning trading on Thursday in response to the plan.

Andy Hughes, analyst at Macquarie, said: “They do seem like stretching targets to me. The challenge is whether you believe they can do it, especially in soft market conditions.”

Mr Greco says that his plan is achievable without the need for outside help. “This is an organic, internally driven programme which does not need external support from favourable markets, rates or inflation. It is a low risk plan.”