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Zurich Insurance to cut up to 800 jobs

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(Bloomberg) — Zurich Insurance Group AG, the biggest Swiss insurer, plans to save $250 million annually by cutting as many as 800 jobs after lowering its profit goal in December, the company said.

Zurich plans to remove management layers between the headquarters and the individual business units to reduce costs, the insurer said in a statement today. The company said it would achieve the savings by the end of 2015.

The company’s fourth-quarter profit was below analysts’ estimates because of $600 million of reorganization costs. In December, Zurich said George Quinn will take over as chief financial officer in April, leaving his current position as Swiss Re’s CFO. He will replace Pierre Wauthier, who committed suicide in August.

“We continue to make significant progress toward our strategic goal to make Zurich a focused and more profitable business,” Chief Executive Officer Martin Senn said in the statement. The changes are subject to discussions with employees and their representatives, the insurer said.

The company’s shares rose 0.1 percent to 268.80 Swiss francs by 11:28 a.m. in Zurich trading, bringing the gain since the beginning of the year to 4.2 percent. That compares with a loss of 0.2 percent in the 37-member European STOXX Insurance 600 (Price) Index.

New target

Daniel Bischof, a Zurich-based analyst with Helvea AG, confirmed his buy rating on the stock, “despite the solid performance year-to-date,” citing Zurich’s strong commercial lines positioning, geographical revenue mix, capitalization and conservative asset side.

Zurich said in December it seeks a return on equity, a measure of profitability, of 12 percent to 14 percent through 2016, setting a new target from the original 16 percent. The insurer started cutting costs last year, eliminating 53 jobs across its general insurance operations in the Middle East.

“The company already announced at its investors’ day in December 2013 to review its cost base,” Stefan Schuermann, a Zurich-based analyst with Vontobel Holding AG with a hold rating on the stock, said today. “Important about this news from investors’ perspective is that Zurich is streamlining its organizational structure.”


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