Zurich Insurance has announced a new round of cost savings as it aims to improve profitability in the coming three-year period. Shareholders can expect to receive higher dividends.
Mario Greco, the CEO of Zurich Insurance Group, Switzerland's largest insurer, wants to make his company more profitable, achieving a return on equity in excess of 12 percent already next year, rising further in coming years.
«We are reshaping the business for new market realities and to best equip us for future success,» Greco said according to a statement published today. «We will become stronger as the competitive landscape shifts, establishing a sound base for future growth.»
Comprehensive Review of Systems
To achieve the targets set by Greco and presented to investors today, Zurich Insurance aims to generate cash remittances in excess of $9.5 billion. A major factor in making the insurer more profitable are cost savings to the tune of $1.5 billion by 2019.
The company will make a comprehensive review of its IT systems and contracts and shared services procurement processes. It expects to incur restructuring charges of $500 million per year on average in 2017 and 2018.
No Job Cuts Mentioned
Zurich Insurance doesn't mention any job cuts in its press release. «Even as the group delivers these improvements in efficiency, there will be investments for the future, primarily in new technologies, systems and data analytics to enhance group efficiency and improve the customer proposition,» the company said in the statement.
The company will also focus on reducing complexity at the operational level and on improving accountability.
Good News for Shareholders
The new targets also spell good news for shareholders. The group intends to maintain its current dividend policy and proposes a target pay-out ratio of about 75 percent of net income attributable to shareholders, subject to a minimum of 17 Swiss francs.
