The restructuring of a global insurance giant will result in 8000 roles being cut worldwide following a drop in business operating profit of 37%.
Zurich’s latest announcement of job cuts comes after the company late last year earmarked its Australian operation for redundancies in its general insurance business.
Chairman and Chief Executive Officer ad interim Tom de Swaan says the company has accelerated its efficiency program and now aims to exceed the previously communicated cost savings target for 2016 of USD$300 million.
De Swaan says the company is on its way to achieving group-wide cost savings of more than USD$1 billion by the end of 2018.
“These savings will be achieved through the application of new technology, lean processes and the offshoring and nearshoring of some activities,” he says.
“We estimate that as a result of these necessary measures around 8000 roles across Zurich will be affected by the end of 2018. This figure includes initiatives completed or announced in 2015.”
The announcement comes on the back of Zurich’s business operating profit falling from USD$4.6 billion to USD$2.9 billion.
Zurich’s net income after tax attributable to shareholders dropped 53% from USD$3.9 billion to USD$1.8 billion.
“This is a disappointing result, reflecting the previously announced challenges in our General Insurance business and restructuring charges, and we have taken rigorous actions to improve profitability,” De Swaan says.
“Given the challenges within General Insurance, it is unlikely that the Group will achieve its target of a business operating profit after tax return on equity of 12-14% in 2016.
“Nevertheless, Zurich is on track to achieve its other targets for 2014 to 2016.”