Zurich, February 8, 2001. - During the fourth quarter of 2000, Zurich Financial Services (ZURN) successfully completed its share unification and initiated a group-wide reorganization. In non-life insurance, the Group benefited from its strong market position in the US and UK where operating conditions have improved. In reinsurance, however, continuing difficult trading conditions were exacerbated by unexpected developments during the last quarter. These included USD 300 million of reserve strengthening related to finite risk reinsurance treaties in the London Market and unexpected adverse developments in the US. In addition, exceptionally severe weather conditions in Continental Europe and the UK in the last three months resulted in non-life claims of more than USD 100 million.
With these unanticipated pre-tax charges of USD 400 million, combined with a negative earnings impact of USD 100 million from share unification and the strong US Dollar, Zurich expects its USD net income in 2000 based on normalized capital gains to be marginally below the prior year level of USD 2,286 million. As a result of weaker financial market conditions, actual realized capital gains declined by some 20% and are expected to result in a net income under IAS slightly above normalized net income. In Swiss Francs, however, normalized earnings per share are expected to increase by close to 10%.
Zurich expects to achieve stronger revenue growth in several of its key markets in 2001. The favorable non-life insurance pricing trends which began to emerge in 2000 have continued into this year. The reinsurance business experienced significant improvements in pricing and conditions in its key markets during the January 2001 renewals.
The Zurich Financial Services Group will provide more details on these developments upon the disclosure of its final audited financial results on March 22nd.
The Zurich Financial Services Group is a global leader in the financial services industry, providing its customers with solutions in the area of financial protection and asset accumulation. The Group concentrates its activities in five business segments: non-life and life insurance, reinsurance, Farmers Management Services, and asset management. Headquartered in Zurich, Switzerland, the Group's worldwide presence builds on strong positions in its three key markets - the United States, the United Kingdom and Switzerland. It has offices in more than 60 countries reaching over 35 million customers and employing 68,000 people. Based on consolidated figures for 1999, the Group achieved gross premiums of USD 48 billion. This amount includes insurance deposits as well as premiums from the Farmers Exchanges. The net income amounted to USD 3.26 billion. On June 30, 2000, the Group had USD 435 billion of assets under management of which USD 260 billion represent funds managed for third-party institutional and retail customers.
Conference call replay
A replay is available until 15 February 2001 at the following number
+41 (0)91 610 25 00 (Europe)
+1 412 858 14 40 (USA)
PIN Code: 293
For further information please contact:
Zurich Financial Services, 8022 Zurich, Switzerland
Investor Relations, Pierre Wauthier
Phone +41 (0)1 625 22 99, Fax +41 (0)1 625 36 18
http://www.zurich.com
