Check out UFAA's newly updated website

Get a UFAA Membership App here 

IJ 09.06.2013

Rueters: By rolling out television, print and billboard marketing campaigns on Monday, Zurich Insurance is aiming to advertise business as usual after a suicide and resignation in the Swiss-based insurer's top ranks.

But behind the scenes, Chief Executive Martin Senn is working to regroup before results, repair shareholder confidence, and update investors on three-year targets, all while the firm puts its corporate culture under the microscope. The company is due to release third-quarter results on Nov. 14.

As a Dec. 5 deadline creeps closer for updating investors on targets the company will likely miss, the spotlight is on how Senn will pilot the company after the suicide of its finance chief Pierre Wauthier last month and the subsequent resignation of its chairman Josef Ackermann days later.

Ackermann, a former Deutsche Bank CEO, was named in a suicide note. Zurich's board is looking into whether any undue strain was placed on Wauthier and into the insurer's wider corporate culture and behavior.

Now the 56-year-old Senn must reassure employees and investors and replenish the top ranks at Zurich.

"Expectations of him are very high," said Dominik Studer, an analyst at J. Safra Sarasin who has a neutral rating on the stock.

"He's firmly in the saddle, but at the moment he has to cope with some demanding tasks," Studer said, citing the update of the earnings targets for Zurich's U.S. unit Farmers and non-life, as well as finding a new CFO.

Zurich said in August that meeting three-year performance targets, which include profitability and costs, for its general insurance and U.S. segment Farmers would be "challenging".

Wauthier and Ackermann had differed over how to communicate the likelihood of Zurich missing the targets to shareholders in its second-quarter results.

Tom de Swaan, whose first move as acting chairman had been to launch the review into pressures on Wauthier, was appointed chairman on Wednesday.

Any external review would likely call on a well-known name to undertake a forensic examination by poring over emails, minutes from meetings and other documents, as well as interviewing employees, people with knowledge of similar reviews told Reuters.

"(The review) will take as long as is necessary to clear up the circumstances so there is no end date planned as of now," a spokesman for Zurich said, adding the company would not share details on possible external advisors or the process and scope of the review.

Since Ackermann became chairman in March 2012, several top-level managers have left Zurich, giving rise to talk of a brain drain, sources inside the company say.

Former general insurance chief Mario Greco left a year ago to become head of Italian insurer Generali. The head of Zurich's life insurance arm, Kevin Hogan, quit to join AIG in August, the same month Zurich's chief of staff Ann Haugh left after just a year in the role.

Senn, a former banker at Credit Suisse who, according to Swiss magazine Bilanz, was recruited by Ackermann, has become the lone figurehead in the weeks following the suicide and Ackermann's exit, battling to calm both investors and employees.

In an interview with Swiss newspaper NZZ am Sonntag the weekend after Ackermann's resignation, Senn said he was working to blow away the "clouds" over the company and restore its reputation.

Entitled "for those who truly love", Zurich's advertising campaign is set to be rolled out in Switzerland this week. Zurich declined to give details of the cost of the campaign.

Its launch was delayed after Wauthier was found dead at his lakeside home outside Zurich on Aug. 26, three sources told Reuters.

The campaign, which has been in development since the start of the year, will mark a move back to normality, a Zurich spokesman said.

But within the company, Senn has been sending employees daily messages of reassurance by email, entreating them not to speculate on recent events, a source told Reuters, a request he also made when addressing mourners at Wauthier's company memorial service.

In his first public comments since resigning from Zurich's board, Ackermann said it was unfair to blame him for what he called a surprise tragedy.

Pulse of the Agents Poll      

About $837 million has been spent on construction in Joplin
MO., since the May 2011 tornado, including starts on more than 1,100 new homes, according to city building permit data.

The figures include construction done throughout the city and are based on building permit statistics released periodically by the city. The latest numbers were for April through July, The Joplin Globe reported.

City data showed the city issued building permits totaling $104.6 million for fiscal year 2013 up to July. That follows a total of $554.8 million in permits in fiscal 2012 and $192.4 million in fiscal 2011, the vast majority of which were issued after the May 22 tornado that year, which damaged a large section of the city and killed 161 people.

More than two-thirds of the building permits for new homes since the tornado were issued in the tornado zone. However, since November 2012, 151 permits for new homes were issued, a significant slowing of home construction compared with fiscal years 2011 and 2012. In fiscal 2011, 441 permits for new homes were issued, almost all of those after the tornado; in fiscal 2012, 552 permits were issued.

Crystal Harrington, head of the Home Builders Association of Southwest Missouri, said initiatives such as the Joplin Housing Assistance Program, which will begin this fall, will improve home construction.

"These are middle-income grants for the down payment and closing costs on a house," she said of the program, which she thought could help build 400 new homes. "If 20 percent down is needed to construct a home, these grants could amount to $20,000 to $30,000 each. This could help a family making $60,000 or less to build a brand new house."