GWP grows 30%, but growth rate is set to slow by half, O'Sullivan says
Zurich Financial Services (ZFS) must improve returns by more than 30% to meet new targets, UK general insurance chief executive Patrick O'Sullivan said.
O'Sullivan explained new group chief executive James Schiro has set a return on risk-adjusted capital target of 12%.
"We are five points short of that at the moment," admitted O'Sullivan.
O'Sullivan was speaking following the approval of a rights issue by Zurich's shareholders. The plan to raise £1.6bn was approved last Friday.
The rights issue follows the company's announcement in September that it was to cut 2,000 jobs worldwide and to focus on core general insurance business.
The money raised by the issue would be used to grow market share in non-life, said O'Sullivan.
He said the drive would be led by North America, which increased gross written premium by 40% this year.
But, he added, the UK business had grown GWP by 30% year-on-year.
"If we are reading the market share statistics correctly, we are joint number one with R&SA in the large commercial market," said O'Sullivan.
O'Sullivan warned that growth would not be as steep next year. "We are expecting half that growth in 2003," he said.
Zurich will not be following AXA, Groupama and Norwich Union in chasing the SME market, said O'Sullivan.
"Most go for the SME market because of the spread of risk - it is unlikely there will be single, significant events. We won't go in for those reasons. Indeed, the industry may prove it has an Achilles heel. The market piles in to grab market share in the false belief the business will remain profitable over time. And price is used to get in there. We will simply not do that," he said.