Crisis and recovery, 2000–2016

The collapse of 2001 and 2002

The expansion of the late 1990s left Zurich exposed on several fronts at once. The integration of the Scudder and Kemper fund businesses proved difficult because the two firms had different corporate cultures, leaving the asset management arm to underperform. In 2001 the group announced that it would spin off its reinsurance business, Zurich Re, as an independent company, explore options for Zurich Scudder up to an outright sale and cut head office costs by 200 million dollars a year.¹ The terrorist attacks of 11 September 2001 imposed heavy losses on property and casualty insurers. At the same time the fall of equity markets after 2000 eroded the investment portfolios on which insurers relied to balance underwriting results.

The share price collapsed amid what analysts described as a confusing information policy. After four profit warnings, the group reported a loss of 387 million dollars for 2001, compared with a profit of 2.3 billion dollars in the previous year. Hüppi announced on 25 February 2002 that he would give up the office of chief executive by the middle of the year. Shareholder organisations such as the Ethos Foundation and the Swiss shareholder protection association continued to demand a full separation of the roles of chairman and chief executive, and on 19 April 2002 Hüppi announced his complete withdrawal. He explained that the change at the top of the company should take place without the burden of a public controversy about his person.²

The loss of 2001 was only the beginning. For the first half of 2002 the group reported a loss of about 3 billion francs, some 2 billion dollars, against a profit of 861 million dollars a year earlier, mainly because of lower capital gains and special provisions of 2.7 billion dollars. It announced the elimination of 4,500 of its 76,500 jobs worldwide.³ To restore its capital, the group raised new equity from its shareholders in the autumn of 2002.⁴

The Hüppi episode belongs to the corporate governance history of Switzerland as much as to that of Zurich. It came at the moment when the Swiss Code of Best Practice for Corporate Governance and the directive of the SWX Swiss Exchange (today SIX) on corporate governance information were being prepared. It gave shareholder organisations such as Ethos a first public success against the combination of chairman and chief executive in one person. Since then the separation of the two offices has become the norm among large Swiss listed companies.⁵

James Schiro and “The Zurich Way”

The board appointed James J. Schiro, previously chief executive of PricewaterhouseCoopers, as chief executive in May 2002. He was the first chief executive to come from outside the company.⁶ Schiro promised profit improvements of one billion dollars within a year and a concentration on the insurance business in the United States, the United Kingdom and continental Europe, with Switzerland, Germany, Italy and Spain designated as growth markets.⁷ Non-core businesses were sold. Once the asset management operations had been disposed of, the group returned to its roots as an insurer.⁸

The recovery was rapid. In 2003 the group introduced business operating profit (BOP) as its main performance measure, a figure that excludes the volatility of realised capital gains and special items and that the group still uses today. It also launched “The Zurich Way”, a programme to standardise core processes across countries. In 2006 business operating profit reached a record 5.9 billion dollars, 48 per cent more than in 2005, with a return on common shareholders’ equity of 19 per cent. In 2007 it rose to 6.6 billion dollars. The group came through the financial crisis of 2008 with positive results. By 2009 it had achieved its twenty-eighth consecutive quarter of profitability. In the same year the Farmers Exchanges acquired AIG’s American personal motor business, 21st Century.⁹

Martin Senn succeeded Schiro as chief executive in 2010. In 2012 the group, which by then had left most of its asset management ambitions behind, changed its name from Zurich Financial Services to Zurich Insurance Group, a name that states its business more accurately. The Historical Dictionary records the change of name in that year.¹⁰

Mario Greco and the simplified group

Mario Greco became group chief executive in March 2016. In July of that year he restructured the group into a simpler organisation built around customers before presenting, in November, a strategy with financial targets for 2017 to 2019. Acquisitions in the following years included the Australian travel insurer Cover-More in 2017. In 2020 the Farmers Exchanges agreed to acquire MetLife’s American property and casualty business. In 2022 Zurich celebrated its 150th anniversary with, among other things, a day of free public transport throughout the canton of Zurich on 22 October. In the same year it agreed to sell its Russian business to a group of eleven members of the local management team after the Russian invasion of Ukraine.¹¹

Notes

1. “Zurich Financial Services”, International Directory of Company Histories, via Encyclopedia.com, https://www.encyclopedia.com/books/politics-and-business-magazines/zurich-financial-services. ↩
2. swissinfo.ch, “Hüppi kapituliert”, 20 April 2002, https://www.swissinfo.ch/ger/finanzplatz-schweiz/hueppi-kapituliert/2664746. The article reports that Lodewijk van Wachem was to be elected chairman at the general meeting of 16 May 2002. ↩
3. swissinfo.ch, “Milliardenverlust und Stellenabbau”, 5 September 2002, https://www.swissinfo.ch/ger/finanzplatz-schweiz/milliardenverlust-und-stellenabbau/2912696. The article notes that Standard & Poor’s downgraded the group’s ratings. ↩
4. swissinfo.ch, “Milliardenverlust und Stellenabbau”, 5 September 2002 (cited above): “Das Unternehmen kündigte zugleich eine Kapitalerhöhung um 2,0 bis 2,5 Mrd. Dollar an. Dabei soll den Aktionären ein Bezugsrecht angeboten werden.” The capital increase was to be submitted to an extraordinary general meeting. ↩
5. economiesuisse, Swiss Code of Best Practice for Corporate Governance (approved 25 March 2002, published July 2002), with the SWX Swiss Exchange Directive on Information relating to Corporate Governance of 17 April 2002, in force from 1 July 2002, English edition, https://ecgi.global/sites/default/files/codes/documents/swisscodeofbestpractice_english.pdf. The connection drawn with the Zurich case is the author’s assessment. ↩
6. Zurich Insurance Group, “History and Heritage”, entry for 2002, https://www.zurich.com/about-us/history-and-heritage. ↩
7. swissinfo.ch, “Milliardenverlust und Stellenabbau”, 5 September 2002, https://www.swissinfo.ch/ger/finanzplatz-schweiz/milliardenverlust-und-stellenabbau/2912696. ↩
8. Zurich Insurance Group, “History and heritage”, https://www.zurich.com/about-us/history-and-heritage, entry for 2002: “After a steep drop in its share price, Zurich radically sharpens its focus as an insurance-based financial services provider”, followed by the statement that “All non-core businesses are sold (IPO of Zurich Reinsurance; Threadneedle Asset management; Zurich Capital Markets).” ↩
9. Zurich Insurance Group, “History and Heritage”, entries for 2003 and 2006 to 2009, https://www.zurich.com/about-us/history-and-heritage. ↩
10. Elena Folini, “Zürich Versicherungen”, HLS, https://hls-dhs-dss.ch/de/articles/041840/. For Senn’s appointment in 2010 and the reasons for the change of name see Zurich Insurance Group, “History and Heritage”, entries for 2010 and 2012, https://www.zurich.com/about-us/history-and-heritage. ↩
11. Zurich Insurance Group, “History and Heritage”, entries for 2016, 2017, 2020 and 2022, https://www.zurich.com/about-us/history-and-heritage. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.