Zurich Insurance Group AG fell to the lowest in more than three years after Switzerland’s biggest insurer put shareholders on notice that it expects a second straight quarterly loss in its general insurance business.
Operating losses in the non-life unit will probably amount to about $100 million for the last three months of 2015, the company said in a statement Wednesday. That reflects an estimated $275 million in claims from three storms that flooded thousands of homes in northern England, Scotland and Ireland in December.
The disaster came at a difficult time for Zurich, one of the world’s largest insurance companies with some 55,000 employees.
The company is searching for a successor to Martin Senn, who resigned as chief executive officer after the non-life unit posted a third-quarter loss of $183 million. That forced Zurich to abandon a high-profile takeover bid for RSA Insurance Plc. and prompted an overhaul of general insurance.
Zurich plans to speed up cost cuts and wants to exceed its 2016 target of $300 million in savings, according to the statement.
The company will book $475 million in charges related to those measures, mainly within general insurance.
“Expectations for the fourth quarter were rather low because of ongoing restructuring at the generalinsurance unit,” said Daniel Bischof, an analyst at Baader Helvea who recommends buying Zurich’s shares.
“The extent of the hit they took is nevertheless disappointing, and it remains to be seen whether this was a final clean-up or more needs to be done to fix the unit.”
Beyond natural disasters, the company incurred a “very high” level of large losses from accidents in the fourth quarter, including several significant property claims. The global corporate unit was affected, along with business in some European countries that weren’t identified in the statement.
The group also plans to write off $230 million in goodwill for its German life business and will record the charge outside of fourth-quarter profit.
Zurich said it will provide more information on the non- life unit and on expectations for 2016 results when it reports on Feb. 11.
Operating results for the farmer and global life units “should be in line with expectations,” the company said, adding that its capital position remains “very strong.”