Zurich Insurance tumbles after profit warning

Based on preliminary estimates, Zurich expects aggregate losses of around $275m (£194m) in its 2015 results on the back of storms Desmond, Eva and Frank in the UK and Ireland.

Zurich, which is due to report its annual results on 11 February, said the numbers are its current “best estimate” as the final cost remains uncertain.

As a result, the insurer said it now expects to report an operating loss for its general insurance unit of around $100m for the fourth quarter.

“Zurich has continued to experience a very high level of large current accident year losses in the fourth quarter. These large losses mainly relate to a large credit and surety loss, and several significant property claims, principally impacting Global Corporate and certain European countries.

“The profitability of business underwritten in 2015 continues to impact results but this will improve over the course of 2016 as the steps taken to reduce exposure to large losses take effect.”

RBC Capital Markets, which rates the stock at ‘underperform’, said: “Ultimately Zurich will need to write less business or take less margin (greater reinsurance), both of which will impact earning capacity, in our view. We continue to believe that Zurich is likely to miss its return on equity target for 2016.”

At 1045 GMT, Zurich Insurance shares were down 8% to CHF227.10.