O’Sullivan Says Zurich Financial Sees Tougher 2009

February 25, 2009

Zurich Financial Services AG will find this year tougher than 2008, when profit fell 47 percent, a senior executive of the Swiss insurer said on Wednesday.

Patrick O’Sullivan, vice chairman of the management board and chief growth officer, said Zurich Financial was seeking acquisitions in emerging markets for its life and personal line businesses and would look at any parts of the U.S. insurer American International Group which are put up for sale.

Premiums would probably be “static to marginally down”, O’Sullivan told Reuters in an interview in Beijing, adding: “2009 will be more difficult than last year.”

Gross written premiums last year totalled $37.2 billion.

The worst financial crisis since the 1930s has taken a toll on financial companies around the world.

Zurich Financial Services earlier this month missed forecasts with a 23 percent fall in business operating profit for 2008, hit by falling asset values.

Ratings agency Standard & Poor’s said earlier this week it may change ratings of multiline insurers, which bundle different risk exposures such as property and casualty into one contract, if an insurer’s earnings fall much more than it has estimated.

S&P also said it would review Zurich Financial in March.

“We’re in completely unchartered waters, nobody’s gone here before,” O’Sullivan said. “The world has never experienced a crisis like this on a global scale.”

Lookout for AIG

AIG is in advanced talks to sell its U.S. auto insurance unit to Zurich Financial in a deal which could be worth up to $2 billion, a source familiar with the matter told Reuters earlier this month.

Zurich has said it was on the lookout for deals that will bolster its North American personal lines and global life insurance businesses.

Several operations that may fall into those categories are for sale by AIG, which has been forced to shed assets to repay part of the U.S. government bailout.

O’Sullivan, who also acts as the company’s chief growth officer, declined to comment directly on AIG’s car insurance business but said: “If AIG is up for sale, or part of it, then we’ll look at parts of it, but it’s always a question of price and value.”

The Zurich-based insurer is actively looking at acquisitions in emerging markets, such as Brazil, Russia, Turkey and China, because there are more opportunities there than in mature markets, O’Sullivan said.

But companies are still overpriced at the moment, he said. “People are still not accepting that their prices are lower than they are.” (Additional reporting by Michelle Chen, editing by Erica Billingham)

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