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Zurich Insurance CEO Senn resigns after recent 'setbacks'

Dr Tony Tan Keng Yam, Deputy Chairman and Executive Director, Government of Singapore Investment Corporation talks with Zurich Financial Services CEO Martin Senn prior to the start of the session "The Future of Investing" at the World Economic Forum in Davos on January 28, 2011.

[ZURICH] Zurich Insurance Group AG Chief Executive Officer Martin Senn resigned, acknowledging "setbacks" in recent months as the company reported a loss at its general insurance business and dropped a takeover bid.

Chairman Tom de Swaan has been appointed interim CEO with immediate effect, the Zurich-based company said in a statement Tuesday. The resignation will have no effect on the insurer's strategy or financial targets, with the company "confident" about achieving its goals for the three years through 2016, Zurich said.

Zurich earlier this month announced plans to cut jobs and exit some businesses in a reorganization of its global general insurance unit after the non-life business reported a third- quarter loss. The insurer abandoned its proposed bid for Britain's RSA Insurance Group Plc in September after underestimating North American auto and construction liabilities.

"Management has missed its operating ROE target every year since Mr Senn took over and is almost certain to miss again in 2015," said Thomas Seidl, an analyst at Sanford C Bernstein & Co in London, referring to the company's return on equity. Zurich will probably replace Mr Senn with an outside candidate and will "rebase" its dividend, said Mr Seidl, who has an underperform rating on the stock.

Vice Chairman Fred Kindle will take on "certain additional responsibilities" as part of the management changes, according to the statement. The company said it plans to provide information on the use of US$3 billion in excess capital when it publishes full-year results.

Mr Senn joined Zurich as chief investment officer in 2006 and became CEO in 2010. In 2011, he oversaw the purchase of a 51 per cent stake in Banco Santander SA's insurance division for US$1.67 billion. He has been under pressure to increase profit as the shares declined even as the company increases it's dividend.

"There have been some setbacks in recent months, but I am convinced that we have put in place the right measures for Zurich to reach its targets," Mr Senn said in the statement. "I will remain closely tied to the company." Zurich fell as much 1.2 per cent in Zurich trading. Before Tuesday, the shares had dropped about 13 per cent this year.