Zurich chief looks to bright future for its Irish operation

Global chief executive Martin Senn says the insurance company is coming to terms with the tragic suicide of its chief financial officer

Martin Senn: “Overall, we are probably, for six to 12 months, optimistic with a good dosage of cautiousness for the first time since the financial crisis started in 2008.” Photograph: Eric Luke

Martin Senn: “Overall, we are probably, for six to 12 months, optimistic with a good dosage of cautiousness for the first time since the financial crisis started in 2008.” Photograph: Eric Luke

 

On his time off, Martin Senn, the Swiss-born global chief executive of Zurich Insurance Group, loves to get stuck into a bit of DIY.

“I am a handy man,” he says deadpan from Zurich’s office in Dublin’s IFSC. “I can fix nearly anything which is broken.”

Any chance of popping round to my place to fix up a few things?

“I’m not sure you can afford me, but I probably could fix it. Anything to do with gluing things. I glue nearly everything.”

Senn is a big fan of Switzerland’s dual education system, which combines apprenticeships with vocational education to prepare young people for the workforce, and says this is the reason why its tradesmen are world class.

“A carpenter comes to our house and I like to see them work,” he says. “The first thing they do is they take their shoes off. The second thing they do is put out a blanket. A solid, thick blanket on the floor before they take any single tool out.

“Then they take their tools out and put them on the blanket and start working with very high precision. You have to learn that to young kids. So I’m a big proponent of that [dual education system].”

Senn’s own career started with an apprenticeship at the former Swiss Bank Corporation. It set him ultimately on a path to the top job in Zurich, where he has worked since 2006.

He says this model, which is also used in Germany, could help to tackle the blight of youth unemployment in the EU.

“Youth unemployment is a big issue and that has to be dealt with [as a]high priority, particularly in southern Europe,” he says.

“Not everybody has to go to university. Bring them off the street aged 16 and learn them on the job to be the best hairdresser for three years, learn them to be the best motorbike mechanic, learn them to be the best construction worker or street-maker.

“Then, after that, if they want to continue learning they can go to university, but they have a very solid background. A lot of our family businesses started with these guys.”

Senn was in Dublin this week for Zurich’s global leadership team meeting. Its the second time in three years that it has been held here.

About 130 of its top brass came to town to brainstorm about the future – the company will hold an investor day on December 5th to outline its next three-year strategic plan.

This reflects Ireland’s strong position within Zurich globally. The insurer employs more than 1,000 staff here. In addition to its domestic businesses, Zurich located its European head office for general insurance here in 2009. It oversees about 17 markets, including Ireland, and employs 60 staff in the IFSC.

Earlier this year, Zurich added to its Irish operations by locating two group technology hubs and 112 jobs in Dublin, with the support of the IDA.

Senn is impressed by the business- friendly attitude of successive Irish governments. “I’m always amazed how business- supportive the government of this country is,” he says. “That’s frankly one of the reasons why I think Ireland is doing well, relatively-speaking, in managing out through the [economic] crisis.”


Financial crisis
He cites “accessibility, good labour, the efficiency of the regulatory environment,” as the main reasons why Zurich has located regional units here. Our 12.5 per cent corporate tax rate was “certainly a factor, but not a key factor”.

Zurich has weathered the global financial crisis post 2008 better than most. “Not a single quarter of a loss through the crisis,” Senn boasts. “In fact, not a single quarter of a loss through the past 10 years.”

In Ireland, he says the business has “held its own”.

In general insurance last year, Zurich had a market share here of 11 per cent and gross written premiums of $375 million. About 90 per cent of its policies are sourced through brokers.

Zurich Life had a market share of 16 per cent with annual premium equivalent of $210 million.

Using a football analogy, Senn views Zurich as a regular player in Champions League. “Does not always win the Champions League, but is a company that permanently plays in the league,” he says.

What team does he think Zurich mirrors? Manchester United perhaps? Barcelona? Bayern Munich?

FC Basel. I’m from Basel. I have a bit of a home bias.”

Results for the first nine months of this year, published on November 14th, show Zurich increased its business operating profit globally by 2 per cent to $3.6 billion. Its net income rose by the same percentage to €2.9 billion.

Premium income in general insurance rose by 3 per cent but declined by 7 per cent for life.

Its not all honey and jam at Zurich. A cloud continues to hang over it following the suicide in August of Pierre Wauthier, its chief financial officer, who was 53.


Undue pressure
A note left by Wauthier referenced Zurich’s then high-profile chairman Josef Ackermann and rocked the company. Ackermann stepped down while rebutting strong criticism from Wauthier’s grieving family.

“I was of course shocked, as everybody else was shocked,” is how Senn describes his reaction to Wauthier’s death. “Pierre was an outstanding professional. Everybody [who] knew Pierre liked him. He was 17 years with the organisation and did a fine job in all his stages of employment.”

What about the letter?

“The fact that there was a letter which spoke about the relationship he had with the chairman [Ackermann], in his view, and it’s very important I stress that it was Pierre’s view, created a lot of uncertainty.

“We stated fast that we want to look into it even though the culture of the firm, we believe, would not accept any undue pressure or any cultural elements that would not support a good work environment for all people. It’s very important for the board and for management and me that we have that culture.”

In a joint letter to shareholders this month, Senn and chairman Tom de Swaan said the company had received the results of two independent investigations by the Swiss Financial Market Supervisory Authority.

“The investigations found no indication that he [Wauthier] was subjected to any undue or inappropriate pressure, and furthermore, the presentation of the financial figures was confirmed as appropriate,” the letter said.

Senn sits rigidly in his chair when asked about Wauthier’s death and calmly explains the reputational damage this matter has had on Zurich.

“I can only say to add that this was a very tragic incident. It had reputational impact on the firm. Its very difficult to find reasons [why it happened] and my own take away is that even though you think you know a person very well you don’t see inside that person.

“At the end there will be some open questions and we cannot always answer all the questions. Frankly, we have to accept that. It’s one of those situations.”

Senn says he didn’t consider resigning, although this clearly had a huge impact on him personally.

“We had a memorial for Pierre and I said to all my colleagues who came that we want to remember Pierre on how he was living and not how he was dying.

“ With that, leave it as is. We have a responsibility to look forward as an organisation for our customers, shareholders and employees. We will continue thinking of Pierre of course.”

Wauthier’s death posed questions about Zurich’s culture and how it treats staff. Senn insists that the company is not driven by a profit-at-all-costs attitude.

“Everything we do is about people, and I have to live up to that . . . people have to tell me if I don’t. Because I demand it from all my leaders. They keep hearing it from me again and again. Care for people. Act as a role model with high values, lead with passion striving for good or excellent results at all times.”

The interview rounds off with Senn’s view of the business landscape.

“We are cautiously optimistic,” he says. “Globally, the economies are somehow getting a bit more momentum. We are seeing European countries that have been in recession coming out of recession. China seems to hold up well, the growth in the US [where Zurich has half its business] is forecast to go higher.

“Overall, we are probably, for six to 12 months, optimistic with a good dosage of cautiousness for the first time since the financial crisis started in 2008.”

CV: MartinSenn
Name: Martin Senn
Job: Global chief executive of Zurich Insurance Group
Age: 56
Lives: Zurich
Family: Married with two adult children
Hobbies: Football (he’s a Basel supporter), golf (handicap 18), swimming, cross-country ski-ing and mountain biking. “I like any outdoor sports.”
Something we might expect: He’s insured with Zurich.
Something that might surprise: “My wife is Korean and I’m the honorary consul for the Republic of Korea in Zurich. It gives me an interest in other cultures.”