Zurich to scale back general insurance business in Middle East

Zurich Insurance Group announced plans to close its services to retail and small business customers within its general insurance business in the region.

The company said that it will stop writing new general insurance policies for this segment by November 30 and will “effectively exit its general insurance businesses by the end of 2016 or as soon as possible thereafter.”

Switzerland’s largest insurer said that the decision affected just the general insurance business in the Middle East and assured that it remained committed to its life insurance business.

Zurich’s global corporate business will continue to underwrite new policies under the Dubai International Financial Centre reinsurance license and will stop underwriting new policies under the onshore license through branches in United Arab Emirates, Oman, Kuwait, Qatar, Bahrain and Lebanon, a statement said.

The company’s decision to scale back its business in the region comes after a comprehensive review of its general insurance business globally. Following the review, the insurer said that it decided to prioritise investment in markets where it sees the best potential. The Middle East region, however, did not make the cut.

“The review found that while the Middle East remains an attractive market, there was limited potential for the general insurance business of Zurich to profitably grow its business in the region and achieve an operating scale that warranted the continuing investment of capital and management resources,” the statement said.

Zurich said that such a decision might lead to it reducing staff in the region but did not mention how many jobs will be cut.

“This has been a difficult decision for Zurich, reflecting the challenges of building a strong and profitable franchise across multiple markets in the region in the current economic environment,” said the chief executive of Zurich’s general insurance business in the Middle East Brian Reilly.

“Zurich deeply regrets the impact on our employees and the inconvenience to our general insurance customers and partners across the region.”

Swiss insurer reported a 79 per cent fall in net profits during the third quarter of this year, dragged down by the performance of its general insurance division.

In September, Zurich pulled out of an $8.8bn acquisition deal of United Kingdom-based RSA Insurance Group due to problems in its general insurance business and flagged its third quarter loss. In addition, losses incurred from deadly blasts at a factory in China’s Tianjin also affected its bottom line, Zurich said.