Zurich Insurance attempted to mollify investors on Thursday by bringing forward the start date for incoming Chief Executive Mario Greco and holding its dividend unchanged.

But a steeper-than-expected drop in full-year profit and an acknowledgement that Zurich was unlikely to hit one of its three financial targets knocked the insurer’s shares and highlighted the task ahead for former Generali boss Greco.

“We think further kitchen sinking is on the way,” Bernstein analysts wrote in a note, adding they saw a strong chance that Greco would want to bring Zurich’s reserve buffer in line with peers with a $2 to $3 billion reserve charge.

Switzerland’s biggest insurer has been without a permanent CEO since Martin Senn’s departure in December and Greco — who will now take on his new role on March 7 after being released this week by Generali — has a remit to quickly outline strategic goals beyond 2016, while boosting performance at Zurich’s flagship general insurance (GI) business.

This has traditionally been its biggest earnings driver, but its earnings have been hit by a series of unexpected payouts.

After warning on profits in January due to large losses from winter storms in Britain and Ireland, Zurich ended up posting a $424 million loss for the last three months of 2015.

This loss, coupled with payouts from devastating explosions at the Chinese port of Tianjin, helped push 2015 net profit down 53 percent to $1.8 billion, missing the average estimate in a Reuters analyst poll for $1.997 billion.

Meanwhile, Zurich’s combined ratio for its general insurance division hit 103.6 for 2015, a big increase over the 96.8 combined ratio in 2014. Zurich blamed the result on large losses and natural catastrophe claims, including U.K. and Ireland flooding in December and more than $275 million in losses from the Tianjin explosions last August.

Beyond that, Zurich also faced struggles in U.S. auto liability, global corporate property and North America Commercial construction liability, the insurer said.

Gross written premiums/policy fees for Zurich’s general insurance arm surpassed $34 billion in 2015, down from more than $36.3 billion during the previous year.

Shares in Zurich were down 3.6 percent at 1217 GMT, slightly outperforming the European Insurance index which was down 4.8 percent.

Unchanged Dividend

In a bright spot for investors, Zurich left its 2015 dividend unchanged, surprising analysts who had expected a cut to 16.40 francs.

Dividend payouts above those of many peers are one of the main attractions of holding Zurich’s stock.

“The fact that we are able maintain a proposed dividend again of 17 Swiss francs is a reflection of the conviction of the board that there is a possibility of a sustainable and attractive dividend,” Chairman and interim Chief Executive Tom De Swaan said.

Zurich said it had opted against immediately returning cash reserves to investors in order to maintain “capital strength and flexibility” in the current climate.

It added it was unlikely to hit its business operating profit after-tax return on equity target of 12 to 14 percent in 2016 due to the weak performance of its GI business.

In a $1 billion-plus cost-cutting drive, Zurich said around 8,000 jobs would be affected by the end of 2018. Zurich has around 55,000 employees.

($1 = 0.9715 Swiss francs) (Editing by Alexander Smith)

*Carrier Management added additional financial results to this story.

Topics Profit Loss