Zurich Insurance hit the rocks last year, with high claims resulting from natural and man-made catastrophes pushing the company's general insurance business into a loss in the third quarter. Zurich is now ready to take action to turn its fortunes around.

The headaches at Zurich Insurance stemmed mainly from the losses incurred at the general insurance unit last year. They even prompted the company to drop plans to buy Britain's RSA Insurance. Finally in December, CEO Martin Senn departed, after six years at the helm of the company.

Mario Greco, when he takes over from Senn in May, will be in charge of a company that has already undertaken measures to correct the failings, which led to the underperformance of last year. Zurich is prepared to shrink some its businesses after being caught off guard by the scale of claims it had to absorb last year, Zurich's Chief Risk Officer Cecilia Reyes told «Bloomberg News».

Poor Underwriting Results

The insurer was surprised by the poor underwriting results in the general insurance business, she further said, adding that Zurich would have to re-price or walk away from certain risks.

At the general insurance business, one in six had underperformed in the first nine months of 2015, with a combined ratio of 143 percent. A ratio above 100 percent means Zurich had to pay out more than in received in premiums.

Stop the Rot

In the three months through September, Zurich had a profit of $207 million, almost 80 percent lower than a year earlier. The massive drop was mainly attributable to costs incurred by the explosion at a storage facility in Tianjin, China, in April and an increase in reserves at the U.S. auto liabilities business.

And the rot didn't stop there: Zurich is braced for a fourth-quarter general insurance loss following claims due to natural catastrophes, including the storms and floods in the U.K. and Ireland.

Make Zurich More Profitable

The measures identified by Zurich to help it return to a more profitable future also include making better use of reinsurance to manage the normal volatility of the insurance business, Reyes told «Bloomberg News». They should help the insurer to meet its targets in 2016, she added.

Reyes assumed the role of chief risk officer in July, having thus far served as chief investment officer.