Zurich Insurance: Because change happens - Essay Example

Running Head: report Zurich Insurance: Because Change happens of the of the of the Table of Contents 1.0 Executive summary……………………………………………………………....3 2.0 Key Issues…………………………………………………………………………3 3.0 Vision, Mission and Corporate Objectives……………………………….……..5 3.1 Vision……………………………………………………………..……….5 3.2 Mission…………………………………………………………………….5 3.3 Corporate objectives…………………………………………….…………5 4.0 Situational Analysis…………………………………………………..…………..6 4.1 Macroeconomic analysis……………………………………………..……7 4.2 Industry analysis………………………………………………………...…9 4.3 Market analysis……………………………………………………………10 4.4 Internal analysis………………………………………………..………….10 5.0 Marketing Objectives………………………………………………...………….11 5.1 Emerging markets…………………………………………………………11 5.2 Profitability objectives…………………………………….………………11 5.3 Rebuilding customer trust………………………………….……………..11 5.4 Innovative products………………………………………….……………11 5.4 Creating brand awareness……………………………………..…………..12 6.0 Marketing Strategies……………………………………………….……………12 6.1 The Ansoff Matrix………………………………………. ……………….12 6.2 The 7S Framework……………………………………………….……….13 6.3 Marketing strategy…………………………………..……………………14 7.0 Implementation…………………………………………………………………..14 7.1 Product………………………………………………………………..…..14 7.2 Place…………………………………………………………...………….14 7.3 Price……………………………………………………………….………14 7.4 Promotion…………………………………………………...…………….15 7.5 People…………………………………………………………..…………15 7.6 Processes………………………………………………………………….15 7.7 Physical evidence………………………………………………..………..15 8.0 Budgetary Requirements……………………………………………………..…15 9.0 Control and Corrective Action……………………………………………...….16 10.0 Conclusion………………………………………………………………………17 Appendices…………………………………………………………………….……..18 References……………………………………………………………...…………….23 1.0 Executive summary With an economic slowdown comes an opportunity for expansion of business, but it demands courage from the top management and their belief in the potential of a company. Any organization that gives up on long term objectives in the wake of few economic disappointments that are short lived is bound to fail. An economic downturn does compel a company to look back and re – evaluate the objectives and underpinned strategies, but it does not necessarily mean to forfeit the plans of expansion and growth. Zurich group has grown into a one stop solution for all financial needs of their customers since its foundation in the year 1872. The customer centric philosophy of Zurich has established its image as one of the most trusted name in the domain of financial service industry. Such a philosophy requires that customers are placed at the centre of all the processes, and any business activity must that is carried out must result in value addition for the customers (The Times 100 n.d). 2.0 Key Issues As already discussed, the economic turmoil could offer various opportunities to a company. But in order to take full advantage of available options a company should have strong financials along with capable management that could steer the ship through the storm in the right direction. Zurich Financial Services Group has performed well when almost all of its competitors were feeling the heat of the bad market conditions and liquidity crunch (Zurich 2011). Based on the available information, following SWOT ANALYSIS (Bohm 2008) has been carried out for the Zurich: Strengths: Strong financials indicate strong performance of the company. Zurich is a market leader in the UK financial market. Weaknesses: Adverse market conditions and declining profits in the year 2009 Possible compromise on customers’ confidential and personal information Opportunities: Change in the configuration of emerging markets post economic turmoil. Huge market share offers an opportunity to cover available market space and acquiring new customers while competitors are grappling with liquidity crunch and cost cutting measures. Threats: Regulatory and governing bodies could possibly impose fines for possible lapses (recent incident) in the service delivery. Cut throat competition and eased norms for small players to enter the market. Low entry barrier. Based on the above analysis, Zurich will have to prepare them against following challenges that might come their way in future: 1. Developing a strong bond with the customers as recent incidents might affect company’s reputation of being a customer centric organization. Ensuring confidentiality of customers’ personal details tops the list of priorities for Zurich. 2. Taking adequate measures to ensure high customer retention along with customer acquisition because acquiring cost is usually much higher than retention cost. 3. Consistency in the worldwide service delivery, irrespective of the country of operation must be maintained. 4. Common standard for the benefit of staffs and employees must be set. 5. Focus must be on value enhancement instead of gaining volumes while considering mergers and acquisitions. 3.0 Vision, Mission and Corporate Objectives A vision statement describes the organization and in the modern businesses it is often used as a tool to motivate the associated stakeholders. Similarly, a mission statement describes the purpose of an organization and it is generally build upon the values of the organization. Corporate objectives have long term orientation and they are statements of intent. The nature of these objectives i.e. whether they should be achievable or not achievable is still, a matter of debate. 3.1 Vision The most trusted insurer recognized as the one stop solution for all insurance need of our customers by consistently meeting their growing expectations through world class service. 3.2 Mission Statement Our mission is to be acknowledged as a most trusted insurer that offers the best possible products in the market through continuous innovation. We are determined to make our customers feel valued by delivering help when customers need it most. Our people are our most important assets and we are determined to develop them in order to maintain quality of our products and services 3.3 Corporate Objectives Corporate objectives must be comprehensive in nature so that every stakeholder gets the message that is intended to reach them. This is the reason why these objectives should conform to SMART (Specific, Measurable, Actionable, Realistic and Time bound) criteria. However many times organizations prefer to choose simple corporate objectives that are free from figures and other financial peculiarities (Wilson & Gilligan 2005:294) 3.3.1 Customer Loyalty To provide best possible products that deliver maximum value to the customer and hence gaining their loyalty and earning trust. To ensure security of customers’ personal information that tops the list of priorities. 3.3.2 Profit maximization To continue growing independent of market conditions and to earn the maximum profit to finance our fast growth. To benefit our shareholders and managing resources effectively to successfully achieve other corporate objectives. It must be seen as a combined responsibility of all the stakeholders. Increased profit will assist us to invest in emerging markets. 3.3.3 Market Leadership To maintain our top position in the market and remain as the most preferred brand in the industry. To enter the new areas backed by our competencies in the domain to ensure top position in those markets. 3.3.4 Developing employee capabilities To create a world class environment to work that is conducive for bringing out the best of all the employees and offering them enough opportunity to grow. To develop high commitment level through employee satisfaction and treating them with sense of accomplishment. 4.0 Situational Analysis Situational analysis requires highlighting the recent trends and current market situation in a given Industry. It’s a key part of marketing plan that helps making correct choices by identifying external opportunities and obstacles in the market. It involves analysis of macroeconomic factors, Industry, market along with internal analysis. 4.1 Macroeconomic analysis The whole objective of carrying out macroeconomic analysis is to assess the correct level of risk and opportunities that are peculiar to insurance sector for any given country. This objective could achieve through a brief yet effective PESTLE analysis of the macroeconomic factors (Bensoussan & Fleisher 2008: 171) as following: Political factors In the current market scenario, Insurance sector is not in as dire straits as are the banks. UK government has done too much funding for the banks to keep them afloat but insurance sector didn’t require any desperate measures. UK government is acting on all fronts to stabilize asset prices and since insurance companies hold large stake in equity and bond, every step by government will directly have an effect on Insurance business. The framework directive for Solvency II has been introduced by EU with more of a risk-based character. Capital requirement of a company would be directly linked to the risk profile of the company. Economic factors Despite of poor economical conditions, underwriters haven’t performed very poor. But the concern lies in the fact that assets have lost their values on an average and insurance companies need to re- plan their investment of premium incomes to get desired returns. Aftershocks of the recent economic downturn may adversely affect the long term returns of the insurance companies in the future. Insurance sector is still well capitalized in Europe and there are no serious concerns at present at least. Social factors The generational shift of wealth from older people towards the younger people as the latter relies on credit and interest rates have gone down considerably. Older people are experiencing negative real growth on their deposits if we take inflation into account (Milligan n.d). This is important for insurance companies to analyze the changing trends for new product development. Recent fine over Zurich by FSA over the issue of compromise on customer’s sensitive information with third party has casted enough doubt in the minds of customers regarding insurer’s privacy policies (Insley 2010). Technological factors Technology is an important variable as it decides the speed at which a product or service is delivered. For a service based industry like Insurance, the processing of data to generate useful information is technology based. In a true customer centric approach, customer should get a world class after sales service through the technological innovations to ensure customer retention. All the big insurance service providers are well equipped with latest technologies in the domain. Environmental factors Due to exceptional global economic downturn, most of the companies have shifted their focus from the environmental factors. But for the Insurance sector it is the major concern as rising global temperature would invite greater catastrophes in the future which would directly affect their profits. A slight increase in the footprint of flood or draught can lead to massive bills of damage, consequently. Legal factors In recent years there have been significant legal changes in United Kingdom. Age discrimination and disability discrimination legislations are to name a few of them. Other than Competition act 1998 and Enterprise act 2002 that deal with totally national cases, EU law would also apply to the company that is operating in the European Union. Office of Fair Trading (OFT) and the Competition Commission are the two main regulatory bodies that keep an eye on all the companies operating in UK. 4.2 Industry Analysis Insurance sector as told earlier has not been as badly hit by the crisis as the other financial sectors, though the crisis has eroded their surplus capital considerably. The reason could lay in the fact that banking and insurance sectors have different regulatory frameworks and also different approach towards risk as well. Insurance sectors mainly invest in equities (mainly in banking stocks), and in corporate and government bonds. Most of these bonds come from financial sectors. They have recently consolidated their presence in the capital market. The International Association of Insurance Supervisors (IAIS) assured the global market amid the crisis about strong fundamentals of global reinsurance sector (Report, December 17, 2008). Reinsurers play a crucial role of shock absorbers by sharing the risk burden of Insurers and thereby helping in smooth functioning of ‘efficient insurance markets’ globally. According to IAIS, insurers and reinsurers recorded huge losses because of catastrophic events in the year 2005, next two years brought substantial profit for the sector and it helped them in facing the economic crisis that deepened in the year 2007 (same was later on quoted in a report by Zurich Re where they informed that industry is not running short of funds and operating smoothly). The Zurich Report also suggested that exposure of insurers to the toxic asset-backed security was extremely low and insurers are reconfiguring their investments from risky instruments to core business instruments. Post crisis there are two reasons that raise some concern for the Insurance sector. Firstly, regulators have grown stronger and are dictating terms to the Insurance entities asking them to increase their reserved capital. It acts against the insurers and prevents them to spend money in search of a new business. Secondly, devaluation of the existing assets as mentioned earlier has not helped the cause for the sector either. 4.3 Market Analysis The insurance industry has exhibited a change in their approach towards the threats of climate change. Melting of polar ice and rising sea levels have made certain outcomes inevitable. It is certain that assets that lie in the low lying coastal regions are bound to be damaged in the near future (ironically they are the most valuable one at present) and insurers could do nothing about it. Unpredictability of catastrophes has already risen to such a level that it cannot be measured effectively. But the increased degree of innovation has become more evident as the insurance companies have seen this as an opportunity to bring yet another innovative product in the form of ‘catastrophe bonds’. Similarly insurance industry has been dealing in a derivative i.e. Industry Loss Warranty (ILW) that has already seen sales of 4 billion US dollars. If we consider growth of the insurance business, it reveals that premium incomes are growing much faster in emerging markets as compared to already developed markets (attributed to lower base and high GDP). The major contributor in the growth of Insurance sector is still the life insurance business in both mature and emerging markets. 4.4 Internal Analysis Zurich Insurance has performed well over the past few years despite of various ups and downs in the market. The segment wise study of the financial data reflects that the general insurance business for Zurich hasn’t been profitable which can be attributed to the fact that they had to pay for the damages for the loss of assets. The operating profit came down to USD 621 million from 889 million. Life Insurance business has contributed tremendously for Zurich in the last financial year with 58% increase in operating profit and 23 percent increase in incomes from premiums. Improvement in gross management result (increase of 10%) of Farmers Management Service (FMS) is also an achievement for Zurich that is worth mentioning here. The most interesting observation from the financial data is the Solvency I ratio which has improved by 17 pts. Similarly the earnings per share, book value per share and the ROE are favourable for the company. However, the Business Operating Profit (after tax) return on common shareholders’ equity (BOPAT ROE) has declined unusually (refer to appendices). (Zurich Financial Services Group 2010) 5.0 Marketing Objectives Marketing objectives are generally set for a shorter period and for a definite market plan that that has been framed to guide the marketing team of the company for next few years. These marketing objectives should be highly correlated with corporate objectives. This alignment is crucial in deciding the success of overall marketing plan (Walker 2006: 209). 5.1 Emerging markets Zurich aims at increasing its market share percentage by 10 percent in the emerging markets by the year 2012. 5.2 Profitability objectives Zurich has produced promising results in the previous financial year but in the year 2010 they have seen steep fall in operating profits (30% decline) in general insurance business. It is required to focus on general insurance business and to increase their overall contribution in the total business by 2012 5.3 Rebuilding customer trust Zurich Insurance will try to create awareness among the customers that it is determined to safeguard the privacy of customers and will not share with any third party. 75% of total customer base has to be informed by the end of year 2011 about the strict privacy policies of the company 5.4 Innovative products Zurich will offer all types of products that are offered by the competitors in the market. It will launch series of new products for its customers in the current financial year. 5.5 Creating brand awareness Zurich Financial Services group will launch series of advertisement campaigns to create brand awareness in the emerging market and also keep customers informed about the latest changes, ‘because change happens’. 6.0 Marketing Strategies Since Zurich believes in adopting aggressive strategies for growth both by capturing new markets and developing new products, Ansoff’s matrix could be helpful in choosing the correct product for a respective market. It gives entirely new perspective for crafting product strategy (Bachmeier 2008: 2). 6.1 The Ansoffs’s Matrix EXISTING PRODUCTS NEW PRODUCTS EXISTING MARKET NEW MARKET It has been discussed earlier that with the disproportionate rise in the level of risks with increased unpredictability, insurers must prepare themselves for future events that could be far disastrous and can have huge impact. This is one of the reasons why Zurich has shifted its focus towards emerging markets, with innovative products. Purely this is an attempt to diversify both the risk and the product portfolios. Products like Catastrophe Bonds and ILW belong to the upper right quadrant of the matrix where focus is to increase profitability through product development. Moreover the general insurance business could be revamped in the emerging markets where probability of occurrence of a natural catastrophe is least. 6.2 The seven S’s framework This framework encompasses 3 hard S’s such as Strategy, Structure, Systems and 4 soft S’s such as Shared value, Style, Staff and Skill offers is helpful in deciding an organization’s competitive advantage (Joseph & Mohapatra 2009: 60). If an organization makes appropriate use of these 7 S’s, its marketing strategy would be highly effective. Zurich Insurance would require this framework to bring consistency in their service delivery model, which is desired as they operate in variety of countries in Europe, US, Africa and Asia. The hard S’s are meant for top management while three S’s lying at the bottom of the pyramid is meant for front end staff. HR department will work as the connecting link between these S’s. 6.3 Marketing strategy Marketing Strategy that will drive Zurich finance for next few years would involve product development and market development. Developing staff is an ongoing process and cannot be achieved in a year or two. Zurich will aim at more advertising and branding under the current marketing strategy and thereby creating new markets and acquiring new customers. These campaigns will also promote the initiatives like Zurich help point, which is responsible for guaranteeing customer satisfaction post sales. 7.0 Implementation The most important phase of any marketing plan is its implementation phase. The whole concept of service marketing is based on 7 P’s of marketing, and missing on any of them would lead to a complete failure (Kingl 2010:54). 7.1 Product Developing the new products for the existing market by analyzing the competitor’s product portfolio. Uniqueness utility of the product will decide its marketability and acceptance. 7.2 Place The place of sale of products is equally important. Zurich possesses advanced technology in the domain to cater to its customers through its hybrid delivery channel that offers high accessibility in the market. Various products can be purchased online as well as renewals can also be done online. 7.3 Price Zurich aims at offering the fresh quotations of policy premiums online, which can be accessed by the customers. Most of its products have been competitively priced which offers another edge over the competitors. Pricing in Insurance industry is highly regulated. 7.4 Promotion Other than television commercials and public banners, Zurich can promote its products and services through podcasts and live streaming. It is important to mention here that internet has very high reach and even under-developed countries are rapidly developing infrastructure for internets. 7.5 People (Employee benefits 2004) People constitute the first additional P of the service marketing. Recruiting right staff in the emerging markets is going to be a challenge for company. It is much difficult to communicate the shared value to the newly recruited human resource, in a new country. 7.6 Processes The Zurich help point is the most suited example to explain the importance of processes in services marketing. Customers are generally unaware of processes that form the back end of a system. They judge the effectiveness of a process based upon the pace at which a service is delivered. Zurich Help Point ensures fast delivery of services and hence it a great initiative by Zurich which should be promoted aggressively. 7.7 Physical Evidence Being a global Insurer, there should be no compromise with the ambience, and outlook of the front end office. It directly communicates with the mind of the customer and helps in developing a perception about a company. It also communicates the values of an organization. 8.0 Budgetary requirements For Zurich to become synonymous to ‘help’, it needs to emphasize on product development through catastrophe bonds and ILW and on market development by coming out with innovative products for young generation segment. The Marketing plan (refer to the excel sheet layout) highlights the key areas where Zurich needs to concentrate its spending on. For the time being, greater focus is required by the on-going activities of customer retention and creating awareness about Zurich’s serious attitude towards customers’ private details. Second priority is the collection of data on the feasibility of new products and market development and introducing them to the customers which will extract another major chunk of its budget. Allocation of percentage figures into the budget has been handicapped by the unavailability of any financial data regarding the operations or previous budgets of Zurich Group. 9.0 Control and Corrective Action Zurich is revisiting its marketing strategies and with the help of market research, it has embarked on a new set of business strategies. As such, controls are needed to evaluate the performance against the set objectives and identify gaps. In the case of Zurich, two controls are recommended which would help it develop its proposition amidst customer-centric philosophy. Budgetary control Used as a marketing control device, budgetary control analyses the costs and profits according to product, territory and function which fits well with the product and market development and diversification spree of the company. In this control action, statements of control will be made at different time intervals depicting the budgeted, actual and the variant figures. Fluctuations revealed in the statements will help Zurich determine which activity to continue and which to forego. Management by Objectives As stated above, reinventing the business strategies by Zurich will encompass control of its management in an effective manner. Marketing being the prime activity here, MBO technique will help identify the KRAs (Key Result Areas) for it including the market share and coverage, productivity, standing, profitability and sales volume. The technique will entail setting of objectives in important business areas, measuring the achieved performance and monitoring and improving the performance by eliminating gaps and deficiencies. 10.0 Conclusion Zurich Insurance has performed well in the past and has come out of hard times. But with dramatic changes in climate of the planet, there is urgent need of redefining the strategy in order to prepare the organization for future crisis. The organization needs to innovate in its products to satisfy the ever growing demands of the market and the customers. Zurich has always tried to take good care of its employees, but the in order to enjoy sustained growth; they will need to take more initiatives. Zurich also needs to do some repair work on its brand value which has been affected by recent incidents in United Kingdom. Appendices Zurich, May 6, 2010 - Zurich Financial Services Group (Zurich) today reported another strong set of financial results for the three months ended March 31, 2010. Zurich continued to achieve a robust operating performance, combining sustained profitability in its core business segments with strong growth at Global Life and Farmers. Although the first quarter was characterized by a high occurrence of weather and catastrophe-driven events, the diversified nature of the Groups global portfolio allowed Zurich to produce strong results. First quarter performance highlights1 include: Business operating profit (BOP) of USD 1.3 billion, an increase of 19%. Annualized BOP ROE2 after tax of 13.5% Net income3 of USD 935 million, an increase of 76%. Annualized return on equity (ROE) of 13.2% Total Group business volumes, comprising gross written premiums, policy fees, insurance deposits and management fees, of USD 19.0 billion, an increase of 11% or 6% on a local currency basis Shareholders equity of USD 28.2 billion, a 4% decrease over year end after deduction of the USD 2.2 billion dividend. Solvency I ratio up 17 percentage points to 212% Commenting on the performance within the Groups three core business segments, Zurichs Chief Executive Officer Martin Senn said: "Our General Insurance business successfully maintained its focus on protecting profit margins, managing to absorb both the significant impact from the Chilean earthquake as well as the top-line pressures driven by reduced economic activity among our customers." "Our Global Life business continued to show growth in all its key indicators for top and bottom line performance. This reflects the successful execution of our distribution and proposition-oriented strategy, coupled with a strong focus on expense management and risk margins." "At Farmers, we continued to achieve strong operating margins, while increasing the surplus position of the Exchanges, which we manage but do not own, as a result of continued cost discipline and a strong contribution from the acquired 21st Century business." Dieter Wemmer, Chief Financial Officer, added: "Contributing further to the strong operating performance are the continuous operational improvements embedded through The Zurich Way initiatives, which also underpin the ongoing successful integration process of our recent acquisitions in the U.S. and emerging markets." "After paying a highly attractive and competitive dividend of USD 2.2 billion, our equity position continues at a strong level. Our book value per share increased by 10% to CHF 200.95, even after accounting for the gross dividend of CHF 16. Moreover, the Groups regulatory solvency margin improved by 17 percentage points to 212%, providing a desirable buffer going forward as we continue to observe persisting uncertainty regarding the macroeconomic environment." Segment performance General Insurance in USD millions, for the three months ended March 31 2010 2009 Change in USD Change in LC General Insurance gross written premiums and policy fees 10,010 9,814 2% (4%) General Insurance business operating profit 621 889 (30%) (29%) General Insurance combined ratio (in %) 99.0% 95.8% (3.3 pts)   Business operating profit decreased to USD 621 million, mainly as a result of the earthquake in Chile, higher weather-related losses and reduced investment income driven by lower yields for reinvested premiums. Rate changes continued to be positive and applied by the business in a targeted way to maintain margins, with all major geographies contributing to these rate increases. Past rate increases feeding through earned premium compensated for the lower investment income. However, the result was impacted by the worst winter weather in many years in Europe and parts of the U.S. as well as a high incidence of hail and storm damage in Australia, all of which contributed to a deterioration in the combined ratio. Gross written premiums and policy fees overall decreased by 4% in local currency as selective growth in some European corporate lines, in Asia and in Latin America was offset by lower volumes elsewhere. The lower volumes were driven by both a continued decline in insured customer exposure and a competitive market environment. The Groups continued disciplined approach to rates necessarily constrains growth in the current competitive market environment. Global Life in USD millions, for the three months ended March 31 2010 2009 Change in USD Change in LC Global Life gross written premiums, policy fees and insurance deposits 6,774 5,529 23% 14% Global Life business operating profit 351 222 58% 55% Global Life gross new business annual premium equivalent (APE) 833 721 16% 9% Global Life new business margin, after tax (as % of APE) 21.9% 20.6% 1.3 pts   Global Life new business value, after tax 183 149 23% 16% New business value4, after tax, reached USD 183 million, up 23% or 16% on a local currency basis, and was generated entirely from existing businesses. All strategic pillars contributed to the growth in new business value except for the Agent pillar, which was affected by lower volumes in Switzerland and margin reductions in the U.S., the latter due to rising interest rates. The increase in new business value within the IFA/Broker and the Corporate Life & Pension pillars reflected continued successful sales of long-term savings products, a significant increase in cross-border sales and growth driven by corporate pension products. Bank Distribution had a positive development despite lower overall volumes resulting from different campaign timing in Spain as well as increased protection sales with higher margin, but lower APE volume. New business volumes (in terms of annual premium equivalent or APE) increased by 9% in local currency, resulting in a strong new business margin of 21.9%, which underscores the quality of new business. Business operating profit increased by 58% or 55% in local currency, to USD 351 million, reflecting the recovery in global financial markets as well as further progress in the industrialization of the segments business model. Farmers in USD millions, for the three months ended March 31  2010 2009 Change in USD Change in LC Farmers Management Services (FMS) management fees and other related revenues 703 623 13% 13% Farmers Re gross written premiums and policy fees 1,495 1,056 42% 42% Farmers business operating profit 462 324 43%   FMS gross management result 343 311 10%   FMS managed gross earned premium margin 7.4% 7.5% (0.1 pts)   Farmers Management Services (FMS) grew its management fees and other related revenues by 13% to USD 703 million, driven by an 11% earned premium increase at the Farmers Exchanges (Exchanges), which Zurich manages but does not own. Contributing to this growth was the acquired 21st Century business, whose integration into Farmers is progressing successfully and on schedule. In conjunction with continued cost discipline, FMS gross management result improved by 10%, resulting in a 9% higher business operating profit of USD 351 million and a gross earned premium margin of 7.4%. Farmers Re increased its premium volume compared to the same prior year period, driven by a higher participation in the quota share reinsurance (35% against 25% in the prior year quarter) and premium growth at the Exchanges. Benefiting further from higher investment income and lower levels of catastrophe losses, Farmers Res business operating profit rose to USD 111 million, resulting in an increased business operating profit for the Farmers segment of USD 462 million. Other Operating Businesses The Other Operating Businesses segment, predominantly consisting of the Groups Headquarter and its Holding & Finance activities, reported a business operating loss of USD 199 million due to higher funding costs driven by higher debt levels and different timing of marketing expenses. In the same period last year, the result also included gains from debt buy-back. Non-Core Businesses The Non-Core Businesses segment, including the Groups run-off insurance businesses and the Groups banking activities, reported a business operating profit of USD 24 million compared with a loss of USD 331 million for the prior year period. The increase mainly resulted from improved financial market developments. Group investments in USD millions, for the the three months ended March 31  2010 2009 Change in USD Change in LC Group investments average invested assets 194,642 176,692 10%   Group investments results, net 1,970 759 nm   Group investments return (as % of average invested assets) 1.0% 0.4% 0.6 pts   Total return on Group investments (as % of average invested assets) 2.1% (0.3%) 2.4 pts   Total return on Group investments, including investment income, realized gains and losses, impairments as well as changes in unrealized gains and losses reported in shareholders equity, was 2.1% (not annualized). The net investment result for Group investments, which includes investment income, realized gains and losses, and impairments, contributed USD 2.0 billion, a return of 1.0% on invested assets, to the Groups net income. Net capital gains on investments and impairments of USD 191 million improved significantly relative to the prior year due to lower impairments, positive asset revaluations and gains from the sale of bonds and equities. Net unrealized gains reported in shareholders equity as of March 31, 2010 improved by USD 2.1 billion as credit spreads continued to narrow, yields on government securities fell and equity markets rose. 1) All comparisons refer to the first three months of 2009 unless stated otherwise. 2) Return on equity calculated on common shareholders equity. See the Financial Supplement and the Financial Review on the Investor Relations page of our Web site www.zurich.com for further information on shareholders and common shareholders equity. 3) Attributable to shareholders. 4) Calculated on the Market Consistent Embedded Value basis. References Bachmeier, K. (2008). Analysis of marketing strategies used by PepsiCo based on Ansoff’s Matrix. Germany: GRIN Bensoussan, B.E & Fleisher, C.S. (2008). Analysis without paralysis: 10 tools to make better strategic decisions. Pearson Education Bohm, A. (2008). The SWOT Analysis. Germany: GRIN Employee benefits. (2004). Swiss-based financial services firm Zurich looks to its roots for benefits leadership, but has the flexibility to tailor perks on a local level, says Kate Donovan [online] available from [accessed 5 Jan, 2010] Insley, J. (2010). Zurich Insurance fined £2m for losing customer details [online] available from [accessed 5 Jan, 2010] Joseph, P.T & Mohapatra, S. (2009). 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