Senn said the company will reduce costs at the general insurance unit, which sells property and casualty policies, by about $200 million by the end of 2016. Expenses as a proportion of premium income at the division increased to 30.5% last year from 29.7% in 2013.

Zurich reported on May 7 that first-quarter profit fell 4% to $1.22 billion, the third-straight quarterly decline. Profit from general insurance, a business headed by Mike Kerner, slid 20% to $706 million.

Costs Rose

Zurich's costs, excluding its Farmers unit in the U.S. and restructuring charges, rose to $10.1 billion last year from $9.5 billion in 2013, partly as a result of “complex middle-office processes and systems” and too many employees in high-cost locations. The expenses included $2.9 billion for support functions, which rose from $2.7 billion, and for information technology, which climbed $200 million to $2 billion, according to a company presentation.

Senn says he will cut costs to help reach a target for return on equity, a key measure of profitability, of 12% to 14% by the end of 2016. It fell to 11.1% in 2014 from 11.6% the previous year.

To reach the cost savings, Zurich will incur about $400 million to $600 million in accounting and restructuring charges, with the majority included in this year's results.

The company reiterated a plan to redeploy $3 billion of excess capital by the end of 2016. The cash will be either spent on mergers and acquisitions or a return of capital to shareholders, it said.

Chief Financial Officer George Quinn told analysts earlier this month that Zurich had “the shorthand of $3 billion” in capital available.

The shares rose 0.7% to 305.80 Swiss francs at 12:33 p.m. in Zurich, valuing the company at 46 billion francs ($49 billion). They declined 1.9% francs this year compared with a 15% gain for the Bloomberg Europe 500 Insurance Index.

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