Chief Executive Officer Mario Greco took over in March with a mission to restore confidence in the company after it reported operating losses for its general insurance unit in the third and fourth quarters of 2015. Greco, the former CEO of Italian insurer Assicurazioni Generali SpA, is continuing with an overhaul of the insurer’s biggest unit, while preparing a strategy update to be announced in November.

‘Clear direction’

“I don’t think Zurich needs a radical change in direction — I think it needs a clear direction and stability,” Greco said on a conference call with reporters, adding that it would be too early to disclose details of the strategy.

The company has revamped top management with the departure in 2015 of CEO Martin Senn and general insurance head Mike Kerner following a year that saw Zurich Insurance abandon a high-profile takeover bid for RSA Insurance Group Plc because of unexpectedly high claims. The company has since pledged to make better use of reinsurance contracts to insulate itself from risks.

The general insurance unit — the biggest source of premium income — posted a first-quarter operating profit of $542 million, down 23% from a year earlier. The combined ratio for the first quarter stood at 97.7%, down from 103.6% for 2015, although still marking an increase compared against the previous year period of 96.7%.

More improvements

A measure of more than 100 means the unit is paying out more in claims and costs than it’s collecting in premiums. “More improvement on the combined ratio is expected, especially in the second half of the year,” Zurich said in prepared remarks for a conference call.

Abandoning a strategy focused on growth is one of Zurich’s most important “corrections” made so far, Greco said on a conference call with analysts. The company will continue to prioritize underwriting discipline over an expansion, and won’t resort to adding business in order to balance out excessive costs.

“You underwrite for profits — you don’t underwrite for size or premiums. This is what we’re doing and we’ll keep on doing that,” Greco said.

Action on costs

“The growth will be a consequence of that and if growth is negative, so be it. There is no way we can solve an expense ratio issue by growing the size. So if the expense ratio worsens we would take more action on costs.”

Operating profit at reinsurance unit, Farmers Re, fell 12% to $343 million after a “small loss” due to catastrophe claims from the Farmers Exchanges.

“We miss detailed insight on restructuring action and timing — it’s a quite straightforward first-quarter slightly above estimates, should be well received,” said Stefan Schuermann, an analyst at Vontobel Securities AG in Zurich. He has a hold rating on the stock.

Zurich, a stock that is preferred by many investors due to its payout policy will maintain a “sustainable” and “attractive” dividend, Chief Financial Officer George Quinn said. The company doesn’t plan to bulk up reserves. “We had issues in the third quarter last year — and we don’t anticipate further steps.”

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