Zurich Financial Services Group announces major strategic and operational initiatives and reports half-year 2002 results

Zurich, September 5, 2002 - Zurich Financial Services Group has announced a program of strategic initiatives to:

Sharpen strategic focus

• Concentrate on core insurance markets in the US, UK and Continental Europe
• Redeploy capital into profitable growth opportunities

Improve operational efficiency

• Target an operating return on equity of 12% over the medium term
• Implement an operational improvement program expected to enhance profit after tax by at least USD 1 billion in 2003
• Incur restructuring costs of approximately USD 500 million after tax in the second half of 2002

Strengthen the balance sheet

• Increase non-life and reinsurance reserves by USD 2.0 billion (USD 1.8 billion after tax)
• Write-off USD 954 million after tax relating to goodwill and capitalized software expenses and other assets

Improve management of the capital base

• Propose Rights Offering of USD 2.0 to 2.5 billion in October 2002
• Execute disciplined redeployment of capital
• Revise dividend policy
• Utilize hybrid capital capacity when appropriate
• Make selective use of cost-effective reinsurance
• Reduce equity exposure in insurance investment portfolio

James J. Schiro, Chief Executive Officer of Zurich said:

"Over the last three months, we have conducted a thorough review of the Group's strategy and operations. We will sharpen our focus as an insurance-based financial services provider with an international network, concentrating on chosen markets. The initiatives we announced today should create a sound financial and operational platform for Zurich from which to deliver strong earnings growth."

Summary of half-year 2002 results

• Premium growth (including policy fees) of 18% to USD 20.7 billion
• Non-life premiums up 30% to USD 14.9 billion
• Life premiums (including policy fees) up 15% to USD 5.0 billion
• Pre-provision combined ratio improvement of 2.3 percentage points to 103.3%
• Net investment income of USD 3.2 billion
• IAS pre-provision net income decrease from USD 861 million to USD 683 million
• Pre-provision shareholders' equity stable at USD 17.6 billion
• Special provisions of USD 2.7 billion after tax relating to strengthening of balance sheet
• IAS loss after tax of USD 2,029 million
• IAS shareholders' equity of USD 14.9 billion