Martin Senn

Martin Senn
CEO

Zurich Financial Services Group

Martin Senn joined Zurich as Chief Investment Officer in 2006 and at the same time became a member of the Group Executive Committee. He became CEO in 2010. Martin began his career in banking and has previously held senior management positions with the former Swiss Bank Corporation, Credit Suisse and the Swiss Life Group.

Martin is a member of the foundation board of Avenir Suisse and treasurer of the Zurich Association of Economics. In addition, he serves as the Honorary Consul of the Republic of Korea in Zurich and as a member of the board of directors of the Swiss-American Chamber of Commerce. He is also a member of the board of the Geneva Association and of the Institute of International Finance (IIF). Besides that, he is a representative of the Property and Casualty CEO Roundtable, a member of the Pan European Insurance Forum (PEIF), the European Financial Services Roundtable (EFR), the advisory board of the Tsinghua School of Economics and Management, the board of trustees of the Lucerne Festival, and the international advisory board of the Atlantic Council. He was previously a member of the board of directors of various banks and financial services organizations.

Martin received his commercial and banking diploma from the Business School in Basel, Switzerland, and graduated from the International Executive Program at INSEAD in Fontainebleau and the Advanced Management Program at Harvard Business School.

 

Watch interview highlights

 

A view from the top

In this short video, Martin Senn shares his view on today's key business issues: risk, volatility, innovation, talent, and growth

 

Quotes

Martin Senn

Martin Senn

CEO, Zurich Financial Services Group

Insurance companies have a different business model than banks, so they need to be regulated differently. There should not be regulatory overspill from banking into insurance. We think that a company like Zurich, which is a pure insurance company, does not pose any systemic risk. Many regulators accept this, but with some the discussion is still ongoing.

Martin Senn

Martin Senn

CEO, Zurich Financial Services Group

I understand the outcry, but there’s a risk that if the regulators respond in a populist way, the recovery could potentially be threatened. The public and the private sectors went into the crisis together; now they need to come out of it together. So for us, dialog is very important and something that we pursue.

Martin Senn

Martin Senn

CEO, Zurich Financial Services Group

Our main strategic move has been expansion into emerging markets. One example of that is our partnership in Latin America with Banco Santander. This is a strategic move for the long term. We’re also expanding in Asia; we just closed a deal in which we bought Malaysian Assurance Alliance Berhad. Balancing our strength in Europe and the US with our growing strength in the emerging markets is an important strategic priority for us.

Martin Senn

Martin Senn

CEO, Zurich Financial Services Group

For a multinational company such as Zurich, the “greenfield” approach is sub-optimal. It takes too long to make a meaningful contribution to the group. So we employ other options: partnerships and acquisitions.

Martin Senn

Martin Senn

CEO, Zurich Financial Services Group

Stress tests do not replace sound risk management at the micro level. Sometimes, however, the application of stress tests allows us to identify companies that need to be recapitalised.

Martin Senn

Martin Senn

CEO, Zurich Financial Services Group

In life insurance and insurance as a whole, there is a potential shortage of actuaries, particularly life actuaries.

 

Read interview transcript

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Where do you see the economy going in 2012?

We see global economic activity slowing this year. In our base scenario, we project that activity in developed countries will be below potential for several years to come. Growth in emerging markets is also likely to level off somewhat from current levels though we anticipate it will remain comparatively robust.  We expect that interest rates are going to be low for quite some time; inflation will be low; and volatility in financial markets will be high. So it will be a challenging environment.

What factor might be most worrying?

Clearly, the most worrisome factor concerns the ongoing discussion over the sovereign debt crisis in the Euro-zone. We’re two years into this crisis and are still without the clear resolution needed to instil confidence in the markets.

Exchange rates have been difficult here in Switzerland. Is that a major concern?

No, because Zurich, as a large company, is highly diversified. The challenge has been the exchange of funds into Swiss Francs - the currency in which we pay our dividends. But the Swiss National Bank has taken decisive action on this, setting a minimum rate for the Euro against the Franc, so that risk has been mitigated.

We’re in a period of historically low interest rates. Does that change the way you run the insurance business?

Low interest rates are a challenge for the industry. It means that the largest sources of income for the industry are under pressure. And the effects will most likely accelerate over time because insurers tend to invest for the long run. So, as we reinvest our assets, we have to put them into lower-returning vehicles. Nevertheless, Zurich is in a strong position. We have shown that we’re able to generate strong cash flows. We have a very strong balance sheet. And we are highly diversified.

Is it your view that, for the medium term, interest rates will remain low?

Yes - other scenarios do not seem realistic at the time being. But I think there is also no immediate risk of aggregate demand sparking inflation.

In discussions with governments, what do you advise them?

There are two aspects to this. One is dealing with the current debt crisis. There needs to be more meaningful action on the current debt crisis to calm the markets and build confidence. The other aspect is that one needs to differentiate among business models. Insurance companies have a different business model than banks, so they need to be regulated differently. There should not be regulatory overspill from banking into insurance. We think that a company like Zurich, which is a pure insurance company, does not pose any systemic risk. Many regulators accept this, but with some the discussion is still ongoing.

You’ve been Zurich’s CEO for more than two years.  Have you instituted any changes in strategy?

The company was in good shape when I became CEO, so what was required was evolution not revolution. We’re on a stable course with a strong balance sheet, strong cash flows, and a well diversified portfolio of insurance risks. Our main strategic move has been expansion into emerging markets, which balances our strength in the more mature markets of the US and Europe. One example of that is our partnership in Latin America with Banco Santander. This is a strategic move for the long term. We’re also expanding in Asia; we just closed a deal in which we bought Malaysian Assurance Alliance Berhad.

So with a strong balance sheet, you can pick up some bargains in these crisis times?

Clearly, in the current market environment our strong capital position provides us with opportunities. However, it’s important to stay disciplined. Controlling temptation is paramount. Principles must be applied stringently because there is a lot of uncertainty. And uncertainty carries risk, which must be counterbalanced.

With respect to your expansion into developing markets, could Zurich go it alone? Or are partnerships and acquisitions preferable?

For a multinational company such as Zurich, the “greenfield” approach is sub-optimal. It takes too long to make a meaningful contribution to the group. So we employ other options: partnerships and acquisitions. Our partnership in Latin America with Santander enhances our distribution capabilities there. We’ve been establishing these sorts of partnerships for quite some time. For example, we’ve just renewed similar arrangements with Deutsche Bank in Germany; and with Credit Suisse here in Switzerland. These are exclusive agreements. But we also have non-exclusive agreements with other banks around the world. And of course, we also have our own people on the ground. We’ve maintained a presence in Latin America for many years, and the Santander deal strengthens our established position there.

What do you think of stress tests in the banking and insurance industry?

At Zurich, our experience with solvency regulations and stress testing has been very positive. We support an economic and risk-based solvency regime. So does the industry - although there are some debates about the technical aspects of it. We believe the Swiss Solvency Test is a meaningful test and points in the right direction for future regulation. We believe that regulation should be holistic, taking in all risks, e.g. that of selling insurance and of investing some of the proceeds.

Have these stress tests really addressed the “too big to fail” problem?

We’ll always have unforeseen problems. The interconnectivity of risk regularly creates new challenges. I’d be surprised if we ever enter a world without risk. In fact, that would threaten us: Risk is our business. Stress tests do not replace sound risk management at the micro level. Sometimes, however, the application of stress tests allows us to identify companies that need to be recapitalised. I want to stress that regulation always addresses past events. It is not possible to establish a regulatory scheme that excludes any possible future risk. Regulation must deal with the factors we know and understand and should focus on principles rather than stiff rules.

How do you justify to shareholders Zurich’s commitment to corporate responsibility?

We believe that how you do business must be acceptable to all stakeholders in the system. That includes our customers, our employees, our shareholders, and society at large. We work in over 170 countries and in every single one it’s important for us to be acknowledged as a responsible organisation.

Which would you choose: Better innovation or faster innovation?

Clearly, better innovation that results in sustainable, meaningful contributions to the business. Quality in everything we do comes first.

Do you see innovation flowing from the developing to the developed world?

Yes - and that is one of Zurich’s most promising opportunities. We are a large organisation and we have our fingers on the pulse of many markets. An opportunity in Latin America, for example, can also be applied in Asia or Europe. So we encourage our people to speak up, to take the risks, and to think innovatively in order to create solutions for customers around the world. For example, we developed a new way of offering car insurance in Japan that is now being used in the US.

Is recruiting talent more of a challenge today than it was, say, a decade ago?

Certainly, it’s more a topic of discussion today than it was a decade ago. But at Zurich, we see the recruitment of talent as more of an opportunity than a challenge. As a strong, successful, multinational company, we can provide people around the world with rewarding careers. Retention is no doubt an issue for some companies. But for Zurich, this is not a major issue. Clearly, we want to do even more to develop and motivate our people because people are our most important asset.

What traits do you look for in new joiners?

I look for globally-minded people with the capacity to anticipate change and the flexibility to accept it. I also put a lot of emphasis on character. Good character, honesty, and consistent behaviour - that’s what we’re looking for.

With respect to their studies, what would you suggest that young people choose?

They should study a subject they like. Young people should not be pushed into a box; they should pursue whatever their passion is. If young people are passionate about their studies - and later their work - then they are well prepared to pursue a career in business or social work or any other part of the economy.

Are there functional or skill areas where you see shortages?

In life insurance and insurance as a whole, there is a potential shortage of actuaries, particularly life actuaries.

How is that being addressed?

We are developing people from within and attracting people from outside the organisation.

Switzerland’s “Freizügigkeitsabkommen” [covenant on freedom of movement] has had a major effect on your operations here. Are there any negatives to it?

No, not at all. Zurich is truly a global organisation. At our corporate centre, we have over 1,000 people from 45 different countries. The opening of the Swiss borders has been important for our company and for the economy of Switzerland as a whole. It’s one of the reasons that such a small country has such a large impact on the global economy.

Will the global movement of employees increase or decline?

It will remain important. In my own career, I had a chance as a young employee to go to Hong Kong and to learn many new things. We will continue to support people who want to move into new cultural zones. It’s an important element in developing an organisation’s talent.

What are you doing to create a pipeline of recruits into your company?

We are supporting universities around the world, especially in the field of risk management. We view these universities as partners. We have an agreement with the University of Zurich to support the exchange of students between Switzerland and China. This has been a very successful programme for many years. We have other programmes like it around the world.

Has the allocation of your time changed significantly in the past few years?

I’m probably spending more time with regulators. These discussions revolve around ways to address the current crisis. I’m pleased to say that the regulators’ doors are open to us because as a company, we managed the crisis well and are dedicated to maintain a strong relationship with our key regulators.

Do you foresee a day when your time will be allocated more normally - if there is such a thing?

I’m not sure what normal really means. But here at Zurich, we are positive thinkers. We believe that no matter what happens, there is always a day after. It’s part of our culture, our way of thinking. If we stay focused on our strategy and disciplined in its execution, I’m confident that we can look forward to better days.