Chief executive officer, Zurich Financial Services
Born: January 2, 1946.
Education: St. John's University, BS, 1967; graduate of the Amos Tuck School Executive Program, Dartmouth College.
Family: Married Tomasina (maiden name unknown); children: two.
Career: Price Waterhouse, 1967–1982, various positions; 1982–1991, chairman, Mining Special Services Group; 1991, national director, mergers and acquisitions; 1991–1995, vice chairman and managing partner, New York metropolitan region; 1995–2001, deputy chairman, World Executive Group and World Board; 1995–1997, chairman and senior partner, U.S. firm; Pricewaterhouse Coopers, 1997–2001, chief executive officer; Zurich Financial Services, 2002, chief operating officer; 2002–, chief executive officer.
Address: Zurich Financial Services, Mythenquai 2, Zurich, Switzerland; http://www.zurich.com.
■ James J. Schiro, a trained accountant and former CEO of Pricewaterhouse Coopers, used basic financial discipline to transform Zurich Financial Services. With 2002 revenues of $40.4 billion, Zurich was Europe's third-largest insurer, and its staff of 62,000 offered insurance and risk-management solutions and services for individuals and businesses in more than 50 countries. The United States, the United Kingdom, and Switzerland were key markets for Zurich, together accounting for about three-fourths of sales.
A company man for 30 years, James Schiro oversaw the successful 1998 merger of Price Waterhouse with Coopers & Lybrand, one of the biggest and most influential mergers in the professional-services industry. Said Schiro: "The goal of
this transaction was not creating a size of 1 plus 1 equals 2 and being the biggest from that standpoint. The goal of this transaction was to give us the critical mass and platform from which we can change the competitive landscape. We can deploy resources and move them around to meet changing needs in different parts of the world" ( Accounting Today , September 28, 1998).
Schiro presided over an embarrassing scandal that arose after the Securities and Exchange Commission issued a report in January 2000 regarding the investments held by partners of Pricewaterhouse Coopers in companies that the firm was auditing. He also oversaw a failed attempt to sell the firm's consulting arm to Hewlett-Packard, a deal that would have taken care of at least some corporate-governance concerns in the wake of the scandal at Enron, once the largest U.S. buyer and seller of natural gas. At Enron, Arthur Anderson's flawed auditing led to new industry-wide practices of separating consulting from auditing.
Schiro persuaded accountants to negotiate new rules with the SEC governing the independence of auditors from their clients, and his efforts for a time made him a prospective candidate to replace former SEC chairman Arthur Levitt. After four years as its CEO, Schiro left Pricewaterhouse Coopers at the end of 2001 and was succeeded by Samuel A. DiPiazza Jr. Schiro said that he chose to leave the firm when he did because he had accomplished most of what he had set out to do.
Schiro joined Zurich in March 2002 as one of the company's two COOs in charge of finance. Just two months later he was named CEO. Analysts saw him as a safe choice, someone with the potential to restore stability to the insurer. Zurich's problems began in the late 1990s when the company lost focus of its core insurance business and embarked on a program of acquiring of ancillary business, such as banking and asset management. Tim Dawson, an analyst at Pictet & Cie in Geneva, remarked, "At least we know there won't be some new guy coming in with all sorts of harebrained schemes to take the group off in all sorts of strange new directions" ( CNN.com , May 14, 2002). Still, Schiro did not seem like an obvious choice. Not only was he the first foreigner to head the firm, he did not speak German and lacked experience in the insurance industry.
Schiro vowed to return the company to profitability and implemented strict cost-control measures. An increase in claim disputes served as evidence of Schiro's discipline; the company was paying closer attention to payouts, scrutinizing any claim that pushed the boundaries of the client's coverage. Employees were also instructed to teach clients risk-management practices that would prevent them from having to file a claim. This benefited both the client and the company since fewer claims meant lower costs and premiums. "Large customers expect you to help them more and more with risk engineering and to be proactive," said Schiro. "This is a good partnership. If we can reduce the losses, this will improve overall profitability" ( Reactions , September 1, 2003).
In 2003 Schiro continued his cost-cutting measures in earnest. He eliminated thousands of jobs, Zurich left the banking business, and Schiro engineered the sale of nine Zurich businesses. He sacrificed the renewal of $800 million in business that the company underwrote in 2003 because it was not profitable. "The culture driving the new Zurich is sacrificing market share for performance and return. We're better off giving up market share than losing capital," Schiro said ( Reactions , September 1, 2003). In 2003 the Swiss insurance group generated $2.1 billion in profit, a remarkable turnaround from a record $3.4 billion loss in 2002 due to the write off of assets and strengthening of non-life insurance-related cash reserves. Still, the company laid off some 4,500 people in 2003.
Once Schiro had stabilized Zurich, he outlined plans for new growth opportunities. Those included repositioning Zurich Advice Network, the company's low-performing UK sales force, to sell a wide range of financial products from other companies. As a performance incentive, he offered agents equity stakes in the company. Schiro also implemented a new management culture built on four components: risk management, underwriting discipline, internal auditing, and matching rewards with performance. As a result, new underwriting standards were introduced throughout the company. "I don't believe you can run a financial services company in a decentralized way. We want group-wide standards in underwriting and claims management and a marrying of the compensation of underwriters to their underwriting performance," Schiro said ( Financial Times , April 7, 2004).
In early 2004 the company's long-term prospects finally seemed sound. Schiro had an opportunity to relish his accomplishments, but chose not to get too comfortable. "My job is to prevent Zurich from going back to its old ways. The new culture and drive of Zurich is to be more performance oriented. We are driving for profitability in our core business" ( Reactions , September 1, 2003).
See also entries on PricewaterhouseCoopers and Zurich Financial Services in International Directory of Company Histories .
Markram, Bianca, "Control is the Key; Special Report: Zurich's Survival Strategy," Reactions , September 1, 2003, p. 20.
Telberg, Rick, and Laurence K. Zuckerman, "Moore, Schiro: 'We Changed the Competitive Landscape,'" Accounting Today , September 28, 1998, p. 5.
"Zurich Financial Names New CEO," CNN.com , May 14, 2002.
"Zurich to Build on its Strengths," Financial Times , April 7,2004.