insurance group, said that profits fell by a disappointing 5.5 percent last year and there would be no growth in the current year.

Shares slid after the news to 3-1/2 year lows.

The bad news followed a profit warning from the group in February in shaking investors' faith in Chairman and Chief Executive Rolf Hueppi.

"It's just one more time where one was poorly informed... One is getting used to it,'' said one Swiss-based fund manager who declined to be identified.

His group manages investor portfolios which include Zurich shares. That fund manager said one way to restore confidence would be for Hueppi to go. "That would certainly do the share price some good'', he said.

Hueppi said normalised net profit -- Zurich's main profit measure -- slipped to $2.096 billion, adding that there would be no return to the longer-term profit growth target of 10 to 15 percent until 2002.

The 5.5 percent decline was worse than Zurich, which owns the Centre Solutions and Zurich Insurance companies in Bermuda, had projected in a surprise profit warning in February.

It told investors then one-off factors of some $500 million -- extra reinsurance reserves, weather-related claims and costs to streamline the organisation -- meant earnings would be "less than five percent'' below the 1999 level of $2.218 billion.

Normalised profit includes sustainable capital gains from investments and is Zurich's main profit measure, introduced to smoothe the impact of financial market volatility on earnings.

As a rule, normalised profit is lower than unadjusted profit. Unadjusted net profit fell by 28.7 percent to $2.33 billion, below analysts' estimate of $3.66 billion.

At 1110 GMT, Zurich's shares were down by 15.4 percent, a drop of 106 francs to 582. During the morning, shares got as low as 540 francs, a drop of over 20 percent, the lowest level since October 1997.

Hueppi said he expected normalised net profit in 2001 of $1.8 billion to $2.0 billion, adding that Zurich was taking measures to boost profitability including asset sales and the spin-off of insurance business Zurich Re.

"The 2000 results are indeed disappointing, but still represent a solid level, with a return on equity of 11 percent showing the earnings power of our group,'' Hueppi said.

"Our cautious outlook for 2001 includes factors such as lower expected investment income, a weak dollar; the cost of remedial action falls in 2001, but the benefits in the year after; investment in technology continues,'' he said.

"We are in a growth period where reported earnings lag top-line growth,'' he said, adding that the ten to 15 percent profit growth target was a "long-term average, not something which we achieve year after year.'' The "firm corrective action'' involved a focusing of the group through the spin-off of Zurich Re and the sale of non-strategic and lower performing assets. "The value of all these transactions is up to $4 billion,'' Hueppi said.

Hueppi said the planned divestment programme did not include Zurich's holding in medium-sized Swiss insurer Baloise. Zurich controls almost 30 percent of Baloise.