IT started in the “green room” at the World Economic Forum in Davos.

Tony Blair, who was still prime minister at the time, was rubbing shoulders with German chancellor Angela Merkel and James Schiro, chief executive of Zurich Financial Services, at the annual schmooze-fest of the world’s political and business elite.

Eventally the conversation turned to climate change, said Schiro. “We had some time together and discussed some of the issues in our global risk report. He had a fascination with lots of issues which we as a company had been talking about. We discussed how he could help elevate them.”

It would take a year of wooing by Schiro before Blair’s “fascination” would pay dividends. The Swiss insurer made overtures to Blair’s people after he left office in June. Then a few months later, the two men met in New York at the Clinton Global Initiative.

Thirteen days ago, it all paid off handsomely – for both sides – as Blair was unveiled as Zurich’s most famous adviser, bagging more than £500,000 a year for his services.

For sceptics it is another giant pay-day for the former British premier. Unsurprisingly, Schiro sees it rather differently. Blair will provide general guidance on “developments and trends in the international political environment”. But his key interest is in Zurich’s climate initiative, announced at the same time, to develop products and research to tackle global warming.

“Climate change is not only one of the big long-term social issues, but a business issue,” said Schiro, a dapper, sun-tanned 61-year-old American. Blair’s role will range from serving on Zurich’s advisory council to participating in seminars for chief executives of the insurer’s clients to “explain the risks we see now and in the future”.

“Having someone who is as high profile, and is as passionate and excited about an issue as Tony Blair makes a real difference,” said Schiro.

Luring such a major political figure is undoubtedly a coup for Schiro, who took over the helm at Zurich almost six years ago when the company was in financial turmoil.

Some are cynical about Schiro’s motivations: “The Blair appointment is as much about Jim’s ego. He is obsessive about image and reputation,” said one senior insurance executive.

The high-profile appointment comes at a crucial time for the Swiss group as it bids to expand and innovate. About 12 months ago, Schiro signalled a new zeal for growth. This came after a five-year marathon of restructuring, asset sales, slashing costs and a root-and-branch overhaul of processes and underwriting.

The company’s initiative to find solutions to combat climate change is all part of the attack on growth and Schiro’s vision that insurers need to innovate. Its American business Farmers already offers discounts for users of hybrid-fuel cars.

As a relative outsider who spent almost 34 years at the professional-services giant Price Waterhouse, latterly as chief executive, and who was the architect of its 1998 merger with Coopers & Lybrand, Schiro can afford to be scathing about the insurance industry.

“This is a business that sends all the wrong messages to customers. It has lagged because you need to have products – you need insurance to drive a car. If you lead with products, they become commoditised. The industry has not spent enough time focusing on customers’ needs.”

For Schiro, Zurich has made progress. He rattles off examples – the group’s creation of a “catastrophe bus” during the California wild fires of last year, which travelled to the state and doled out cash to customers who had lost their homes.

Zurich is a very different beast to the stricken group of six years ago. The insurer was fighting for survival after a disastrous expansion and undisciplined underwriting under Rolf Huppi, the chairman and chief executive who had dominated the Swiss group for a decade.

Four profit warnings within a year led to the ousting of Huppi in May 2002 and forced Zurich to launch a $2.5 billion (£1.3 billion) rescue rights issue. Schiro, who had joined the group as chief operating officer only two months earlier, was promoted to sort out the mess.

Nobody questions that Schiro has pulled off a remarkable turnround. Profits have risen sharply, shareholders have gained bumper returns and a first ever buy-back. Noncore assets, such as fund managers Scudder and Threadneedle, were sold off.

Zurich’s expansion plans look aggressive. Schiro is targeting the “next generation of emerging markets”, including Turkey, Hungary and Ukraine, while last year the company took a 66% stake in Nasta, one of Russia’s top 10 insurers. Like its rivals, it is racing into Asia. It was a latecomer in China, but has snapped up a 19% stake in New China Life Insurance Company.

Zurich is now a clean, well-run insurance giant with operations in 120 countries, 55,000 staff and is expected to increase 2007 operating profits by 10% to $6.4 billion when it reports this week. But there are still doubts about its growth prospects.

For a start, the bulk of its business is in mature, lower-growth markets. In America, Zurich appears to be bucking a weaker market. However, many are sceptical. “Given that the nonlife market is slowing, you have to have doubts,” said one analyst.

Others argue it is weaker than some rivals in Asia and sub-scale in leading European markets. Such fears have fuelled speculation of major acquisitions. Zurich has been linked as a possible buyer of embattled UK insurer Friends Provident. Schiro said deals in America, Europe, Japan and emerging markets were on the agenda.

Some are surprised that Zurich has survived. When Schiro took over, many expected him to dismantle the group. “A year ago he was a hero who could have crowned his achievement with a hugely value-enhancing break-up. Now he seems to want something else,” said one senior banker.

Part of the answer may lie in Schiro’s desire to establish a legacy before his contract runs out at the end of 2009. One view is that he is determined to pull off a big American deal and erase the memory of his exit from Price Waterhouse Coopers. What will not happen is a return to the “flag planting” expansion under Huppi.

But with rivals such as Axa, AIG and Generali on the prowl, the long-awaited wave of consolidation in the sector looks set to break. All Schiro will say is that Zurich will be involved, but will not be a “victim”. “We have to be masters of our own destiny.”

Put another way, the climate is changing.

BLAIR WILL TALK HIS WAY TO A £40M FORTUNE

EIGHT MONTHS after leaving 10 Downing Street, Tony Blair is on course to becoming the wealthiest former British prime minister.

As well as the advisory role with Zurich, which is worth more than £500,000 a year, Blair has bagged another advisory role with the American banking giant JP Morgan Chase, which could pay him as much as £2m a year.

He has also become one of the highest-paid stars on the international lecture circuit. He can charge between £100,000 and £200,000 per speech and earns about £500,000 a month from such events. Last November he was reportedly paid £240,000 to address a group of Chinese businessmen.

Blair is also understood to have a £4.6m deal with the publisher Random House for his memoirs.

Some experts believe that he could earn £40m from his various roles.

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts