Zurich Financial Services Group reported strong growth in net income in the first quarter of 2005 with net income up 21 percent to $779 million, compared to $644 million in the first quarter of 2004.
Other highlights included:
— Business operating profit (which excludes capital gains/losses) of $1.034 billion, an increase of 18 percent and an annualized BOP ROE after tax of 15.3 percent
— Gross written premiums in General Insurance of $10.2 billion, an increase of 2.3 percent and a combined ratio of 96.9 percent
— Gross written premiums and policy fees in Life Insurance of $2.8 billion and new business profit margin of 7.5 percent.
— Net Group investment result of $2.2 billion, an increase of 12.0 percent
— Total gross written premiums declined by 2 percent during the first quarter to $13.892 billion from $14.233 billion in Q1 2004.
CEO James J. Schiro commented: “We are off to a good start in increasingly competitive markets that held revenue growth essentially flat. An 18 percent increase in business operating profit to more than USD 1 billion, a strong increase in net income, and a ROE of 16.5 percent reflect our focus on operational excellence and delivering results for shareholders. We look forward to continued progress.”
Zurich said the first quarter results reflected the company’s commitment to build on the “the strong fundamentals seen in previous years,” reflecting “cost vigilance and the Group’s disciplined approach to the businesses.” This “resulted in a low expense ratio in General Insurance and underlying improvements in the Life Insurance new business profit margin. Overall performance also continued to benefit from the well-diversified business portfolio in attractive markets on both sides of the Atlantic and positive income contributions from the run-off businesses and Centre.”
In a discussion of its general insurance activities, Zurich said: “In increasingly contested markets, the Group maintained disciplined underwriting by selectively pursuing growth opportunities. Adjusted for exchange rate movements, gross written premiums grew about 3 percent in the Global Corporate division. They were flat in Europe General Insurance and decreased 3 percent in North America Commercial.
“The loss ratio in the Global Corporate business was affected by large claims in contrast to the benign first quarter 2004. Their impact is included in the combined ratio of 96.9 percent, which also reflects our more conservative approach to current year reserving as developed and implemented by the end of last year.”
Farmers Exchanges, which Zurich manages but does not own, “continued to make a stable contribution in fee income and business operating profit to the Group,” said the announcement. “Fee income grew 4.7 percent to $508 million and business operating profit increased 7.4 percent to $306 million on the backdrop of $3.6 billion in gross written premiums.” It also noted that the Exchanges improved their combined ratio 4.2 percentage points to 94.5 percent and made excellent progress towards their surplus growth target of $1 billion for the three years ending in 2006. In the first quarter 2005, surplus grew by $184 million, bringing surplus growth after five quarters to $646 million.
Zurich will hold a telephone conference with a Q&A session for analysts and investors at 2 p.m.Central Europe time, today, May 19. The dial-in numbers are:
Europe – +41 (0) 91 610 56 05
UK – +44 (0) 207 107 06 13
USA – +1 (1) 866 865 51 44
The full earnings report and further presentations from the telephone conference are available on the company’s Web site at: www.zurich.com.
Topics Profit Loss Europe
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