Zurich Q1 Net up 71% to $1.387 Billion

Zurich Financial Services Group enjoyed a very good first quarter with all of its business units showing profit gain. Highlights for the period included the following:
–Net income of $1.387 billion, a 71 percent increase–
— Annualized return on equity (ROE) of 23.5 percent
— Business operating profit (BOP) of $.734 billion, a 25 percent increase
— Annualized BOP ROE4 after tax of 21.4 percent
— General Insurance combined ratio of 93.3 percent, an improvement of 1.5 percentage points.
— Gross written premiums and policy fees of $10.2 billion, up 4 percent or -1 percent in local currency
— Strongly increased Global Life new business value of $146 million up 43 percent, with new business margin (percent of APE) of 23.2 percent5 and APE up 8 percent or 2 percent in local currency
— Farmers Management Services’ management fees and other related revenues increased 4 percent to $542 million
— Shareholders’ equity continued to increase to $26.5 billion net of share buyback to date of $438 million

“These excellent results reflect our ability to balance operating discipline and selective growth across our well-diversified book of business,” noted CEO James J. Schiro. “Going forward, we are confident this combination will provide further opportunities for profitable growth, particularly in emerging markets, parts of Europe and in personal lines in the United States.”

He added that the increased profits were due to “our rigorous approach to operational excellence,” which is embodied in the Company’s operational improvement program, “The Zurich Way.” Schiro also singled out the progress Zurich has made in “areas such as capital management, tax efficiency and the further streamlining of our corporate structure. This, along with selective growth opportunities, gives us confidence going forward.”

Zurich’s general insurance (P/C) had a “strong showing in the first quarter, absorbing both the impact of the Kyrill storm in Europe as well as some reduction in rates,” said the announcement. Better underwriting results, up $120 million, and an increase in investment income by $108 million led the way. The combined ratio improved in spite of the $152 million loss from Kyrill.

Zurich noted that it had been successful in North America “in holding our rates in a market where reported rates continue to fall.” By contrast European rates “showed overall some signs of improvements, offsetting continued reductions in the UK and Ireland.”

While volumes tended to be flat or slightly reduced across the region, volume in the UK stabilized during the quarter following a series of declines. “Successful customer retention also marked the performance in Global Corporate, where the impact of rate reductions in a number of business lines contributed to a reduced premium volume,” said the bulletin. “Meanwhile International Businesses managed to increase volumes as well as its profitability.”

Zurich manages, but does not own, the Farmers Insurance Exchanges. Revenues from management fees and other related revenues grew by 4 percent to $542 million, “as a result of targeted investments in its distribution platform and product enhancements.”

Zurich said Farmers achieved “market-beating first quarter premium growth of 5 percent. Operating profit increased 3 percent to $330 million, while the operating margin was reduced to 47.9 percent. “This margin compression reflects the continuing impact of investments in growth initiatives as well as expenses related to the creation of the North America shared services platform, which will drive operating efficiencies,” the announcement continued.

The full report and a replay of the telephone conference for analysts and investors are available on the Group’s web site at: www.zurich.com.

Topics Profit Loss Europe