Zurich Financial Services Group reported a business operating profit of $1.2 billion and net income of $751 million for the third quarter. “Global Life and Farmers supported the Group’s profitability by delivering ongoing top-line growth coupled with strong profit margins,” said the bulletin.
“General Insurance benefited from past rate increases earning in and managed to successfully continue targeted rate increases into the third quarter. However, it was impacted by a high occurrence of catastrophe- and weather-driven events particularly in the first half of the year.”
Zurich listed the following performance highlights for the first nine-months:
— Business operating profit (BOP) of $3.5 billion, a decrease of 13 percent.
— Annualized BOP ROE after tax of 12.2 percent
— Net income of $2.4 billion, a decrease of 18 percent. — Annualized return on equity (ROE) of 10.7 percent
— Total Group business volumes, comprising gross written premiums, policy fees, insurance deposits and management fees, of $50.2 billion, a decrease of 1 percent or flat on a local currency basis
— Shareholders’ equity of $31.0 billion, a 6 percent increase over year end after paying $2.2 billion in dividends. Solvency I ratio up 50 percentage points over year end to 245 percent
Zurich said its business operating profit for the nine months “includes the impact of increased banking loan loss provisions of $330 million, before tax, as reported at the half year. Net income takes into account a previously announced third-quarter charge of $295 million related to the proposed comprehensive settlement agreement in the matter of Fogel vs. Farmers Group, Inc.”
Zurich’s CEO Martin Senn stated: “Our core businesses continued to deliver a robust operating performance in spite of the difficult economic environment in our major markets.
“At Global Life, our focus on delivering relevant solutions for the growing protection needs of our customers is paying off resulting in both higher margin and increased volumes.”
“Farmers continues to show good results generating strong operating margins. I am particularly pleased by the enduring appeal of the Farmers brand and the value propositions offered by the Farmers Exchanges to their customers.”
“In General Insurance, we are managing the business with a strong focus on protecting profit margins, as demonstrated by our successful efforts to implement targeted underwriting actions.”
“We are investing in growth markets, while continuing to focus on sustained profitability, operating efficiency and effective risk management.”
CFO Dieter Wemmer added: “Our capital and regulatory solvency positions remain strong and we are confident that we are well prepared for new regulatory requirements.”
Despite less than ideal economic conditions in the U.S., Farmers managed a six percent increase in “management fees and other revenues,” posting $2.096 billion for the first nine months of 2010 – “driven by a 5 percent increase in gross earned premiums at the Farmers Exchanges,” said the bulletin. The Exchanges are managed, but not owned, by a wholly-owned subsidiary of Zurich.
Zurich said the growth at the Exchanges was “driven by the contribution from 21st Century, partially offset by the impact of continuing economic pressures in the U.S. particularly on the Exchanges’ auto and homeowner line of business.
“In conjunction with continued strict expense discipline, the gross management result of FMS improved by 8 percent resulting in a 6 percent higher business operating profit of $1.0 billion and an improved gross earned premium margin of 7.4 percent.
“Gross written premiums at Farmers Re decreased compared with the prior year period due to changes in the participation level of the quota share reinsurance treaty, which as of September 30, 2010 stood at 25 percent, the level it was prior to the acquisition of 21st Century. Farmers Re’s business operating profit rose to $248 million as a result of improving loss trends at the Exchanges contributing to an increased business operating profit for the overall Farmers segment of $1.3 billion.”
The full earnings report and additional information may be obtained on the Group’s web site.
Source: Zurich Financial Services
Topics Profit Loss Agribusiness
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