Zurich’s 9-Month Business Operating Profit Flat at $3.2 Billion

November 15, 2012

The Zurich Insurance Group reported a business operating profit (BOP) of $3.2 billion and net income attributable to shareholders (NIAS) of $2.7 billion for the nine months ended September 30, 2012.

The bulletin gave the following highlights for the period:
– Nine months BOP of $3.2 billion, unchanged compared with prior year and Q3 BOP of $733 million, down 34 percent compared with prior year, after previously announced financial adjustments in Germany General Insurance
– Nine months NIAS of $2.7 billion, down 16 percent compared with prior year and Q3 NIAS of $477 million, down 62 percent compared with prior year
– Combined ratio of 97.6 percent, for the first nine months, an improvement of 1.2 points compared with prior year
– BOPAT ROE 10.2 percent for the first nine months, down from 10.6 percent at corresponding prior year period
– Strong underlying profitability driven by continued pricing discipline and portfolio management
– Sustained top-line growth in target markets
– Strong capital position well within target AA range

“Our strong overall underlying profitability clearly demonstrates that Zurich’s strategy is delivering. While the third quarter was adversely affected by the previously reported adjustment in the German General Insurance business, we continue to see the benefit of our strong focus on pricing discipline and portfolio management,” stated CEO Martin Senn.

“We are particularly pleased with the robust performance in some mature markets, notably the U.S. where we are celebrating 100 years of doing business, and our continued success in the high potential growth markets in Latin America and Asia.”

The bulletin said Zurich’s general insurance operations remain “focused on delivering its strategic targets through disciplined underwriting and expense management. The underlying loss ratio for General Insurance continued to improve in the first nine months of 2012 to 61.6 percent and the business segment showed a robust BOP. The improvement in profitability benefited from a lower level of catastrophes and weather-related events compared with the same period of 2011, although these positive developments were partially offset by a reassessment of loss reserves and deferred acquisition costs in Germany.”

In its global life sector Zurich said it “continued to show the positive impact of organic growth in selected markets. In an environment of persisting low yield in many significant markets, the segment remains focused on continuing to shift its product mix from traditional savings toward protection and fee-based products and leveraging its global strength in Corporate Life & Pensions and Bank Distribution. Overall gross written premiums, policy fees and insurance deposits increased by 9 percent compared with the same period of 2011.”

In addition the report noted that “Farmers showed an increase in BOP of 5 percent in the management services company, while the second consecutive year of significant weather-related events and the absence of favorable prior year loss development compared with the same period of 2011 led to losses from reinsurance operations.

“The non-core businesses recorded improved net income, mainly resulting from positive developments from run-off life insurance portfolios.”

Zurich added that its “capital position and solvency remain strong, with the capitalization ratio under the Swiss Solvency Test (SST), as filed with regulators as of July 1, 2012, at 178 percent. Shareholders’ equity stands at $34 billion, an increase of 7 percent since December 31, 2011.

Source: Zurich Insurance

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