Zurich Reports Big Increases in Q3, 9-Month Profits

November 5, 2009

Zurich Financial Services Group reported “business operating profit for the discrete third quarter 2009” of $1.5 billion, a 138 percent increase over Q3 2008. Net income for the quarter was $909 million, a 490 percent increase over the same prior-year quarter. “Both figures represent the fourth consecutive quarter-on-quarter improvement since the third quarter 2008,” Zurich noted.

CEO James J. Schiro commented: “In this period of ongoing economic uncertainty, our focus remains on maintaining our strong balance sheet, driving operational excellence and delivering sustained profitable growth. By effectively balancing these levers, we have generated excellent quarterly results and ensured that Zurich is well positioned for the future under any economic scenario.”

Zurich listed the following highlights for the first nine months of 2009:
— Business operating profit (BOP) of $4.1 billion, down 3 percent but an increase of 2 percent as measured in local currencies, with all core operating segments improving on a local currency basis. Annualized BOP ROE after tax of 16.9 percent
— Net income of $2.2 billion, a decrease of 24 percent. Annualized return on equity (ROE) of 11.6 percent
— General Insurance gross written premiums and policy fees of $26.3 billion, down 10 percent or 3 percent in local currencies, and an improved combined ratio of 96.9 percent
— Global Life new business value, after tax, of $520 million, up 2 percent or 11 percent in local currencies. New business margin, after tax (as percent of APE), of 21.8 percent, with APE up 5 percent or 17 percent in local currencies
— Farmers Management Services’ management fees and other related revenues up 8 percent to $2.0 billion, with business operating profit also up 8 percent to $992 million
— Shareholders’ equity of $ 8.5 billion, an increase of 29 percent over year end 2008, boosting the Group’s solvency position to 209 percent.

Zurich’s combined ratio for its general insurance operations during the first nine months of the year decreased to 96.9 percent from 98.7 percent in the first nine months of 2008.

As stated above, the Farmers Exchanges, the third largest personal lines insurer in the U.S., which Zurich manages but does not own, had a profitable nine months.

Zurich said the good results reflected the successful management of the underlying the increased revenue stream, with gross earned premium growth of 7 percent at the Exchanges, “driven by the acquisition of 21st Century in July of this year, the transfer of North America Commercial’s Small Business Solutions book to the Exchanges in June 2008, as well as targeted investments in distribution capabilities and product enhancements.”

Zurich added that the “integration of 21st Century continues to progress in line with Farmers’ previously successful integration track record.”

The complete earnings report, as well as access to a replay of Zurich’s earnings conference call may be obtained on the Group’s web site at: www.zurich.com .

Source: Zurich Financial Services

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