Zurich profit inches up 1% despite ‘best-ever’ P&C combined ratio

Zurich Insurance Group’s property/casualty (P&C) business achieved the lowest-ever combined ratio and robust top-line growth in what it claims to be one of the best first half results in its history. The company plans to launch a 1.9 billion share buyback to offset the expected earnings dilution from the  agreed sale of the Germany life back book.

In the first six months of the year, growth was achieved in all business segments and regions, particularly in retail and commercial insurance. Natural catastrophe and weather claims were slightly above expected levels but turned out significantly lower than in the prior year.

Overall, the net profit attributable to shareholders was $2.2 billion, up 1% over the prior-year period. The 25% improvement in its operating profit, from $2.7 billion in H1 2021 to $3.4 billion this year, was largely offset by negative mark-to-market effects.

Property and casualty (P&C) combined ratio at 91.9% was at the lowest level. Gross written premiums grew by 13% on a like-for-like basis to reach $23.8 billion, supported by significant rate increases in the group’s commercial business across all regions, with these trends expected to continue into 2023.

The group achieved price increases of about 6% in the first half, driven mainly by commercial insurance, remaining at a largely stable level and above claims cost inflation.

The net investment result was down 48% compared with the prior-year period.

Commenting on the results, Zurich group chief executive officer Mario Greco said: “We are on track to beat all our targets for the second successive three-year cycle. This is particularly remarkable because the last three years have brought unprecedented and unexpected challenges. These results show our agility and our commitment to deliver results, no matter what happens in the markets.

“Over the last six years, we have changed our culture and built capabilities to transform Zurich into a leaner and more agile business. This has steered us through the difficult conditions of the past three years. Since 2016, we have set about changing the structure of our organization. We have refocused our commercial business and strengthened technical expertise. We have changed the portfolios to reduce their volatility and we consolidated major market positions. We have raised customer and employee satisfaction by using data to make better decisions and provide better experiences. We have created a diverse and highly qualified leadership team and we have become one of the most sustainable insurers.

“Our first-half 2022 results show the solidity of our business and the value of our mid-term transformation. The P&C business reported today its best ever combined ratio, with continued robust top-line growth. Our Life business also continued to produce excellent results with one of the strongest ever performances for operating profit despite the adverse impact of capital markets and headwinds from currency movements. The planned sale of life and pension back books in Italy and Germany4 will further reduce the capital intensity of our business and will increase our flexibility.”