Zurich profit plummets 12% despite highest BOP in 15 years

Zurich Insurance Group’s profits declined 12% year-on-year due to losses stemming from divestment of businesses, hyperinflation charges and lower level of capital gains, despite witnessing strong double digit top line growth in its property and casualty and life businesses. In light of the developments, the company has proposed a 9% increase in the dividend per share to (Swiss Franc) CHF 24.

The Swiss insurer reported its highest business operating profit (BOP) since 2007 in full year 2022, an increase of 12% to reach $6.5 billion, with improvement across almost all operating segments.

Net profit, however, plummeted to $4.6 billion, down 12% compared with the prior-year period when it generated a net profit of $5.2 billion.

In property and casualty (P&C) insurance, gross written premiums grew 14% on a like-for-like basis, adjusting for currency movements, with growth in both retail and commercial insurance across all regions. P&C combined ratio remained unchanged at 94.3%, driven by continued improvement in commercial margins.

The group attained price increases of about 6% in the year, supported by a commercial insurance rate change of 8%.

In Europe, Middle East and Africa (EMEA), the growth was driven by a combination of rate increases, higher retention and improved new business. Zurich said North America continued to benefit from higher commercial insurance prices, as well as rising agricultural commodity prices driving top-line growth in crop insurance.

Asia Pacific saw a strong recovery in the travel insurance business and overall growth across the region, management claimed. Latin America returned to growth with a strong performance in Brazil supported by a rebound from lower levels in the previous year due to COVID-19.

The company's group chief executive officer Mario Greco said it has exceeded the financial targets for the second consecutive three-year period. “These were tough years with unexpected challenges during which we had to stay very agile and focused on our goals,” he said. “We continued to execute our strategy with strong discipline and successfully drove our results to deliver the targets.”

Greco highlighted that higher risk-adjusted prices in commercial insurance and continued progress towards its strategy to transform Zurich took P&C gross written premiums to a “record” level, with its life business achieving the “highest profits ever, with a very light capital consumption”

The insurer has proposed a 9% increase in the dividend per share to CHF 24.

In November, Zurich raised its financial targets for the next three years. “The combination of continued margin improvement in our commercial business, improving trends in retail and our ability to grow across all our businesses supports the Group's higher financial ambition for the 2023-2025 cycle,” Greco concluded.

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