Zurich profits plummet 42% on COVID-19 losses in first half of 2020

Swiss insurer Zurich Insurance Group's half-year 2020 profits declined 42 percent year-on-year due to losses stemming from COVID-19, higher catastrophe claims and civil unrest in the US, despite witnessing strong growth in its commercial business. The CEO, however, is confident that the group is well positioned to benefit from the improved pricing environment going forward.

In the first half of 2020, the insurer's net profit plummeted 42 percent to $1.2 billion, compared to $2 billion in the same period a year ago. Zurich said the decline was largely due to an overall COVID-19 related impact of $686 million and the pandemic’s impact on financial markets leading to less favorable performance of the group’s investments, in particular in hedge funds.

Its property and casualty (P&C) business saw gross written premiums growth of 4 percent ($18.9 billion) in H1 2020, primarily driven by commercial insurance in Europe, Middle East and Africa (EMEA) and North America. However, the P&C combined ratio deteriorated to 99.8 percent, 4.8 percentage points higher from 95.1 percent in H1 2019.

P&C operating profit declined 55 percent year-on-year, driven primarily by $484 million of COVID-19 related impacts, together with $234 million of higher catastrophe claims resulting from European and North American weather events and civil unrest in the US, and by $120 million lower capital gains on hedge funds.

Over the first half of the year, commercial insurance gross written premiums, which make up around 70 percent of the group’s P&C premiums, grew by 8 percent on a like-for-like basis, supported by significant rate increases in North America as well as in Europe.

Mario Greco, group chief executive officer of Zurich, said: “The first half of 2020 has been an unprecedented period with unforeseeable events ranging from a global pandemic and recession, to civil unrest and a higher rate of natural catastrophes."

"Our business developed well in the first six months of the year in spite of the uncertainties," he added. "Our commercial business reported strong growth following improvements to the portfolio mix in recent years, and is positioned to further benefit from the improved pricing environment. We continue to expand our digital offering, whose growth contributed to the resilience of our Retail business. We launched Zurich WellCare to serve demand for health and wellbeing services, and plan further steps this year to accelerate the digital transformation.

“While our operating environment changes, our goals are the same – we remain confident in the strength of our business, our strategy, and our ability to adapt to changing needs.”