Zurich posts solid results but warns on challenges in P/C business

Zurich Insurance Group posted a stable set of results for the first nine months of the year with its life business and Farmers Exchanges performing well though its CFO warned on the challenging environment it is seeing on the property/casualty side of things.

It also noted that weather and natural catastrophe losses over the first nine months were slightly above expected levels. In the fourth quarter, losses related to Hurricane Michael are estimated to be approximately $175 million.

Gross written premiums in Property & Casualty for the first nine months of 2018 grew by 2 percent in US dollar terms and were stable on a like-for-like basis. Growth in Asia Pacific and Latin America was partially offset by planned actions focused on profitability in North America. Overall the Group saw rate increases of around 3 percent over the period.

In EMEA, gross written premiums increased 5 percent in US dollar terms and remained flat on a like-for-like basis, with growth in commercial business in Switzerland, and in Portugal, offset by reductions in Germany and the UK.

Gross written premiums for North America were down 1 percent compared to the prior year period. In line with the Group’s strategy, this was mainly driven by planned reductions in less profitable lines of business.

In Asia Pacific, premiums were up 15 percent on a like-for-like basis with around two thirds of the increase resulting from growth in the Australian travel business, with the balance largely resulting from growth in Japan and Malaysia.

In Latin America, gross written premiums increased by 7 percent on a like-for-like basis driven by the retail business in Brazil and Argentina.

Life new business annual premium equivalent (APE) volumes increased by 25 percent on a like-for-like basis in the first nine months after adjusting for currency and the disposal of the UK workplace savings business, with growth of 3 percent as reported.

In EMEA, like-for-like growth of 16 percent was driven by an overall strong performance, in particular by the joint venture with Banco de Sabadell SA in Spain, together with Italy, Switzerland and the UK. North America grew 30 percent as a result of improved volumes of corporate protection business.

In Asia Pacific all countries contributed to growth of 22 percent while Latin America saw growth of 46 percent as a result of winning a tender for a large corporate protection contract in Chile.

The Farmers Exchanges, which are owned by their policyholders, continued to deliver top-line growth in the first nine months of the year with the key customer metrics of Net Promoter Score and retention improving further in the most recent quarter.

In the first nine months, gross written premiums from continuing operations were up 4 percent, with growth across all books of business. The Uber commercial rideshare insurance accounted for approximately one percentage point of the growth. Growth was also supported by the continued delivery of the Farmers Exchanges expansion in the Eastern US, with gross written premiums increasing 16 percent in the expansion states. In July 2018, the Farmers Exchanges opened for business in Florida.

George Quinn, its CFO, said: “We are pleased with the development of our businesses over the first nine months of the year and are on track to achieve our 2017-2019 financial targets.

“Life continues to perform very strongly, while the Farmers Exchanges are seeing good momentum in key customer metrics and underlying profitability. In Property & Casualty we continue to focus on profitability over volumes in what remains a challenging environment. We have also continued to execute on our strategy with the announced acquisition of Adira Insurance in Indonesia and the integration of the acquired QBE businesses in Latin America.”

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