Target-beating Zurich Insurance lifts operating profit 16%
* No significant impact from coronavirus -CFO
* P&C operating profit up 38%
* Dividend increase below forecast (Adds detail, background, CFO comments)
Rising insurance premiums, strong investment income and cost savings helped Zurich Insurance lift operating profit by 16% last year as Europe’s fifth-largest insurer exceeded its 2017-19 targets.
Insurers have been grappling with weak prices, high natural catastrophe losses and low yields over recent years. But last year brought an improvement in premiums and lower natural catastrophe losses than the previous two years.
Zurich, which counts AXA, Allianz and Generali among its biggest competitors, last year introduced tougher targets for 2020-22.
Chief Executive Mario Greco, who joined from Generali in 2016, said on Thursday that Zurich is “well positioned to meet the ambitious new targets”.
Operating profit was $5.3 billion last year while net profit rose 12% to its highest since 2010.
Group insurance premiums rose 4% on average last year after a 2% increase in 2018, finance chief George Quinn said on a media call.
Zurich’s combined ratio, a key measure of underwriting profitability in which a number below 100% indicates profit, strengthened to 96.4%.
The insurer also said it is unlikely to take a significant hit from the coronavirus outbreak in China, though the epidemic could lead to a drop-off in premium volumes for travel and business interruption insurance, Quinn said.
Life business operating profit rose 2% on a like-for-like basis.
Zurich’s annualised operating profit return on equity was 14.2%, against the existing target of 12%-plus. The target for the next three years is 14%-plus.
The company proposed to raise its dividend to 20 Swiss francs per share, below market expectations of 20.51 francs.
(Reporting by Michael Shields and Carolyn Cohn Editing by David Goodman)
© Thomson Reuters 2020.