Greco announces big turnaround at Zurich

Mario Greco appears to have woven his magic at Zurich since rejoining the group in March of last year as it reeled from a series of dramatic losses largely incurred by the group’s global corporate business. Mr Greco was delighted to announce a big turnaround in profits driven by a strong recovery in the group’s general insurance business and global corporate lines in particular.

Zurich today reported a business operating profit (BOP) for the full-year 2016 of $4.5bn, up 55% on 2016. Net income attributable to shareholders (NIAS) was up 74% at $3.2bn. Mr Greco said this was driven by improved profitability in general insurance and continued growth in global life and its US Farmers business.

The general insurance BOP increased by $1.6bn to $2.4bn, or 182% in US dollar terms and 199% on a local currency basis. Zurich said that this reflects a $1.4bn improvement in the net underwriting result across all regions.

Gross written premiums and policy fees (GWP) fell by $900m to $33.1bn, or 3% in US dollar terms and flat in local currency terms.

“The decrease was largely due to the ongoing focus on profitability and measures to ensure the right geographic footprint, including exiting markets in South Africa and Morocco. RCIS, a provider of agricultural insurance in the US acquired during the year, perfomed well while actions to enhance the profitability of the business and a benign claims environment contributed to the strengthening of the combined ratio by 5.1 percentage points to 98.4%,” stated Zurich.

The overall combined ratio fell back below 100% from the 103.6% reported for full year 2015. The global corporate combined ratio fell from a horrible 113.9% in 2015 down to 104.2%. Mr Greco said that the goal is to hit 95-96% by 2019 for the group.

Mr Greco and his new management team have also made progress in their cost cutting action plan. The group made a saving of some $300m in 2016. It aims for a further $400m saving and has allowed for some $500m in restructuring costs.

Mr Greco said: “We are very pleased with our results for 2016. Both Global Life and Farmers continued to grow well while General Insurance benefited from a stronger underlying performance across all regions. We’ve exceeded our target cash remittances and created a more efficient operation delivering savings of $300m as promised. We have a highly cash generative business and our capital position remained strong, with our estimated economic capital model (Z-ECM) ratio of 122% at year end above the target range.”

He described the result as “quite an achievement” that gives his team real confidence that their longer-term goals are “realistic and attainable”.

“General Insurance is developing well and this is expected to continue over the coming years while the Farmers Exchanges delivered further growth driven by rate increases, resulting in higher fee income for Farmers Management Services,” he added.

“We have many strengths and a very solid platform from which to develop. We are well positioned in terms of products, people and geographies and remain focused on delivering sustainable earnings that meet our financial targets and support our dividend policy. We are on track to create a simpler structure, underpinned by smart investment and greater customer focus, that will ensure we are equipped to realise the group’s full potential. These results show what we can accomplish and are an excellent start to achieving our 2019 financial targets,” concluded Mr Greco.