Zurich’s half year results hit by Ogden change, but second quarter sees improvements

Zurich Insurance has reported a small increase in business operating profit for the first six months of 2017 to $2.167bn from $2.163bn for the same period in 2016. The first half result was affected by the change in the UK discount rate (Ogden) for calculating personal injury and accident claims resulting in a $289m impact in the first quarter of 2017. Excluding Ogden, business operating profit for the six months of 2017 rose 14% to $2.46bn.

Zurich reported 7% fall in net income for the first half of 2017 to $1.50bn from $1.6bn for the first half of 2016. However, the first the second quarter of 2017 saw net income increase by 21% to $896m. Zurich said businesses made strong progress, and the group remains on track to achieve its strategic objectives for 2017-2019.

For property & casualty business, gross written premiums and policy fees fell by 3% to $18.0bn (2016: $18.52bn). P&C business operating profit decreased by 15% to $1.02bn (excluding Ogden it rose 2% to $1.23bn). The P&C combined ratio increased from 98.1% to 99.5%.

“I am very pleased to report results that show what dedicated people can accomplish in a relatively short time, as we were able to grow our businesses in local currencies, improve our underwriting and expand our customer reach, all while reducing our cost base,” said group chief executive officer Mario Greco. “Based on that performance, we are confident that we will maintain this positive momentum, which positions us well to improve our shareholders’ returns and drive sustainable dividend growth.”

Zurich said that the stronger underlying performance over the half year reflects rate actions, a declining cost base over the period and an improved underwriting result. It said the accident year loss ratio excluding catastrophes for the period improved by 0.6% points over the full-year 2016 result, driven by the continued underwriting measures taken by the group. It noted that the impact from natural catastrophes was slightly higher than seasonal expectations, while reserves remained strong over the half year. Zurich added that, overall, rates rose by around 1% in the first half year of 2017 despite challenging market conditions.