P&C profit up 35% with Zurich on course to hit targets

Zurich has reported business operating profit up 20% to $4.6bn on the back of big P&C improvements, as the insurer enters the final year of a three-year plan on track to hit key financial targets. Underwriting improvements helped Zurich deliver a 35% rise in P&C business operating profit to $2.1bn last year, and a three-point improvement in the combined ratio to 97.8% from 100.9% in 2017. P&C premiums recorded a 1% rise to $33.5bn last year, after growth in Asia and Latin America was offset by a slight decline in North America. Zurich said its focus remains on profitability in P&C over premium volume, with further shifts away from liability in favour of property and specialty business. The insurer said it pushed through rate increases of 2% last year across most regions, although it added that Q4 showed signs of rates moderating in North America after rises during the previous four quarters. CEO Mario Greco said the pricing dynamic for property looks “better and higher” so far in 2019 than in recent years. Zurich reported cumulative net cost savings of $1.1bn in 2018, putting the company within reach of its $1.5bn target by the end 2019. Business operating profit after tax return on equity stood at 12.1% at year-end, hitting the target of 12% and upward from 9.2% in 2017. “This performance gives us great confidence as we enter the next phase of our development over the year ahead,” Mr Greco said. Mr Greco and Zurich laid out a three-year plan for 2017 through to 2019 after the insurer ran into trouble, with its global corporate unit suffering large losses. The plan included cutting back from badly performing business, focusing on profitable areas and cutting costs. Mr Greco said following last year’s performance he is confident that Zurich will meet all if its targets by the end of 2019. He said this is despite tough market conditions facing insurers in the last couple of years. “We are very pleased with these results. We have a three-year plan covering 2017,2018 and 2019. We have a target for the end of 2019 and this result shows that all the targets are within our reach, and we are already very close to achieving some targets,” he said during a press conference. Mr Greco reiterated Zurich’s stance that it will not chase growth in P&C business, instead choosing to focus on profitability. “You should not expect us to be pursuing growth in property and casualty no matter what. If you do that in property and casualty, you run the risk of losses. So on property and casualty we will always have the same mindset, which is we want to grow profitably,” said the CEO. Mr Greco said Zurich met “challenging goals” in 2018 by strengthening profits and acquiring businesses in Latin America (including QBE’s Latin American operations) and Asia, to continue global growth. Zurich said it expects to complete the acquisition of an 80% stake in Indonesian insurer PT Asuransi Adira Dinamika in the first quarter of 2019, when it will become the country’s leading foreign P&C insurer. Chubb has reported full-year net income of $3.96bn, an increase of almost 3%, despite income falling 77% to $355m in Q4 after it booked $506m of natural catastrophe losses. Full-year nat cat losses totalled $1.35bn, from $2.75bn in 2017. Announcing its results, Chubb said the last quarter saw insurance rates rising. Munich Re recorded €2.28bn profit last year, following 2017’s nat cat-hit €392m. The company’s numbers were boosted by primary business ERGO, which exceeded targets to book €412m of profit; and its reinsurance business, which recorded profit of €1.87bn – up from €120m in 2017.

P&C profit up 35% with Zurich on course to hit targets

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