Positive rating picture from Zurich as softer phase forecast

Group CFO George Quinn told analysts that pricing in general insurance is likely to become softer over the coming months and that the company would have to work harder to reach its targets. "Overall, this is a solid set of results. We recognise that the environment is getting tougher. The pricing environment in GI [general insurance] may be about to enter a phase of softer pricing and interest rates remain at very low levels. As a result we will have to work even harder to reach our targets," he told analysts. Rate increases on renewal across the group book as a whole were 2% for the third quarter, reported Zurich. Pricing in both its Global Corporate operation and in Europe was up by around 2% said the Switzerland-based group.hide"In terms of top-line development overall, Global Corporate reported a Q3 (third quarter) decline of two per cent compared to the prior year. This includes some seasonality and timing effects and we would see the two per cent growth for the nine months as more indicative of current trends. We have seen higher retention and better new business production in the US, while within Global Corporate in Europe, premiums are slightly down, mainly driven by our underwriting actions," said Mr Quinn. "Standing back from the detail, and consistent with much of what you've heard already, market conditions are not that different to what they were in the second quarter. Pricing is broadly running in line with loss cost trends, and our retentions are very good, although clearly at the margin we do see signs of increased competitive pressures in some areas, and with fairly limited overall exposure growth in most markets," he continued. "We will continue to optimise our portfolio, taking action on underpriced risks and allocating our capital to those areas offering the most attractive returns. We also have the ability to meaningfully improve our efficiency and our high cash remittances and strong capital base afford us significant flexibility when it comes to our previously stated capital management priorities. We are confident in our ability to achieve our financial and strategic goals," he added. Overall Zurich reported a business operating profit (BOP) of $1.2bn in Q3, down 6% compared with the third quarter of last year. The first nine months BOP of $3.8bn was up 7% compared with the prior year. The third quarter 2014 net profit was $928m, down 16% compared with last year. For the nine months the profit was $3bn, up 3%. The combined ratio was 96.6% for the first nine months, an improvement of 1.2 percentage points compared with last year. The group's general insurance portfolio recorded a BOP of $2.4bn, 12% higher than in the prior year period because of an improved underwriting result. The accident year loss ratio improved 1.8 percentage points compared with the prior year. Zurich said this reflects the benefit of improved underlying loss experience across most of its general insurance business as well as reduced levels of catastrophes, weather-related and large industrial losses compared with the same period in 2013. These improvements were partially offset by a lower level of prior year reserve releases. At $28.4bn gross written premiums for the nine months to 30 September were 1% higher than the same period of last year. "General Insurance continues to undertake targeted re-underwriting and rate actions on portfolios where returns are not achieving hurdle rates, while investing in growth where there are better opportunities for profit. For the discrete third quarter, rate increases across the portfolio were 2% with both Global Corporate and Europe up, while North America was flat," stated the group.

Positive rating picture from Zurich as softer phase forecast

Want to read this article?

Read Next

Strebel to replace Gonzalez as head of Swiss Re China

Risk managers want software providers to integrate more AI tools

Court says German government must tighten up climate protection

Premium increases continue to slow down in US commercial P&C market

Berkshire Hathaway discloses minority $6.72bn stake in Chubb

Strebel to replace Gonzalez as head of Swiss Re China

Risk managers want software providers to integrate more AI tools

Court says German government must tighten up climate protection

Premium increases continue to slow down in US commercial P&C market

Berkshire Hathaway discloses minority $6.72bn stake in Chubb

Want to read this article?

Read Next

Strebel to replace Gonzalez as head of Swiss Re China

Risk managers want software providers to integrate more AI tools

Court says German government must tighten up climate protection

Premium increases continue to slow down in US commercial P&C market

Berkshire Hathaway discloses minority $6.72bn stake in Chubb

Related Articles