Zurich adopts three-year growth plan with discipline the key

Zurich has announced an ambitious new three-year plan for 2023-2025 that will deliver business operating profit post-tax return on equity of more than 20%. The Switzerland-based multiline insurer also plans to deliver compound organic growth in earnings per share of 8% per year and cumulative cash returns to shareholders in excess of $13.5bn during the period. At the same time, the group aims to maintain a Swiss Solvency Test ratio of at least 160% and will offer shareholders an “attractive” dividend policy. Group CEO Mario Greco said this will be achieved through a combination of revenue and margin growth in both its P&C and life operations, and “strong expense discipline”. The group said it intends to build on the success of its previous strategic cycles, “raise the bar” for customer experience, simplify the business and drive innovation. Announcing the new three-year plan, Greco said: “In the last three years, against a backdrop of a global pandemic and its economic fallout, the growing impact of climate change and war in Ukraine, our successful strategy of customer focus, simplification and innovation has consistently delivered for shareholders and customers. “After two successful strategic cycles, we have already achieved much, but our ambition does not end here. Now, we plan to further accelerate our strategy to build a clear leadership position in the insurance industry. “Over the next three years, we intend to further grow our property and casualty margins, and profits in the life business. We expect Farmers to maintain mid-single-digit growth rates in revenues, continuing recent trends. With this business performance and with strong expense discipline, we aim to achieve a business operating profit after tax return on equity in excess of 20% by 2025.” Greco added that, under the new plan, the group will continue to embed sustainability across the business through accountable, transparent and measurable initiatives. “We will track our progress against the new targets announced today and we are confident we will achieve them by 2025,” he said. Zurich proposed that selective top-line growth and continued strong risk selection and expense discipline will allow it to target compound annual organic growth in earnings per share of 8% during the period. This is expected to lead to the business operating profit after tax return on equity target in excess of 20%. The dividend policy targets a payout ratio of about 75% of net income attributable to shareholders, delivering increases based on sustainable earnings growth and a minimum target of the prior-year level. Zurich said in commercial Insurance, the good work of the previous three years will be maintained. Data and analytics will be key, it said. “Zurich has driven a continuous improvement in the combined ratio over the last six years, thanks to disciplined underwriting, improved quality of insights, customer focus and the shift toward a more balanced business,” the group said. “The group’s well-balanced and high-quality portfolio, and relative underexposure to unattractive lines of business, are the source of ongoing margin expansion and stable and increasing returns. A talented workforce and superior insights, based on data and analytics, help Zurich to maintain its focus on better risk selection and position it well to succeed in today’s evolving market conditions. This position of strength will enable further profitable growth, deepen relationships with customers and improve Zurich’s competitive position,” added Zurich. Continued success will be dependent upon maintaining a sharp customer focus, argued the carrier. “The group is fostering a customer-focused culture at every level of the business. At the same time, it has built capabilities to listen, anticipate and respond to the needs of both commercial and retail customers. Zurich intends to maintain momentum by further strengthening this area over the next strategic cycle,” it stated.

Zurich adopts three-year growth plan with discipline the key

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