Zurich posts higher profits and focuses on opportunities in Global Corporate

Group Chief Executive Officer Martin Senn described the results as 'solid' with higher non-life premiums and improved profitability partially offset by increased large claims and lower investment income. Mr Senn also noted that rate increases and lower claims inflation were behind the improved result. "We are continuing to see the benefit of rate increases ahead of loss cost inflation, as well as ongoing expense discipline, and we view most of the portfolio as being in very good shape," Mr Senn told analysts. Zurich recently embarked on a strategic review that will see the company refocus and invest in core areas, such as corporate insurance, and dispose of non-performing units. "There are areas that are clearly not meeting our expectations and where we will take remedial action," said Mr Senn.hideFor example, Zurich's fourth quarter 2013 results include $300m dollars in restructuring costs, some $200m of which were related to a write down of goodwill in Russia, where the group is now 'exploring options'. "This decision is an example of the increased scrutiny on underperforming businesses," explained Vibhu Sharma, interim Chief Financial Officer at Zurich. Growing its Global Corporate business is one of the insurer's three strategic 'cornerstones' prioritised for investment in 2014. "In the corporate space we aim to strengthen our combined Global Corporate and Corporate Life & Pensions 'go-to-market' approach," said Mr Senn. Zurich is also looking to boost earnings by reducing complexity and costs, while also addressing certain underperforming general insurance business. Like other insurers' reported 2013 results, Zurich was aided by a relatively low catastrophe year. As a result, much improved underwriting offset a lower return on investments. Low bond yields meant that investment income was $300m lower than in 2012, while total return on group investment was 1.3% in 2013 compared with 7% in 2012. Group profits were boosted by an overall 35% rise in general insurance operating profit to $2.9bn for 2013. Global Corporate was one of Zurich's star performers-reporting a 77% rise in operating profit to $879m, while North American Commercial income increased 39% to $972m and European non-life profits were 44% higher in 2013 at $1bn. Zurich's group wide non-life insurance combined ratio improved 2.9% to 95.5%, reflecting fewer catastrophe losses compared with 2012 and positive underlying loss and expense trends, the insurer said. While there were fewer catastrophes in 2013, Zurich did suffer an increase in both large and weather-related losses, partly offsetting the reduction in catastrophe losses. The Global Corporate combined ratio improved to 92.3% in 2013 from 99.1% in 2012. Similar improvements were recorded for European and North America Commercial where combined ratios ended the year at 94.5% and 95% respectively. Non-life results also benefited from rate increases in 2013, including in Germany, the UK and Spain. "We continue to see good rate increases across the book, 3.7% for the full year and 4.2% for the fourth quarter. This is particularly the case in our Global Corporate and North America Commercial business where we achieved rate increases of 5% and 4%, respectively, in the fourth quarter," said Mr Sharma. Total premiums for Global Corporate increased 8% to $9.3bn and just 2% for North America Commercial to $10.2bn. Overall, non-life insurance premiums increased by a more modest 3% in 2013, reflecting a 2% decline in Europe. "In Global Corporate we were able to grow our business and we delivered good results despite an increase in weather-related and individual large losses, especially in Europe. The growth was achieved through solid rate increases but also through some exposure growth in all our markets," Mr Sharma told analysts.

Zurich posts higher profits and focuses on opportunities in Global Corporate

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