Zurich Insurance Group exceeded all of the financial targets it set in 2016 to be achieved over the three-year period to 2019
Zurich reported the highest net profit figure in 10 years (Credit: Flikr/rclarkeimages)
Swiss insurance giant Zurich has surpassed all financial goals it set to achieve between 2017 and 2019, as well as increasing its pre-tax operating profit by 16%.
The profit figure of $5.3bn dropped to $4.1bn after tax and dividend expenses, a 12% jump on the $3.7bn figure reported in 2018.
The increase is a reduction on last year’s 24% rise in profit recorded after tax and shareholder payments, but the dollar figure is the highest recorded in a decade.
Zurich Insurance Group CEO Mario Greco said: “Today’s results confirm that we have successfully executed our plans over the last three years.
“It was an amazing journey, during which we significantly strengthened the business, organically and through transactions, reduced profit and loss volatility and improved customer services.”
Due to its strong performance, the Swiss giant chose to increase its dividend payment to shareholders to 20 Swiss Francs (CHF) from the previous year’s 19 CHF.
Zurich financial boost driven by property and casualty growth
Operating profit for Zurich’s property and casual business rose by 38%, from $2.1bn in 2018 to $2.9bn, with growth recorded across all regions.
The combined ratio for 2019 of 96.4% improved by 1.4% from 2018, despite a 2% drop in gross written premium.
Zurich attributed this to a reduction in accident losses, excluding natural catastrophes, of 0.6%, as well as a lower level of natural catastrophe losses.
The group’s life insurance business reported a 4% drop on 2018, with an operating profit of $1.48bn in 2019 compared to $1.55bn last year.
Zurich Farmers Insurance Group, a subsidiary created after an acquisition of US firm Farmers Insurance in 1998, reported a 4% rise on last year’s operating profit, jumping from $1.64bn to $1.7bn.
Zurich hit all financial targets set in 2016
In 2016, Zurich set a group of targets to reach at the end of the three-year period between 2017 and 2019.
The target for the firm’s return on equity — calculated by dividing net income by shareholders’ equity — was set at 12% and hit 14.2%.
Desired net cost savings over the three years were set at $1.5m, a figure the Swiss giant surpassed by $6m.
Zurich set a target for net remittances — the amount paid to satisfy financial obligations or pumped back into the core business — of $9.5bn, but it surpassed the goal and hit $10.9bn.
The insurer uses an internal model to measure the extent to which its risk profile is in line with its risk tolerance level, with results expressed as a percentage ratio — 100% means it’s able to cover all liabilities.
The 2016 target for the Zurich Economic Capital Model (Z-ECM) was set at between 100% and 120%, and the reported figure for 2019 was 129%.