Zurich grows 9% in P&C, but rides life segment to record profit
Zurich insurance Group managed 9% like-for-like top line growth in its P&C business in 2023, well above rate growth pegged near 6%, claiming retail and commercial gains across all regions and an extra-dose of rate driven gains in the US.
Zurich now expects P&C to show revenue growth moving forward in the mid-single digits, management said in its presentation for a pending call with equity market analysts.
EMEA growth was said to look strong in the UK, Germany, Switzerland, Italy and Spain while North America “continued to benefit from higher rates,” particularly in property and motor lines.
In Latin America, gross written premiums rose a heady 5% on a like-for-like basis, “with strong commercial growth and increased retail sales across the region.” Asia Pacific took 11% like-for-like top line growth and earned a call-out for recovery in travel insurance and growth in retail motor.
P&C commercial rate gains were pegged at 6%, slightly below annual growth rates from the prior two quarters. Zurich called out an 8% gain in North America, led by 16% rate growth in property and 11% in motor. Zurich put rate gain at 8% in liability, but admitted to having excluded professional lines to whose rate movement the group never confessed.
Retail and SME rate growth accelerated to a high point for the past several years at 5% with the call out going to EMEA motor, led by 9% growth in Germany and 6-7% growth in other key markets.
P&C margins came out flat against the prior year period with a P&C combined ratio matching the prior year reading of 94.5%. Segment operating profit rose 10% in turn. Management bragged that steps taken to manage nat cat exposures had improved the cat loss ratio to within the guided range.
Commercial lines were said to have held “strong returns,” although the accident year combined ratio ex-cat rose 1.2 points to 90.7%. Retail P&C made up that slack with a 0.5 point improvement in the ex-cat combined ratio to a still-high. 97.3%.
For the full-year profit and loss statement, the more powerful boost came from life insurance. Segment operating profits rose 55% year on year on 26% like-for-like growth in new business.
The US Farmers Exchanges likewise made a positive contribution. The unit’s ex-cat combined ratio came down by a much-needed 5.4 points to 91.9% and management praised a “continued strong focus on pricing,” leading to an earned rate impact of 15% for the period.
Towards the bottom line, group operating profit rose 21% to what Zurich called a record level of $7.4 billion while attributable net income rose 10% to $3.3 billion.
Mario Greco, group chief executive office, said: "We delivered record returns in 2023, well ahead of all targets for 2023-2025, with particularly strong growth in P&C and Life and highly effective management actions at the Farmers Exchanges. I expect this positive momentum to continue and to achieve EPS growth above 10% over the cycle.
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