12 February 2015 Insurance

Zurich not satisfied with earnings

The chief executive officer (CEO) of Zurich has said he is not “satisfied” with the insurer’s earnings, as profits and gross written premiums fell.

Profits at the insurer fell 3 percent to $3.9 billion for the year ended December 31, 2014, compared with $4 billion in 2013. Zurich’s fourth quarter profits fell 20 percent to $812 million, compared with $1.1 billion in the fourth quarter of 2013.

Zurich’s business operating profits also fell, down 1 percent to $4.6 billion in 2014, compared with $4.7 billion in 2013. This was partly driven by a fall of 27 percent in business operating profits in the fourth quarter to $812 million, compared with $1.1 billion in the fourth quarter of 2013.

Its combined ratio improved minimally to 97.3 percent, an improvement of 0.7 percentage points compared with prior year.

In Zurich’s general insurance segment, gross written premiums and policy fees decreased by $106 million to $36.3 billion but increased by 2 percent on a local currency basis, as growth in the group’s priority markets was partly offset by a decrease in North America.

Zurich’s global life segment posted growth in gross written premiums, policy fees and insurance deposits of 18 percent to $31.9 billion in 2014, compared with $27.1 billion in 2013. Farmers Re gross written premiums and policy fees decreased by $617 million to $3.4 billion, or by 15 percent, due to the reductions in reinsurance assumed from the Farmers Exchanges.

In addition, Cecilia Reyes, chief investment officer at Zurich, will take on the additional responsibility of regional chairman of Asia Pacific, succeeding Geoff Riddell, who will be retiring.

Martin Senn, chief executive officer, said: "While we made good progress last year in executing the strategy we set out in December 2013, we cannot be satisfied with our 2014 earnings. In general insurance, we continue to make good progress in improving our accident year combined ratio, although the results show that we have still much to do in our turnaround businesses, and in driving further improvement across the book.

“In global life, we see good momentum in our priority life markets, and expect to start seeing the benefits of in-force management initiatives coming through in our earnings over the next two years. At Farmers, the positive story continues, with two consecutive quarters of growth and a continuation of positive trends in all key metrics.

"Our solvency capital continues to be very strong and we are well on track to deliver more than $9 billion of cash remittances by 2016, even with the impact from currency headwinds. Reflecting the stability of our business and our strong capital position, the board will propose a dividend of CHF17 per share.

“In 2015, we continue to execute on our three strategic cornerstones – prioritising investment in distinctive positions, managing other businesses for value and growing our operating earnings. This approach is designed to improve our profitability and address the challenges of a prolonged low yield and low growth environment.”

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