Zurich results steady but anticipates improvements in pricing
Zurich Insurance Group posted a steady set of results for the first nine months of the year but said that it anticipated improvements in pricing now on the back of the recent heavy cat losses in North America.
Its gross written premiums in property & casualty (P&C) business for the first nine months of 2017 rose by 1 percent in local currency and declined 2 percent in US dollar terms. It said this reflected improved levels of retention and new business. Rates overall increased by around 1 percent, mainly driven by Europe, Middle East & Africa (EMEA).
In EMEA, excluding the disposals of South Africa, Morocco and the Middle East, gross written premiums declined by 2 percent, due to reductions in Germany, the UK and Spain. Gross written premiums for North America were flat compared to the prior year period, with growth in higher margin lines offsetting declines in large commercial.
In Asia Pacific, gross written premiums were up 8 percent in local currency, reflecting the incremental premium from underwriting the Cover-More travel business in Australia, while gross written premiums for Latin America increased by 12 percent in local currency, mainly driven by the retail business in Brazil and Mexico.
It had previous said that aggregate claims in the third quarter of 2017 related to hurricanes Harvey, Irma and Maria are estimated to be approximately $700 million net of reinsurance and before tax. These events will result in estimated net-of-tax losses of $620 million with a consequent negative impact on the Group’s effective tax rate for the year.
Life new business APE volumes increased by 1 percent in local currency compared with the prior year after adjusting for acquisitions, and were flat in US dollar terms. This was primarily driven by strong sales in the UK, Ireland and Switzerland.
On a reported basis, volumes in Asia Pacific increased as a result of underlying growth and the inclusion of the acquisitions in Malaysia and Australia. In Latin America, continued growth in Brazil and in individual protection business at Zurich Santander was offset by lower sales of corporate protection in Chile.
New business value increased 17 percent year-on-year in local currency and adjusting for recent acquisitions, with higher values in most regions. This was largely due to strong volume growth of protection products in Brazil, improved business mix in Spain and Italy, favorable assumption updates in Asia Pacific and beneficial yield movements across Europe, Brazil and Japan.
“I am pleased with the development of our businesses in the year to date, particularly against a challenging industry backdrop in the third quarter. We expect the third quarter natural catastrophe events to drive improvements in pricing across our business,” said group chief financial officer George Quinn.
“New business volumes and customer retention in Property & Casualty and Life are both up, while the Farmers Exchanges continue to deliver consistent growth. The group is strongly capitalized and has continued to make progress against its strategic targets.”
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