Posted on 05 Aug 2010
Zurich Financial Services Group (Zurich) today reported a robust operating performance from its core businesses for the six months ended June 30, 2010, with continued strong growth at Global Life and Farmers supporting the Group's profitability.
In General Insurance, the solid performance was impacted by a high occurrence of catastrophe- and weather-driven events during the first half of the year. Zurich’s total financial results take into account the impact of the previously reported charge from increased banking loan loss provisions of USD 330 million, before tax. The Group’s capital and solvency positions remain very strong, underpinning a well-diversified portfolio of businesses and its continued focus on sustained profitability, operating efficiency and effective risk management.
Half-year performance highlights1 include:
*Business operating profit (BOP) of USD 2.3 billion, a decrease of 10%. Annualized BOP ROE2 after tax of 12.4%
*Net income3 of USD 1.6 billion, a decrease of 16%. Annualized return on equity (ROE) of 11.5%
*Total Group business volumes, comprising gross written premiums, policy fees, insurance deposits and management fees, of USD 34.9 billion, an increase of 3% or 1% on a local currency basis
*Total return on Group investments, measured as percentage of average invested assets, of non-annualized 3.6%, up 200 basis points
*Shareholders’ equity of USD 28.5 billion, a 3% decrease over year end after deduction of the USD 2.2 billion dividend. Solvency I ratio up 37 percentage points over year end to 232%
Commenting on the performance within the Group’s three core business segments, Zurich’s Chief Executive Officer Martin Senn said: “We continued to achieve significant top- and bottom-line growth at Global Life, which underscores the successful execution of our strategy and our increasing focus on the growing protection needs of customers.”
“At Farmers, our efforts on cost discipline continued to generate strong operating margins, while 21st Century, which was acquired last year, strongly contributed to fee income.”
“Our General Insurance business delivered a solid operating performance in a challenging economic and market environment. The business maintained its focus on protecting profit margins and absorbed the significant impact from an unusually large number of weather- and catastrophe-driven events.”
Dieter Wemmer, Chief Financial Officer, added: “Our strong equity position is underscored by a further increase in our book value per share to almost CHF 208, even after accounting for the gross dividend of CHF 16 and foreign exchange movements, which reduced the book value per share by CHF 8.”
“The reduction in net income year-on-year also reflects the restatement that we had previously announced in connection with the implementation of a dynamic hedge in the first quarter on a closed U.S. life portfolio. Without the restatement, we would have shown an increase against the USD 1.3 billion of net income as published last year.”