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Zurich Reports Strong Operating Performance, Proposes Significantly Increased Dividend

Source: Zurich

Posted on 04 Feb 2010

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Zurich Financial Services Group (Zurich) reported today continued strong operating performance, sustained profitability in all its core business segments and targeted growth in profitable market segments, particularly in Global Life and Farmers.

For the year 2009, the Group generated an increased business operating profit and net income after tax of USD 5.6 billion and USD 3.2 billion, respectively. Reflecting its confidence in the sustainability of these results, the Zurich Board of Directors will propose to the shareholders a gross dividend of CHF 16.00.

“2009 was an excellent year for Zurich. We generated a strong operating performance across all our core businesses and emerged from a challenging year with one of our strongest balance sheets ever,” remarked Zurich’s Chief Executive Officer Martin Senn. “It is that proven ability to generate consistent earnings and achieve growth in targeted market segments that underpins my confidence looking forward, as it enables Zurich to face both challenges and opportunities from a position of strength.”

Performance highlights include:

• Business operating profit (BOP) of USD 5.6 billion, an increase of 8%. BOP return on equity after tax of 17.2%

• Net income of USD 3.2 billion, an increase of 6%. Return on equity of 12.6%

• General Insurance gross written premiums and policy fees of USD 34.2 billion, down 8% or 4% in local currencies, and a combined ratio of 96.8%, an improvement of 1.3 percentage points

• Global Life new business value after tax, up 4% to USD 782 million, with new business margin, after tax (as % of APE), of 21.3% and new premiums (APE) up 12% or 19% in local currencies

•Farmers Management Services’ management fees and other related revenues up 9% to USD 2.7 billion

• Shareholders’ equity of USD 29.7 billion, an increase of 34%

• Diluted earnings per share of CHF 24.21, up 4%

During the course of 2009, Zurich generated operating profits as well as a continuously improved net income in each discrete quarter, compensating successfully for the lower yield environment. This includes a business operating profit of USD 1.5 billion and net income after tax attributable to shareholders of USD 1.1 billion in the fourth quarter stand-alone. Demonstrating its continued commitment to operational and financial discipline, the Group met its expense saving target for 2009 of USD 400 million and achieved in its General Insurance segment average rate increases of 3 percentage points during 2009.

The Zurich Board of Directors will propose to the Annual General Meeting on March 30, 2010 a gross dividend of CHF 16.00 per share, representing a 66% payout of earnings to shareholders and a 45% increase over last year’s CHF 11.00 gross dividend. Furthermore, the Board will propose the destruction of the remaining 1.8 million shares from the share buyback program 2008.

“The dividend proposal reflects the Board’s confidence in Zurich’s business strategy and the sustainability of its results,” remarked Senn. “Furthermore, I am particularly proud of our ability to continue generating such long-term shareholder value, while balancing the need to retain the strong and prudent solvency position our customers expect.”