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Zurich's First-Half Profit Falls 17% on Catastrophe Losses

Source: BestWire

Posted on 16 Aug 2013 by Neilson

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ZurichLower property/casualty and investment income outpaced greater life insurance income as Zurich Insurance Group Ltd. posted a 17% fall in first-half net income, to US$1.85 billion.

Zurich said second-quarter net income fell 27% to $789 million.

"We delivered these results in a period characterized by natural catastrophes and large weather-related events, including severe flooding in Eastern and Central Europe, tornadoes in Oklahoma, as well an unusual number of midsize, weather-related events in the U.S., Canada and Europe," said Chief Executive Officer Martin Senn in a statement. "The economic environment remains challenging with continued low interest rates exerting pressure on our investment income."

Senn added "diversification into higher growth markets is delivering earnings, while our sustained focus on pricing and portfolio discipline is generating benefits in mature markets. Global life and general insurance continued to progress in target markets, while Farmers Re showed an improved underwriting performance, and our capital and solvency remain excellent."

He added Zurich "is on track to achieve some of its three-year targets set in 2010, such as those set for global life and expense savings, while others, such as in general insurance and in Farmers, remain more challenging."

According to Zurich, the combined ratio for general insurance deteriorated to 95.6 from 94.8 in the first six months of 2013, while the underlying loss ratio, which excludes major catastrophes, large losses and prior-year development, further improved.

"The business segment achieved growth in all markets except in Europe where economic conditions remain subdued," said Zurich. The result was "adversely affected" by the relatively high level of catastrophe and other severe weather-related events compared with the same period of 2012.

According to Zurich, global life "maintained its profitability and continued to show strong growth in target markets in Latin America, Asia-Pacific and the Middle East, offset by reductions in North America and Europe."

Farmers showed an increase in business operating profit, "due to an improved underwriting result of Farmers Re, while Farmers Management Services revenues slightly declined," said Zurich.

Non-core businesses recorded a decline in profit mainly attributable to a one-off gain in 2012.

General insurance gross premiums rose slightly to $19.8 billion in the first half, while operating profit fell 16% to $1.37 billion. Global life operating profit was flat at $659 million, while life new business rose 16% to $2.08 billion.