Zurich continues to grow and wants to repatriate capital
Published: Thursday, Nov 9th 2023, 13:32
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The Zurich Insurance Group maintained its growth in the third quarter of the year. The financial group also remains strongly capitalized and has announced a further company takeover. Shareholders are to benefit from share buybacks in addition to the ordinary dividend payment.
In the period from January to September 2023, gross premiums in property and casualty insurance rose by 8 percent to 34.59 billion dollars, as Zurich announced on Thursday. The insurer benefited from significant increases in premium rates, particularly in business with corporate customers, but also from price adjustments for private customers.
Meanwhile, losses from natural disasters remained in line with expectations, as CFO George Quinn told the media on Thursday. This was despite the fact that the insurer recorded further hailstorms and severe flooding in the third quarter, including in southern Switzerland and Italy.
Good growth in life insurance
Zurich recorded strong growth in the life insurance segment. New business premiums amounted to 12.17 billion dollars, an increase of 21 percent. This development was driven by strong growth in Asia-Pacific and Latin America. In Europe, Zurich benefited from high sales in Spain due to a joint venture with Banco Sabadell, while the Swiss business declined.
By contrast, the US partner Farmers Exchange, for which Zurich provides services, grew more modestly (gross premiums +2% to USD 20.6 billion). A decline in sales of insurance for commercial ride-sharing services in the first quarter reduced the positive impact of premium increases, it was reported.
Acquisitions in the USA and India
Further acquisitions should also ensure future growth: at the same time as the figures were presented, Zurich announced that it would buy three brokerage firms and a service business in the area of the state flood insurance program from the Farmers Exchanges for 760 million dollars. The CFO justified the price with good growth prospects for the business.
Zurich hopes to enter a growth market with the takeover in India announced at the beginning of November. As announced at the time, the Swiss group is paying 488 million dollars for a 51 percent stake in Kotak Mahindra General Insurance. However, Quinn admitted that the joint venture would probably not make a "significant contribution to operating profit" in the coming years.
Additional share buybacks
Capitalization remains very strong: the SST ratio rose slightly to 266% in the third quarter and thus remains well above the target of over 160%. Shareholders are now to benefit from an additional distribution. In addition to the dividend payout of 75 percent of the underlying net profit provided for in Zurich's strategy, Zurich will use up to 25 percent for share buybacks.
The insurance group's announcements were received cautiously on the stock market on Thursday. Due to the changeover to the IFRS 17 accounting standard, the estimates in advance were also subject to a high degree of uncertainty. While analysts said that various factors had played a role in the results, the prospect of further share buybacks was unanimously welcomed. At midday, Zurich shares were trading 0.3 percent higher.
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