Zurich earns more money and pays a higher dividend
Published: Thursday, Feb 22nd 2024, 14:30
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The Zurich Group continued to grow last year and also earned significantly more money than in the previous year. The insurance group also benefited from further premium increases.
"We are striving for further growth as a company and want to become even bigger in existing markets and win new customers," said Group CEO Mario Greco in an interview with AWP on Thursday. Zurich achieved this in 2023: In the property and casualty business, gross written premiums and policy fees climbed by 7 percent to USD 44.4 billion.
As in previous years, premium increases were a key driver: In the claims business, Zurich raised premium rates by an average of around 6 percent across all regions, with price increases with corporate customers in North America being particularly significant. However, private customers in Europe also paid more, for example for car insurance.
Limiting storm risks
Zurich is trying to cushion the impact of inflation with higher rates. This is because it also makes repairs to cars and houses or replacement purchases of household contents more expensive. The industry is also faced with rising storm costs due to more frequent and stronger thunderstorms, flooding and forest fires.
In recent years, Zurich has gradually reduced the risk exposure to natural catastrophes on its books. Limiting risks has helped to contain earnings volatility, said Chief Financial Officer George Quinn on a conference call. "We will continue to take a cautious approach to underwriting severe weather risks."
Despite severe flooding and hailstorms in Europe, particularly in the third quarter, the Group's combined ratio in 2023 remained unchanged from the previous year at 94.5%. The fact that the US East Coast, for example, was spared a hurricane catastrophe for the entire year also helped here.
Record high operating profit
Strong growth, good investment results in some cases and significantly improved profitability at US partner Farmers and in life insurance boosted Zurich's profits. Operating profit climbed by a good fifth to a record 7.38 billion dollars and net profit increased by 10 percent to 4.35 billion.
The profit growth and the still solid capital position with an SST ratio of 233 percent will allow Zurich to distribute a total of around 5 billion dollars to shareholders. The dividend will be increased by two francs to CHF 26 per share and a share buyback of CHF 1.1 billion will be launched.
Greco was confident with regard to the targets set for 2025. The return on equity climbed by 5.3 points to 23.1% and was above the targeted 20% threshold. The annual earnings per share growth target of 8% was also exceeded. From today's perspective, growth of over 10 percent is even expected.
The positive statements on the business targets and the dividends were well received on the stock market. In the early afternoon of Thursday, Zurich shares rose by around 3 percent in a weaker overall market.
©Keystone/SDA
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