Global insurer Zurich Insurance Group has reported that its net income increased by 36% to $5.2 billion in 2021, supported by a huge 50% jump in the business operating profit of its property and casualty (P&C) segment.
Notably, this is the highest level of operating profit and net income recorded by Zurich since the 2007 financial crisis, with growth achieved across all segments.
In addition to underlying improvement across the board, Zurich also reported reduced claims from COVID-19, which more than offset higher levels of natural catastrophe and weather-related claims.
Looking at the P&C result specifically, business operating profit from $2.08 billion in 2020 to $3.12 billion in 2021, with the result benefitting from a combined ratio of 94.3%, which was 4.1 percentage points below the previous-year period.
The reduction was driven by an underlying increase in underwriting profitability as higher prices fed into the results, increased reserve releases, as well as an improved net impact from COVID-19, which together offset the impact of higher catastrophe and weather claims.
The improvement was mainly driven by commercial insurance, while the retail and SME combined ratio was affected by higher natural catastrophe losses and claims frequency gradually returning to more normal levels after a benign experience in 2020 associated with COVID-19 restrictions.
Zurich also reported that its P&C gross written premiums grew 11%, consisting of 12% growth in commercial insurance and 8% in retail and SME.
In EMEA, growth was driven by higher retention and new business in retail, and price increases in commercial lines, while North America continued to benefit from higher commercial insurance prices, as well as rising agricultural commodity prices driving top-line growth in crop insurance.
Asia Pacific and Latin America returned to growth, rebounding from the previous year which reflected a higher impact of COVID-19-related restrictions, and benefiting from rate increases in commercial insurance.
Additionally, Zurich achieved price increases of 7% in its P&C segment last year, driven by commercial insurance across all regions, with the level of price increases well above claims cost inflation.
Overall net income for the year increased by 36% to $5.2 billion, reflecting the improvement in business operating profit, supported by higher levels of realized capital gains.
“Zurich has delivered the strongest performance in a long time, demonstrating the strength of our franchise, the quality and commitment of our people, and the benefits of repositioning the business in recent years,” said Group Chief Executive Officer Mario Greco.
“The extreme weather events of 2021 again highlight the pressing need to take collective action to address climate change. The insurance industry has a natural alignment with the sustainability agenda, and I am particularly proud of our work in this area throughout the past year as we continue to reinforce Zurich’s leadership position,” Greco continued.
“I am optimistic about Zurich’s momentum, the skills and enthusiasm of our people and the opportunities that lie ahead of us. I have every confidence we will meet or exceed our 2022 targets.”
