Global insurer Zurich has reported strong growth across all businesses in the first year of its 2023-2025 financial cycle, with the highest-ever Group business operating profit (BOP) up 21% to $7.4 billion, along with reporting its highest-ever return on equity at 23.1%.
The insurer stated that this result was “strongly supported by an excellent performance by the Commercial Insurance business, a record performance in its Life business, and growth at Farmers.”
Zurich says that this 2023 result puts it in an excellent position for further growth and allows the Group to return more than $5 billion to its shareholders.
The insurer reported an earnings per share increase of 12% in USD and 20% on an adjusted basis. Net income attributable to shareholders has risen 10% to $4.4 billion in 2023.
By segment, P&C BOP grew by 7% to $3.9 billion, up 10% on a like-for-like basis with a stable combined ratio of 94.5%. P&C insurance revenue increased 8%, or 9% on a like-for-like basis to $42.3 billion, as P&C gross written premium (GWP) and policy fees increased 7%, or 9% on a like-for-like basis to $44.4 billion.
Zurich reports that the Group achieved price increases of around 6%, supported by a commercial insurance rate change of 7% (9% in North America) and an acceleration of rate increases in the retail business.
In terms of catastrophe losses, Zurich notes that despite severe flooding and hailstorms in Europe in Q3 2023, it’s natural catastrophe losses for the year fell within the guided range, driven by diligent management of its exposure to extreme weather events in order to reduce earnings volatility.
In the firm’s life business, BOP increased 39%, or 55% on a like-for-like basis to $2.1 billion, as the life present value of new business premiums (PVNBP) jumped to $16.4 billion from $13.2 billion in 2022, and the life new business contractual service margin (NBCSM) increased from $987 million to more than $1 billion.
Meanwhile, Farmers BOP grew by 10% to $2.3 billion, with a Farmers Exchanges combined ratio, excluding cat losses, of 91.9%, a 5.4 percentage point improvement. GWP grew 5% year-on-year to $27.4 billion, while gross earned premiums increased 3% to $26.7 billion.
Mario Greco, Group Chief Executive Officer, Zurich, commented, “We delivered record returns in 2023, well ahead of all targets for 2023-2025, with particularly strong growth in P&C and Life and highly effective management actions at the Farmers Exchanges. I expect this positive momentum to continue and to achieve EPS growth above 10% over the cycle.”
Zurich expects compound annual growth in 2023-2025 earnings per share (EPS) to exceed 10%, compared with the target of 8% established at the 2022 Investor Day. This includes mid-single-digit growth in insurance revenue for P&C, with the Life BOP expected to be at least in line with the record high level of 2023.
