Zurich chief defiant as profits hit by floods

Zurich chief executive Guy Munnoch has defended the insurer’s 2007 results, released this week, which showed a plunge in operating profits of almost three quarters.

The insurer posted operating profits of £91m, down from £323m the previous year following a £325m hit from last summer’s floods.

The company’s combined rating ratio (COR) deteriorated by over 12 points to 104.8%. Zurich also saw its GWP decline a fraction to £2.06bn. It wrote £2.065bn of premium in 2006, and £2.18bn in 2005.

Munnoch said the company had seen relative growth in a shrinking market: “But for the change in your pocket, this is a level movement. In a market that has declined by 4%, it is actually relative growth.”

He added that the insurer had delivered strong growth in its personal lines business over the second half of last year, and double digit growth across its segmented lines, including itsproperty investors and construction businesses.

Munnoch said that the creation of a single sales force as well as moving products to full-cycle EDI had helped deliver growth – particularly in the company’s private motor business, which had grown to £500m GWP.

He said the company would continue to pursue its multi-distribution, multi-segment strategy, including expanding its direct business via online facility, Connect, and offering an enhanced service to its top tier of brokers, at present numbering 600.

The insurer rolled out its Broker Alliance Programme at the beginning of last year which, Munnoch said, had proved a tremendous success.

He added that profitable growth was his priority, and that he would be “absolutely” prepared to sacrifice non-profitable volume business.

He also claimed that without the summer flooding, the company would have posted a COR around the 90% mark, and seen its operating margin improve on the previous year..