Zurich UK GI makes £62m loss after floods and large claims

Zurich’s UK general insurance business swung to an operating loss of £62m in 2015 from a profit of £212.9m the previous year.

The combined operating ratio jumped 17.9 percentage points to a loss-making 109.5% (2014: 91.6%).

The losses in the UK came as the group announced a 53% drop in profit and thousands more job cuts

Zurich said the UK losses were almost exclusively caused by the estimated $275m (£189.8m) of claims from the storms and flooding in the UK and Ireland as well as a series of large individual claims, including the fire at stately home Clandon Park.

Gross written premium fell 4.4% to £1.64bn from £1.71bn, which Zurich said reflected the persistently soft market across all business lines and a focus on disciplined underwriting.

The expense ratio was almost flat at 32.6% (2014: 32%).

Despite the losses, Zurich UK general insurance chief executive Vibhu Sharma said the underlying business was strong and that the attritional loss ratio, which measures business-as-usual claims, was “broadly flat”.

Sharma said: “It’s not a surprise to us that the storms at the end of last year have brought a large bill to our door – particularly as we are one of the largest commercial property insurers in the UK.

“And the impact of the storms has been compounded by the high volume of large losses throughout the year, including the fire at Clandon Park in Surrey.

“But that’s what we’re here for – to look after our customers in their time of need and help them get their lives and businesses back to normal as quickly as possible. That we paid out over £2 billion to customers last year in the UK is testament to that.”

Sharma added that the hit to profitability would have no bearing on Zurich’s appetite or commitment across different lines of business.

He also expects soft market conditions to prevail.

He said: “2016 will be a difficult year for insurers, especially if the volatile and unpredictable weather continues.

“But the successful insurers will be the ones who stay the course and focus on what’s important by remaining here help our customers when they need us most. Our business is financially strong, both globally and here in the UK, which gives us the right foundation to weather the market for the long term.”