Zurich’s GI profits down 30%

Zurich Financial Services announce Q1 operating profit up 19% to $1.3bn, net income up 76% to $935m, with total group business volumes up 11% to $19.0bn. General insurance saw profits fall 30%.

Financial highlights $m (2009 in brackets)

• GI GWP and policy fees 10,010 (9,814)
• GI business operating profit 621 (889)
• GI combined ratio 99.0% (95.8%)
• Life GWP, policy fees and insurance deposits 6,774 (5,529)
• Life business operating profit 351 (222)
• Life gross new business annual premium equivalent (APE) 833 (721)
• Life new business margin, after tax (as % of APE) 21.9% (20.6%)
• Life new business value, after tax 183 (149)
• Farmers Management Services (FMS) fees and revenues 703 (623)
• Farmers Re GWP and policy fees 1,495 (1,056)
• Farmers business operating profit 462 (324)
• FMS gross management result 343 (311)
• FMS managed gross earned premium margin 7.4% (7.5%)

Zurich's chief executive officer Martin Senn said: "Our General Insurance business successfully maintained its focus on protecting profit margins, managing to absorb both the significant impact from the Chilean earthquake as well as the top-line pressures driven by reduced economic activity among our customers."

"Our Global Life business continued to show growth in all its key indicators for top and bottom line performance. This reflects the successful execution of our distribution and proposition-oriented strategy, coupled with a strong focus on expense management and risk margins."

"At Farmers, we continued to achieve strong operating margins, while increasing the surplus position of the Exchanges, which we manage but do not own, as a result of continued cost discipline and a strong contribution from the acquired 21st Century business."

General Insurance

Zurich said: “Business operating profit decreased to $621m, mainly as a result of the earthquake in Chile, higher weather-related losses and reduced investment income driven by lower yields for reinvested premiums.

“Rate changes continued to be positive and applied by the business in a targeted way to maintain margins, with all major geographies contributing to these rate increases. Past rate increases feeding through earned premium compensated for the lower investment income.

“However, the result was impacted by the worst winter weather in many years in Europe and parts of the US as well as a high incidence of hail and storm damage in Australia, all of which contributed to a deterioration in the combined ratio.

GWP down

“Gross written premiums and policy fees overall decreased by 4% in local currency as selective growth in some European corporate lines, in Asia and in Latin America was offset by lower volumes elsewhere.

“The lower volumes were driven by both a continued decline in insured customer exposure and a competitive market environment.

“The Group's continued disciplined approach to rates necessarily constrains growth in the current competitive market environment.