Zurich’s profits and income fall

Zurich announced half year profits and general insurance premiums fell but claimed it was on track to pull through the economic downturn. Reuters said the profits beat analysts’ expectations.

Half year financial highlights (2008 in brackets)

• Business operating profit $2,552m ($3,549)
• Net income attributable to shareholders $1,254m ($2,681m)
• General Insurance GWP and policy fees $18,247m ($20,593m)
• Global Life GWP, policy fees and insurance deposits $11,569m ($10,397m)
• Farmers Management Services revenues $1,247m ($1,196m)
• General Insurance business operating profit $1,714m ($2,236m)
• Combined ratio 96.2% (96.2%)
• Life business operating profit $641m ($772m)
• Life new business annual premium equivalent (APE) $1,579m ($1,528m)
• Life new business margin, after tax (as % of APE) 21.0% (22.4%)
• Life new business value, after tax $332m $342m
• Farmers business operating profit $724m £672m
• Group investments average invested assets $184,799m ($192,806m)
• Group investments results, net $2,435m ($3,975m)
• Group investments return (as % of average invested assets) 1.3% (2.1%)

Chief executive James Schiro said: “I am proud of how we have proactively managed our way through this global economic downturn, strengthening our financial position while capitalising on opportunities.”

“These results demonstrate our ability to generate consistently strong profitability, and underscore our confidence that we will enter the recovery period from a position of strength.”

Zurich’s chief financial officer Dieter Wemmer said: “We are particularly pleased with our ability to increase shareholders’ equity and strengthen our solvency ratio despite the challenging market conditions.”

General insurance

Zurich claimed an average increase of 3 percentage points in renewal rates, signaling an improved pricing environment in the global General Insurance market over the first six months of 2009.

It blamed the 16% reduction in operating profit when excluding foreign currency effects, on reductions in investment income and the effects of slower economic activity.

Gross written premiums and policy fees decreased 2% in local currencies, reflecting lower volumes in North America.

Europe premiums flat

In Europe general insurance, premium volumes were largely flat in local currencies, driven by difficult economic conditions. Inside Europe, Italy showed a weak result, while Switzerland and Germany continued to deliver good performances.

In North America Commercial, the ability to drive rates and capitalise on growth opportunities in targeted market segments helped to partially mitigate the impact on volume and profitability from ongoing economic pressures.

Global Corporate continued to focus on underwriting and pricing discipline, driving average rate increases of more than 5% on business written during the first six months of 2009.

All regions within the Group’s International Markets showed volume growth on a local currency basis, with the successful integration of last year’s acquisition in Brazil underpinning a 19% increase in Latin America.