Zurich 2018 P&C profit rises 35% on lower cat losses

Zurich Insurance Group reported a 35 percent improvement in full-year P&C business operating profit year on year, at $2.09bn, following a better underwriting performance. 

The P&C combined ratio improved by 3.1 points in 2018 to 97.8 percent, after it absorbed fewer cat losses year on year and the carrier’s underlying underwriting performance also improved. 

The 2018 accident year ex-cat ratio improved by 1.1 points on 2017, while the corresponding loss ratio declined by 1.8 points. In 2017, Zurich had booked $700mn of losses from hurricanes Harvey, Irma and Maria.  

It pegged 2018 catastrophe losses "in excess of normal loads" at $264mn.

The combined ratio for 2018 also benefitted from 2.3 points of reserve releases, reflecting positive reserve development for the HIM hurricanes.  

These positive combined ratio factors were partially offset by a 1.0 point increase in the commission ratio.

Full-year P&C gross written premiums (GWP) grew 1 percent year on year at $33.5bn.  

Zurich achieved rate increases of around 2 percent, with improvements across most regions. The firm said after four consecutive quarters of accelerating rate increases in North America, the fourth quarter showed signs of moderation “in line with industry surveys”. 

The carrier said growth in Asia and Latin America had been offset slightly by a decline in North America, where it shifted its portfolio away from liability lines and towards short-tail property and specialty business. 

At a group level, which includes the life business and results from Farmers, business operating profit grew by 20 percent year on year to $4.57bn. 

The business operating profit after tax return on equity increased by 2.8 points, to 12.1 percent for 2018.  

Net income attributable to shareholders grew 24 percent to $3.72bn.  

Zurich said it was fully on track to achieve its 2017-2019 targets.  

As of 31 December,  it had achieved cumulative net cost savings of $1.1bn towards its target of $1.5bn.  

CEO Mario Greco commented: “We set challenging goals and are delivering against them. We have continued to strengthen our profitability and lower costs while growing our business, expanding our global footprint and broadening our range of innovative solutions to meet the changing needs of customers. 

“This performance gives us great confidence as we enter the next phase of our development over the year ahead.” 

Zurich no longer provides a Q4 breakdown of its results.

The company's shares were little changed - up CHF1.50 at CHF316.40 - as of 09:49 in Zurich.