Shareholders in Switzerland’s largest insurer face a slight dip in profits in the first half of the year, nevertheless Zurich under Chief Executive Mario Greco has made significant progress.
The turnaround at Zurich in the first six months of the year has exceeded the expectations of most observers. Business operating profit climbed 14 percent on the year to $2.456 billion, excluding its Ogden-Rate discounts in Great Britain, while profit attributable to shareholders rose 7 percent to $1.503 billion, the insurer reported Thursday.
Progress on all Fronts
Zurich said all its operative division made strong progress during the reporting period. The property and casualty combined ratio (excluding the Ogden) gained by 0.3 percentage points on the previous full year to 97.8 percent.
In the life insurance business, operating profit rose 16 percent to $650 million, driven largely by margin expansion and growing bank distribution channels.
Half a Billion Dollars Saved
Against this background the insurer finds itself «well on the way» to reaching its goals for 2017 to 2019. Cost savings of around $550 million have already been achieved. In the medium term Zurich wants to reduce the cost base, when compared to the 2015 level, by $1.5 billion by the end of 2019. Given the first-half results, there is no expectation of further job cuts.
No mention either was made of potential acquisitions, although Zurich is seen as one of those interested in the Australia & New Zealand Banking Group (AZN)’s «Wealth Australia» business, which is up for sale.
There has also been speculation of a merger with Italian insurer Generali, which Chief Executive Mario Greco previously led.
Praise for Employees
Greco’s statement displayed confidence for the future, as the earnings showed «what dedicated employees can achieve in a relatively short period of time», he said Thursday. Zurich also grew when measured in local currencies, improved ist underwriting business, attracted new customers and at the same time lowered its cost base.
