Zurich's first-half results show it was able to carry the momentum from the post-Corona recovery into this year. As a result, CEO Mario Greco should be in a celebratory mood for the 150th anniversary of Switzerland's largest insurer.
Zurich Insurance sees itself on track to meet or even exceed all of the targets it set for itself, as announced Thursday with the company's half-year results. CEO Mario Greco pointed in particular to operational improvements and the highest operating profit since 2008.
He said the good result was all the more remarkable given the difficult environment. «We are on track to beat all our targets for the second successive three-year cycle. This is particularly remarkable because the last three years have brought unprecedented and unexpected challenges,» and the company is moving in the right direction.
«Three years ago, we were completely unprepared for a pandemic,» Greco continued. «Since then, we have proven that we can learn and adapt quickly. That ability makes me optimistic about the current situation as well.»
In a Strong Position
The CEO said that while investment results were negative, the company still outperformed the market and had a decent result. He noted that Zurich started hedging at the beginning of the year and continues to act with a great deal of caution.
«We continue to grow, are profitable, and have gained new customers,» he said. Moreover, «our capital position is extremely strong despite the market turmoil in the first six months.»
Avoiding Profit Dilution
The insurer also announced a 1.8 billion Swiss franc share buyback as a strategic move to offset the dilutive effects caused by the sale of its German and Italian back book business. The move stabilizes the capital position and reduces the interest rate exposure. Still, as a result of the sale, «we also lose a profit contribution of $200 million per year.» The share buyback is expected to keep earnings density per share stable.
Offsetting Interest Rate Effects
According to Chief Financial Officer George Quinn, rising interest rates have different effects on the asset and liability side, but partially cancel each other out. The fact that Zurich reports in dollars also has a major impact.
Farmers in the US have performed well, he said. «We are number three in agricultural insurance in the US», and the Metlife acquisition in the US has been very successful, he said. Overall, the company is in the top ten in every single U.S. state, he said.
No Significant Loss Ratio Deterioration
Quinn does not expect a significant deterioration in the loss ratio in the second half of the year, and more precise information will be available towards the end of the year. Although there are heat waves in Europe and the US, extreme events such as hail or flooding are limited compared to the previous year, while forest fires in southern Europe are generally not insured events, he said.
«We are looking closely at how many natural risks we have on the books,» Greco said. «Natural catastrophes are going to increase.»
The travel insurance market continues to grow significantly in the current recovery following the pandemic. «That has made everyone realize that you have to protect your bookings,» Greco said.
Anniversary Celebration
The positive half-year figures provide the backdrop for the 150th anniversary that the insurance group plans to celebrate in the fall. On November 16, one week after the third quarter figures are announced, the management team will then inform investors about new goals, plans, and ambitions on an investor day.
