Zurich Insurance Group has reported its results for the financial year ending December 31, 2023, with a business operating profit (BOP) reaching an all-time high of US$7.4 billion, marking a 21% increase from the previous year.
This achievement has led to the highest ever return on equity (BOPAT ROE) for the company, standing at 23.1%. Further elevating its financial standing, Zurich has also announced a 12% rise in earnings per share (EPS) in US$ terms, with a 20% increase on an adjusted basis, and a 10% increase in net income attributable to shareholders, amounting to US$4.4 billion.
The insurer attributes this record-breaking performance to significant contributions from all its business sectors, notably a 7% increase in P&C BOP to US$3.9 billion, a record-high Life BOP of US$2.1 billion, and a 10% growth in Farmers BOP to US$2.3 billion. These results are on the back of robust growth across all business lines, underpinned by a strong capital position evidenced by a Swiss Solvency Test (SST) ratio of 233%.
In line with these results, Zurich has proposed an 8% dividend increase to CHF 26 per share and announced a share buyback program of up to CHF1.1 billion.
Additionally, John Rafter is poised for election to the company's board of directors, signalling a strategic move to bolster governance. A few months ago, Zurich appointed Claudia Cordioli as its new group chief financial officer, replacing George Quinn beginning March 2024.
The insurer's P&C segment reported a 7% increase in BOP to US$3.9 billion on a reported basis and a 10% rise on a like-for-like basis, with a stable combined ratio of 94.5%. This performance was driven by enhanced insurance revenue and improved investment results, along with effective management of exposure to natural catastrophes, resulting in a catastrophe loss ratio within the guided range for 2023.
Zurich's life business segment also saw strong performance, with a BOP reaching US$2.1 billion, fuelled by strong growth across all parts of the business. Its Farmers unit witnessed a 10% increase in BOP to US$2.3 billion, with Farmers Management Services margin reaching 7.0%. The gross written premiums for the Farmers Exchanges grew by 5% on an underlying basis, contributing positively to the group's overall performance.
Investments in technology and digitalisation, amounting to US$1.8 billion over the last three years, have significantly enhanced Zurich's operational efficiency and customer experience. The company now boasts that 89% of its retail quotes are digitalised, leveraging artificial intelligence in over 160 use cases to support informed decision-making across underwriting, risk engineering, and claims adjustments.
Looking forward, Zurich has set an ambitious target, expecting compound annual growth in EPS to exceed 10% over the 2023-2025 cycle, an upward revision from the previously set goal of 8% at the 2022 Investor Day. This outlook underscores Zurich's confidence in its strategic direction and its ability to deliver sustained growth and shareholder value in the coming years.
“We delivered record returns in 2023, well ahead of all targets for 2023-2025, with particularly strong growth in P&C and Life and highly effective management actions at the Farmers Exchanges. I expect this positive momentum to continue and to achieve EPS growth above 10% over the cycle,” group CEO Mario Greco said.
In the UK, Zurich reported strong growth for 2023, marking an overall business operating profit (BOP) of £411 million for the period ended 31 December 2023.
The insurer had a strong P&C trading performance, seeing top-line growth of 9% and yielding an overall combined operating ratio of 93.8%. Its P&C business delivered a BOP of £262 million, up slightly from £261 million in 2022. Meanwhile, Zurich UK’s life business registered a BOP of £149 million and its life protection business delivered a GWP of £901 million.
Commenting on the results, Tim Bailey, CEO of Zurich UK, said: “We’re pleased with the performance of the business over the last year, delivering growth and profitability across all areas while also achieving our highest ever customer and broker satisfaction scores.”
He added that: “[Zurich UK’s] overall consistent profitability has been achieved thanks to the hard work and dedication of our teams, as well as our commitment to our broker partners across the country. This year, we will build on this strong performance with a continued focus on our target growth areas.”
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