Zurich reports business operating profit of USD 2.2 billion for the first half of 2015
- H1 BOP of USD 2.2 billion, down 15% compared with prior year period
- H1 NIAS of USD 2.1 billion, down 3% compared with prior year period
- BOPAT ROE 11.6%, down from 12.5% in the first half of 2014
- General Insurance combined ratio of 98.3%; actions underway to deliver on 2016 targets
- Global Life delivers good growth in APE and BOP at constant currency
- Farmers continues progress in strategic execution
- Full-year cash remittances expected to be over USD 3.5 billion; expectation for three year period ending 2016 of more than USD 10 billion, well ahead of target
- GEC members take on additional responsibilities
Zurich Insurance Group (Zurich) today reported a business operating profit (BOP) of USD 2.2 billion and net income attributable to shareholders of 2.1 billion for the half-year ended June 30, 2015.
Zurich Insurance Group (Zurich) today reported a business operating profit (BOP) of USD 2.2 billion and net income attributable to shareholders of 2.1 billion for the half-year ended June 30, 2015.
Select financial highlights – half year (H1) and second quarter (Q2) of 2015
(For a more comprehensive set of financial highlights covering the six months ended June 30, see page 7 of the news release)
| in USD millions, for the six and three months ended June 30, unless otherwise stated | 6M 2015 | 6M 2014 | Change in USD1 | Q2 2015 | Q2 2014 | Change in USD1 |
| Business operating profit (BOP) | 2,238 | 2,621 | (15%) | 943 | 1,240 | (24%) |
| Net income after tax attributable to shareholders (NIAS) | 2,059 | 2,123 | (3%) | 840 | 848 | (1%) |
| Total Group business volumes2 | 36,008 | 37,567 | (4%) | 17,282 | 18,261 | (5%) |
| Net investment return on Group investments (calculated on average Group investments) | 2.0% | 2.1% | (0.1 pts) | 0.9% | 1.0% | (0.0 pts) |
| Total return on Group investments (calculated on average Group investments) | 0.1% | 4.8% | (4.7 pts) | (2.5%) | 2.2% | na |
| Shareholders’ equity3 | 31,883 | 34,735 | (8%) | |||
| Diluted earnings per share (in CHF) | 12.99 | 12.74 | 2% | |||
| Book value per share (in CHF)3 | 200.23 | 232.65 | (14%) | |||
| Return on common shareholders’ equity (ROE) 4 | 14.2% | 13.9% | 0.2 pts | 12.0% | 11.5% | 0.6 pts |
| Business operating profit (after tax) return on common shareholders’ equity (BOPAT ROE)4 | 11.6% | 12.5% | (0.9 pts) | 10.2% | 11.4% | (1.2 pts) |
Zürich, August 6, 2015 – Zurich Insurance Group (Zurich) today reported a business operating profit (BOP) of USD 2.2 billion and net income attributable to shareholders of 2.1 billion for the half-year ended June 30, 2015.
Chief Executive Officer Martin Senn said:
“While the positive trend in Global Life and Farmers has continued, with these businesses delivering good results, the profitability of our General Insurance business was adversely affected by large losses, particularly within Global Corporate and the UK, and a higher expense ratio. In consequence, our business operating profit return on equity for the first half of 2015 was 11.6%.”
“We are addressing the expense ratio issue and expect to see the benefits of the measures we have already taken or are in the process of implementing coming through early next year. In addition, we have launched a number of actions to address the profitability issues in parts of our General Insurance business.”
“In terms of our other key targets, we remain in a very strong position. First, our Zurich Economic Capital Model ratio stood at 120% at the end of the first quarter, at the top of our target range. And second, cash remittances are expected to exceed USD 3.5 billion for the full year and USD 10 billion for the period 2014-2016, well ahead of our target of USD 9 billion.”
“Separately, we have informed the market that we are evaluating a potential offer for RSA Insurance Group plc. We believe that a transaction could bring significant benefits to us and to our investors in terms of the complementary fit of RSA’s business with our own operations and in financial terms. But any capital deployment would need to meet the same hurdles that we apply to any other investment.”
Additional GEC responsibilities
Zurich has also reassigned the following responsibilities within its Group Executive Committee. These will be effective October 1, 2015, subject to regulatory and board approvals.
- George Quinn, Chief Financial Officer, will be the new Regional Chairman for Europe, Middle East and Africa, and the Chairman of Zurich Insurance plc (Ireland).
- Isabelle Welton, Chief Human Resources Officer, will take on the role of Regional Chairman for Latin America.
- Jeff Dailey, CEO of Farmers Group, Inc., will also assume the role of Chairman of the Board of Directors of Farmers Group, Inc.
- Robert Dickie, Chief Operations and Technology Officer, will become member of the Board of Directors of Farmers Group, Inc.
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Certain statements in this document are forward-looking statements, including, but not limited to, statements that are predications of or indicate future events, trends, plans or objectives of Zurich Insurance Group Ltd or the Zurich Insurance Group (the Group). Forward-looking statements include statements regarding the Group’s targeted profit, return on equity targets, expenses, pricing conditions, dividend policy and underwriting and claims results, as well as statements regarding the Group’s understanding of general economic, financial and insurance market conditions and expected developments. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results and plans and objectives of Zurich Insurance Group Ltd or the Group to differ materially from those expressed or implied in the forward-looking statements (or from past results). Factors such as (i) general economic conditions and competitive factors, particularly in key markets; (ii) the risk of a global economic downturn, in the financial services industries in particular; (iii) performance of financial markets; (iv) levels of interest rates and currency exchange rates; (v) frequency, severity and development of insured claims events; (vi) mortality and morbidity experience; (vii) policy renewal and lapse rates; and (viii) changes in laws and regulations and in the policies of regulators may have a direct bearing on the results of operations of Zurich Insurance Group Ltd and its Group and on whether the targets will be achieved. Zurich Insurance Group Ltd undertakes no obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information, future events or circumstances or otherwise.
All references to “Farmers Exchanges” mean Farmers Insurance Exchange, Fire Insurance Exchange, Truck Insurance Exchange and their subsidiaries and affiliates. The three Exchanges are California domiciled inter-insurance exchanges owned by their policyholders with governance oversight by their Boards of Governors. Farmers Group, Inc. and its subsidiaries are appointed as the attorneys-in-fact for the Farmers Exchanges and in that capacity provide certain non-claims administrative and management services to the Farmers Exchanges. Neither Farmers Group, Inc., nor its parent companies, Zurich Insurance Company Ltd and Zurich Insurance Group Ltd, have any ownership interest in the Farmers Exchanges. Financial information about the Farmers Exchanges is proprietary to the Farmers Exchanges, but is provided to support an understanding of the performance of Farmers Group, Inc. and Farmers Reinsurance Company.
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