Zurich provides preliminary update on third quarter 2015
Zurich Insurance Group (Zurich) provides a preliminary update on expected results for the third quarter 2015.
Zurich announces that it currently estimates aggregate losses of approximately USD 275 million related to the series of explosions at a container storage station in the Port of Tianjin in China in mid-August 2015. While this represents Zurich’s current best estimate of the cost for the above event, the nature of many of the losses and the extended remediation period to complete repairs means that uncertainty as to the final cost remains. The estimate is net of reinsurance and before tax. A further update will be provided with the Group’s third quarter results, which are due to be released on November 5, 2015.
In addition to claims relating to the Tianjin port explosions, Zurich now expects that weaker than expected profitability in the General Insurance business in the first half of 2015 will continue in the third quarter.
Specifically, large losses excluding those associated with the Tianjin explosion will be at levels similar to the results for the first half 2015. Further, recently completed reserve reviews indicate a likely negative impact of around USD 300 million in the third quarter in relation to current and prior year liabilities for U.S. auto liability and certain other lines of business.
Given the deterioration in profitability in certain parts of the General Insurance business, and following his appointment as General Insurance CEO, Kristof Terryn is conducting an in-depth review of the business.
While it is not possible at this stage to provide a precise view on the outcome of this review, given claims relating to the Tianjin port explosions and the outcomes of the recent reserve reviews, it is currently expected that the General Insurance business will report an operating loss of around USD 200 million for the third quarter. The Global Life and Farmers businesses are expected to perform in line with expectations. A further update on the outcome of the General Insurance review will be provided on November 5, 2015 with the third quarter results.
Zurich remains committed to achieving its financial targets for 2014 to 2016, i.e. a business operating profit after tax return on equity of between 12% and 14%, solvency as measured by the Group’s internal capital model, the Z-ECM ratio, of between 100% and 120%, and net cash remittances to the Group after all central costs in excess of USD 9 billion over the three years. In addition, Zurich’s priorities for the use of USD 3 billion of excess capital remain unchanged.
In light of the above recent deterioration in the trading performance in the Group’s General Insurance business, Zurich announced this morning that it has terminated its discussions in connection with a possible offer for RSA. The Group’s focus instead will be on taking the necessary actions to deliver on the required performance of the General Insurance business.
Downloads
Contacts
- Media Relations
- Investor Relations
Zurich Insurance Group (Zurich) is a leading multi-line insurer that serves its customers in global and local markets. With more than 55,000 employees, it provides a wide range of general insurance and life insurance products and services. Zurich’s customers include individuals, small businesses, and mid-sized and large companies, including multinational corporations, in more than 170 countries. The Group is headquartered in Zurich, Switzerland, where it was founded in 1872. The holding company, Zurich Insurance Group Ltd (ZURN), is listed on the SIX Swiss Exchange and has a level I American Depositary Receipt (ZURVY) program, which is traded over-the-counter on OTCQX. Further information about Zurich is available at www.zurich.com.
Disclaimer and cautionary statement
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.
It should be noted that past performance is not a guide to future performance. Please also note that interim results are not necessarily indicative of full year results.
Persons requiring advice should consult an independent adviser.
This communication does not constitute an offer or an invitation for the sale or purchase of securities in any jurisdiction.
THIS COMMUNICATION DOES NOT CONTAIN AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES; SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR EXEMPTION FROM REGISTRATION, AND ANY PUBLIC OFFERING OF SECURITIES TO BE MADE IN THE UNITED STATES WILL BE MADE BY MEANS OF A PROSPECTUS THAT MAY BE OBTAINED FROM THE ISSUER AND THAT WILL CONTAIN DETAILED INFORMATION ABOUT THE COMPANY AND MANAGEMENT, AS WELL AS FINANCIAL STATEMENTS.