Zurich Insurance Group AG (ZFSVF) (Q2 2024) Earnings Call Highlights: Record Profits and ...

GuruFocus News
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In This Article:

  • BOP (Business Operating Profit): $4 billion in the first half, record level.

  • BOP ROE (Return on Equity): 25% in the period.

  • Property and Casualty Insurance Revenue Growth: 7% in the first half.

  • Life Short-term Protection Revenue Growth: 12% on a like-for-like basis.

  • Farmers Management Services Revenue Growth: Mid-single-digits.

  • Property and Casualty Combined Ratio: 93.6%.

  • Commercial Insurance Combined Ratio: 91.4%.

  • Retail P&C Combined Ratio: 96.4%.

  • Life Business BOP: $1 billion for the first half.

  • Farmers Management Services BOP Growth: 10% year on year.

  • Farmers Exchanges Combined Ratio: Improved by 16 percentage points to 95.2%.

  • Farmers Re BOP: $81 million, more than $100 million above last year.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Zurich Insurance Group AG (ZFSVF) achieved a record Business Operating Profit (BOP) of $4 billion in the first half of 2024, driven by strong results in property and casualty, life, and farmers segments.

  • The company reported a BOP return on equity (ROE) of 25%, indicating highly attractive returns on capital.

  • Property and casualty insurance revenue grew by 7% in the first half, with particularly strong growth in retail.

  • The life segment reported an all-time high BOP of $1 billion for the first half, with short-term protection revenues increasing by 25% year on year.

  • Zurich Insurance Group AG (ZFSVF) completed the acquisition of 70% of Kotak General Insurance in India and announced an agreement to purchase AIG's personal travel insurance business, enhancing its global market position.

Negative Points

  • The retail property and casualty segment reported a higher combined ratio of 96.4%, driven by elevated weather events and persistent inflationary trends in motor insurance.

  • The company's performance in Germany was notably weaker, with a combined ratio above 100% due to increased claim frequency and weather events.

  • Despite improvements, the Farmers segment faced significant catastrophe losses, impacting the combined ratio.

  • The commercial motor segment continues to face challenges, with the need for further rate increases and portfolio adjustments.

  • Zurich Insurance Group AG (ZFSVF) faces ongoing challenges in managing weather-related losses, with North America experiencing a higher cat loss ratio compared to the previous year.

Q & A Highlights

Q: Can you provide insights on the impact of above-normal weather losses on the combined ratio and clarify the threshold for NatCat classification? A: Mario Greco, Group CEO, explained that the reserve adequacy, especially in casualty, is fully appropriate, with no need to adjust reserves except for commercial motor. The threshold for NatCat classification is $25 million. In North America, the cat loss ratio increased from 2.8% last year to 3.5% this year, indicating a 60 basis point improvement in the accident year combined ratio, excluding cats. In Europe, cat events increased from 90 basis points last year to 110 basis points this year, with additional smaller weather events impacting results.

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