Zurich Insurance Group CEO, Mario Greco, has said the company’s goals remain on track despite the unprecedented global environment in which the underwriter was now operating.
Speaking as Zurich reported its half year results which saw a 40% decline in year on year profits Mr Greco said it’s three year plan was still n track and praised the way the company had responded for both its customers and staff.
“The first half of 2020 has been an unprecedented period with unforeseeable events ranging from a global pandemic and recession, to civil unrest and a higher rate of natural catastrophes,” he said. “In this context, our priority has been to focus on our customers, colleagues and the communities in which we operate. We delivered on our commitments to our customers and provided a wide range of additional support and financial relief such as premium rebates and payment holidays. We moved quickly to protect our colleagues, switching early to home office and providing hospitalisation benefits to them and their families. We are pleased that our actions have increased trust and confidence in Zurich among customers and colleagues alike.
“Since the start of the crisis we have focused on understanding the steps needed to drive the business forward and deliver on our plan presented last November. We are well placed to adapt quickly in a very dynamic and uncertain scenario, and therefore remain fully committed to our three-year plan.”
Mr Greco added: “Our business developed well in the first six months of the year in spite of the uncertainties. Our commercial business reported strong growth following improvements to the portfolio mix in recent years and is positioned to further benefit from the improved pricing environment. We continue to expand our digital offering, whose growth contributed to the resilience of our Retail business. We launched Zurich WellCare to serve demand for health and wellbeing services, and plan further steps this year to accelerate the digital transformation.
“While our operating environment changes, our goals are the same – we remain confident in the strength of our business, our strategy, and our ability to adapt to changing needs.”
First half profits for the group were $1.7 billion, a decline of 40% compared with the figure of $2.8 billion for the same period of 2019. The impact of COVID on the results was put at $686 million. The pandemic’s impact was also felt via the pressure on financial markets, “leading to less favourable performance of the Group’s investments, in particular in hedge funds”. In addition, the first-half result was impacted by higher catastrophe-related claims, mainly related to weather events and civil unrest.
Over the first half of the year, commercial insurance gross written premiums, which make up around 70% of the Group’s P&C premiums, grew by 8% on a like-for-like basis, driven by significant rate increases in North America as well as in Europe.
“The Group is well positioned to grow the commercial insurance business after its portfolio was reshaped and profit improved over the period 2016 to 2019,” added Zurich.
Within the Group’s Property & Casualty insurance business, claims related to the COVID-19 outbreak are expected to be $750 million for the full year 2020 although this is subject to some uncertainty given the continuing nature of the event. The Group recorded this amount fully within the first half 2020 results.
Partially offsetting the P&C claims was a net favourable $64 million of other items related to the COVID-19 outbreak and its impact on financial markets. These include reductions in property and casualty claims resulting from restrictions on activity implemented across many countries.
Gross written premiums grew 4% on a like-for-like basis, adjusting for currency movements, acquisitions and disposals, with growth primarily driven by commercial insurance in Europe, Middle East and Africa (EMEA) and North America. In US dollars gross written premiums grew 2%.
Zurich said the rate hardening which has been evident in recent was already being felt as it achieved price increases of about 8% overall, with the level of increases improved across most regions compared with the previous year, particularly in commercial insurance. Notably, North America experienced a further acceleration of recent trends, with overall rate increases of 18% achieved in the second quarter, and 16% on a half-year basis.