Q3 BOP of USD 1.3 billion, up 28% compared with prior year, and first nine months BOP of USD 3.6 billion, up 2% compared with prior year
Q3 NIAS of USD 1.1 billion, up 64% compared with prior year, and first nine months NIAS of USD 3.0 billion, up 2% compared with prior year
Combined ratio of 95.3% for the first nine months an improvement of 1 point compared with prior year
BOPAT ROE 10.8% down from 11.0% at corresponding prior year period
Solid operating profit in all core segments
Growth in General Insurance and Global Life target markets
Farmers Management Services revenues modestly lower but improved Farmers Re result
Solvency levels further strengthened in first half 2013
Select financial highlights – first nine months (9M) and third quarter (Q3) of 2013
(For a more comprehensive set of financial highlights covering the nine months ended September 30, see page 8 of the News Release)
|9M 2013 ||9M 20121 ||Change in USD ||Q3 2013 ||Q3 20121 |
|Business operating profit (BOP) ||3,567 ||3,510 ||2% ||1,279 ||998 ||28% |
|Net income after tax attributable to shareholders (NIAS) ||2,954 ||2,898 ||2% ||1,103 ||672 ||64% |
|Total Group business volumes2 ||52,966 ||53,965 ||(2%) ||16,726 ||16,463 ||2% |
|Net investment return on Group investments (not annualized and calculated on average Group investments) ||2.5% ||3.0% ||(0.5 pts) ||0.9% ||1.0% ||(0.0 pts) |
|Total return on Group investments (not annualized and calculated on average Group investments) ||0.5% ||5.3% ||(4.7 pts) ||1.0% ||2.2% ||(1.2 pts) |
|Shareholders’ equity3 ||32,062 ||34,505 ||(7%) ||na ||na ||na |
|Diluted earnings per share (in CHF) ||18.65 ||18.49 ||1% ||6.93 ||4.38 ||58% |
|Book value per share4 (in CHF) ||196.49 ||214.86 ||(9%) ||na ||na ||na |
|Return on common shareholders’ equity (ROE)4 ||11.8% ||11.8% ||- ||14.0% ||8.1% ||5.9 pts |
|Business operating profit (after tax) return on common shareholders’ equity (BOPAT ROE)4 ||10.8% ||11% ||(0.2 pts) ||11.7% ||9.1% ||2.7 pts |
Zurich, November 14, 2013 – Zurich Insurance Group (Zurich) today reported a business operating profit (BOP) of USD 3.6 billion and net income attributable to shareholders (NIAS) of USD 3.0 billion for the nine months ended September 30, 2013.
“We delivered a solid operating profit in all core segments for the first nine months of 2013,” said Chief Executive Officer Martin Senn. “Against the backdrop of a fragile global economic recovery and persisting low interest rates, we remained focused on our strategy, growing our business in emerging markets while delivering a resilient performance in mature markets.”
General Insurance business operating profit increased, as an improved underwriting result and expense management compensated for a continued reduction in investment income and losses from severe weather-related events and other large losses. The reported combined ratio improved by 1.0 percentage point to 95.3%.
Global Life profitability continued to improve, as a growing contribution from Zurich Santander offset a decrease in other regions while Europe was largely flat.
Farmers business operating profit increased, driven by an improved underwriting result at Farmers Re.
The Group preserved its strong capital position with shareholders’ equity at USD 32.1 billion and the solvency position, as measured under the Swiss Solvency Test, further strengthened in the first half of 2013.
As communicated during the half year results, the Group remains on track to achieve some of its three year targets set in 2010, such as those for Global Life and expense savings, while some in General Insurance and for Farmers remain challenging and, as of now, will not be achieved. An update on these targets and the new strategic goals will be provided at the Group’s Investor Day in December 2013.
(for the nine months ended September 30, 2013)
|2013 ||2012 ||Change in USD |
|General Insurance gross written premiums and policy fees ||28,182 ||27,309 ||3% ||4% |
|General Insurance business operating profit ||2,124 ||2,085 ||2% ||2% |
|General Insurance combined ratio (in %) ||95.3% ||96.3% ||1.0 pt ||0.9 pts |
General Insurance business operating profit increased by USD 39 million to USD 2.1 billion, reflecting an improved underwriting result including expense management. This was partly offset by the continued reduction in investment income and losses from severe weather-related events and other large losses. These included losses related to floods and hail in Europe, and tornadoes and floods in North America. The combined ratio improved by 1.0 percentage point to 95.3% compared to the prior-year period. The 2012 result was adversely affected by one-off charges taken in the German business in the third quarter.
General Insurance gross written premiums (GWP) and policy fees increased by USD 873 million to USD 28.2 billion, or by 3% in U.S. dollar terms and 4% on a local currency basis. Growth was achieved in all markets except Europe, where economic pressures in key markets and focused underwriting actions resulted in a decline in GWP. Global Corporate delivered strong premium growth in Europe and North America, where the improving market environment continued to support premium and rate increases. Premiums in International Markets increased as these businesses continued to execute growth strategies.
|2013 ||2012 ||Change in USD |
|Global Life gross written premiums, policy fees and insurance deposits ||19,578 ||21,140 ||(7%) ||(7%) |
|Global Life business operating profit ||978 ||966 ||1% ||4% |
|Global Life new business annual premium equivalent (APE)5 ||3,230 ||2,973 ||9% ||9% |
|Global Life new business margin, after tax (as % of APE)5 ||28.9% ||21.4% ||7.6 pts ||7.7 pts |
|Global Life new business value, after tax5 ||935 ||635 ||47% ||49% |
Global Life business operating profit increased by USD 11 million to USD 978 million, or by 1% in U.S. dollar terms and 4% on a local currency basis with an increase in Zurich Santander offset by reductions within other regions.
Net expense and risk margins improved but the net investment margin fell significantly due to persistently low investment yields in all regions, especially in North America and the larger European operations of the UK, Germany and Switzerland.
Global Life gross written premiums, policy fees and insurance deposits decreased by USD 1.6 billion to USD 19.6 billion, or by 7% in U.S. dollar terms and on a local currency basis. Continued growth in gross written premiums in the higher margin protection business, particularly in Zurich Santander and the UK, was more than offset by an expected reduction in insurance deposits in the UK from single premium Private Banking Client Solutions products.
Overall new business value (NBV) of USD 935 million increased by 47% in U.S. dollar terms or 49% on a local currency basis, of which USD 207 million came from the first time inclusion of Zurich Santander. All regions performed strongly, led by growth in the protection business.
New business annual premium equivalent (APE) increased by USD 257 million to USD 3.2 billion or by 9% in U.S. dollar terms and on a local currency basis, of which USD 599 million came from the inclusion of Zurich Santander. This was partly offset by the expected decline in single premium products in Private Banking Clients Solutions in the UK and a reduction in APE in Chile, following the successful Social Security bid in 2012. On a comparable basis, excluding these variables and the contributions from Zurich Santander, APE increased by 9% in U.S. dollar terms.
|2013 ||2012 ||Change in USD |
|Farmers Management Services managed fees and other related revenues ||2,113 ||2,134 ||(1%) ||(1%) |
|Farmers Re gross written premiums and policy fees ||3,094 ||3,382 ||(9%) ||(9%) |
|Farmers business operating profit ||1,108 ||991 ||12% ||12% |
|Farmers Management Services gross management result ||1,023 ||1,024 ||(0%) ||(0%) |
|Farmers Management Services managed gross earned premium margin ||7.3% ||7.3% ||- ||- |
Farmers business operating profit increased by USD 117 million to USD 1.1 billion, or by 12%, primarily due to an improved underwriting result at Farmers Re. Farmers Management Services business operating profit was essentially flat, decreasing by USD 9 million to USD 1.1 billion, mainly driven by lower investment income. Farmers Re business operating profit increased by USD 126 million to USD 58 million, mainly due to an improved underlying loss ratio, while weather-related losses remained significantly above historical levels.
Farmers Management Services’ management fees and other related revenues decreased by USD 21 million, or 1%, to USD 2.1 billion. Management fees increased following 1% growth in gross earned premiums in the Farmers Exchanges, but this was more than offset by a decrease in other related revenues as a result of lower levels of new business policies. The Farmers Exchanges are owned by their policyholders and managed by Farmers Group, Inc., a wholly owned subsidiary of the Group. Gross written premiums and policy fees at Farmers Re decreased by 9% to USD 3.1 billion, mainly due to the reductions in the participation in the quota share reinsurance agreements with the Farmers Exchanges and the 1% decline in gross written premiums.
Other Operating Businesses: Other Operating Businesses, predominantly consisting of the headquarters’ expenses and external financing activities, reported a business operating loss of USD 683 million, a deterioration of 5% compared with the same period of 2012, mainly driven by decreased investment income.
Non-Core Businesses: Non-core businesses reported a business operating profit of USD 41 million compared with USD 118 million in the same period of 2012. The reduction resulted mainly from a 2012 one-off gain in Other run-off.
|2013 ||2012 ||Change in USD |
|Average Group investments ||208,216 ||201,932 ||3% ||3% |
|Net investment result on Group investments ||5,264 ||6,141 ||(14%) ||(15%) |
|Net investment return on Group investments (calculated on average Group investments) ||2.5% ||3.0% ||(0.5 pts) ||(0.5 pts) |
|Total return on Group investments (calculated on average Group investments) ||0.5% ||5.3% ||(4.7 pts) ||(4.8 pts) |
The net investment result on Group investments, which includes net investment income, net capital gains and losses on investments and impairments, contributed USD 5.3 billion to the Group’s total revenues for the nine months ended September 30, 2013, a net return of 2.5% (not annualized).
Net capital gains and impairments amounted to USD 605 million and included gains from the sale of debt and equity securities, to a significant extent allocated to policyholders. This was partially offset by derivative losses and the negative revaluation of debt securities booked at fair value through profit and loss.
Net unrealized gains on investments included in total equity decreased by USD 4.1 billion from December 31, 2012, mainly driven by rising yields on debt securities and widening credit spreads, largely in the U.S., during the second quarter of 2013. The total return on Group investments, which includes net investment income, net capital gains and losses on investments and impairments as well as changes in unrealized gains and losses included in total equity, was 0.5% (not annualized), compared with 5.3 % in the same period of 2012.
1September 30, 2012 and December 31, 2012 have been restated as set out in note 1 of the unaudited Consolidated financial statements.
2Total Group business volumes comprises gross written premiums, policy fees, insurance deposits and management fees generated within General Insurance, Global Life and Farmers.
3As of September 30, 2013 and December 31, 2012, respectively
4Calculated based on the discrete quarter result and annualized. See the Financial Supplement and the Operating and Financial Review on the Investor Relations’ page of our website www.zurich.com.
5New business amounts are calculated on embedded value principles before the effect of non-controlling interests. See unaudited New business overview for details of these principles. New business amounts for the first nine months of 2012 do not include Zurich Santander or new operations in Asia (including Zurich Insurance Malaysia Berhad – ZIMB).
|Financial Highlights (unaudited) ||en || || ||60.7 KB/pdf |