Zurich Financial Services Group announced that its “first quarter 2006 results reflect strong operating performances in all segments of its diversified portfolio.” Notably the Group’s business operating profits rose 31 percent to $1.359 billion, an “annualized BOP ROE after tax of 18.1 percent.”
“Our first quarter results continue the trend of consistent financial performance, reflecting the resilience of our diversified portfolio and the sustainability of our ongoing operational improvement efforts,” commented CEO James J. Schiro. “We even achieved these positive results while making significant progress in settling important regulatory matters in the US.”
Other “Performance highlights” noted in the report include the following:
— Net income of $785 million, an increase of 1 percent after the effect of a charge for US regulatory settlement costs of $262 million net of tax ($ 325 million pre tax). Annualized return on equity (ROE) was 15.2 percent
— General Insurance combined ratio of 95.1 percent, an improvement of 1.8 percentage points
— Strong growth in Global Life new business volumes, with new business profit margin of 14.5 percent
— Farmers Management Services with consistent increase in operating performance
“Thanks to our relentless focus on underwriting and financial discipline, we remain confident in our ability to continue to write profitable business,” Schiro added. “Our growth in life and improving new business profit margins also demonstrate the effectiveness of our restructured operating model and market strategy.”
The announcement noted that the “Group’s operational improvement program, known as The Zurich Way, addresses all core processes, including underwriting, claims, distribution management and finance. As previously announced, the Group established a $ 500 million target for economic benefits from The Zurich Way initiatives in 2006, and the company is well on track to achieve this target.”
In the general Insurance sector Zurich posted an operating profit of $886 million, up 45 percent. “This result was driven by an underwriting profit of $ 338 million, an increase of 61 percent, and investment income of $ 749 million, an increase of 18 percent,” said the bulletin.
The sector’s combined ratio improved by 1.8 percentage points to 95.1 percent, reflecting improvement in both the expense and loss ratios. “These improvements were particularly noticeable in Global Corporate, North America Commercial and Europe General Insurance,” the announcement noted. “In addition to the strong underwriting performance the General Insurance result was further supported by growth in investment income from higher yields and higher invested assets. The first quarter result also benefited from a relatively low incidence of large losses and natural catastrophes.”
Commenting on the results at Farmers Management Services (FMS), which manages the Farmers Exchanges, Zurich said growth and profitability rose, as FMS “increased its investment in marketing and in sales-related IT enhancements. Despite this investment, business operating profit grew by 2 percent to $ 313 million.
“The Farmers Exchanges also continued to build surplus and are now well positioned for profitable growth going forward. In the first quarter, they achieved growth of 1.4 percent in a market environment where there was virtually no growth overall.”
The full report, as well as a replay of the presentation to analysts and investors in a telephone conference call is available on the Group’s Website at: www.zurich.com.
Topics Profit Loss
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