Zurich Financial Services reported that its first quarter net income decreased by 75 percent to $362 million, compared to the $1.427 billion it earned in the same quarter of 2008. Business operating profit fell by 40 percent to, $1.061 billion from $1.764 billion.
Other earnings highlights were listed in Zurich’s report as follows:
— General Insurance gross written premiums and policy fees of $9.8 billion, down 12 percent or 3 percent in local currencies, and a combined ratio of 95.8 percent
— Global Life new business value, after tax, down 7 percent to $149 million, with new business margin, after tax (as percent of APE), of 20.6 percent. APE basically unchanged but up 16 percent in local currencies
— Farmers Management Services’ management fees and other related revenues up 6 percent to $623 million
— Shareholders’ equity of $22.3 billion, an increase of 1 percent over year end
Zurich said that “despite the impact of highly adverse economic circumstances as well as the continued deterioration of financial markets during the first quarter,” it considered the results to be “another solid operating performance for the first three months of 2009, showing a continuous improvement over the discrete third and fourth quarter performance in 2008.”
CEO James J. Schiro added: “We have shown continual quarter on quarter improvement since the financial crisis began, and remain confident in our strategy despite the ongoing financial turmoil. Though we anticipate 2009 to remain challenging, I am pleased with our ability to maintain our strong solvency ratio and add to shareholders’ surplus while capitalizing on market opportunities that emerge.”
Zurich said its General Insurance operations “continued to show resilience across its well-diversified book of business, as a deliberate and prudent approach to rates and expense management maintained profitability despite the ongoing negative economic environment.
“Business operating profit decreased 25 percent to $0.9 billion, driven by a lower underwriting performance due to the impact of recessionary forces on business volumes and challenging market conditions. Reductions in investment income equally contributed to the lower result.
The combined ratio increased by 1.2 percentage points to 95.8 percent, mainly reflecting continued investments in operational transformation, changes in business mix and integration costs associated with the newly acquired businesses in Brazil and Turkey.”
Despite the economic problems, Farmers did well during the quarter. Zurich said its Farmers Management Services (FMS) “continued to successfully manage the Farmers Exchanges, the third largest personal lines insurer in America, which Zurich manages but does not own.
“Management fees and other related revenues grew by 6 percent to $ 623 million, primarily reflecting a 5 percent earned premium growth at the Farmers Exchanges, of which 4 percentage points are attributable to the transfer of North America Commercial’s Small Business Solutions book to the Exchanges in June 2008. As a consequence and in conjunction with cost savings actions, FMS’ gross management result improved by 11 percent, resulting in a 7 percent higher business operating profit and an improved managed gross earned premium margin of 7.5 percent.
“Farmers Re, which provides reinsurance to the Farmers Exchanges, more than doubled its premium volume compared to the same period last year due to an increase of the existing quota share reinsurance from 5 percent to 25 percent as of September 30, 2008. In combination with a significant rise in weather related incidents causing higher claims payments, Farmers Re’s business operating profit fell to $2 million, resulting in a slightly decreased business operating profit for the Farmers segment overall of $324 million.”
The full report and details on accessing the earnings conference call may be obtained on the Group’s web site at: www.zurich.com.
Source: Zurich Financial Services
Topics Profit Loss Agribusiness
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