August 11, 2016 by Canadian Underwriter
Continuing to build on its efforts to simplify and become more agile, Zurich Insurance Group reports that its business operating profit (BOP) for the first half of 2016 was US$2.194 million, down 2% from US$2.238 million for 2015 H1.
Figures were more positive for the quarter ended June 30, 2016, with the company reporting BOP of US$1,107 million compared to US$943 million for the second quarter of 2015, an increase of 17%.
With regard to net income after tax attributable to shareholders (NIAS), this was down for both 2016 H1 and 2016 Q2 over the prior-year periods, notes a statement issued Thursday by the multi-line insurer, which provides general insurance and life insurance products and services.
NIAS amounted to US$1,613 million for the first half of this year, down 22% from US$2,059 million in the same period last year. The decrease was “due to a lower level of realized capital gains, restructuring charges related to the Group’s turnaround plans and a higher effective tax rate,” Zurich notes.
For 2016 Q2, NIAS was down again, although not as sharply, at US$739 million compared to US$840 million for 2015 Q2.
Looking at General Insurance (GI), gross written premiums and policy fees for the first half of 2016 were down 1% to US$18,517 million from US$18,669 million for the first half of 2015.
GI BOP, however, increased by 3%, amounting to US$1,205 million in 2016 H1 compared to US$1,166 million in 2015 H1.
This was because “an improvement in the underlying result offset a decrease in the net investment result and a higher level of catastrophe and weather-related events,” the company explains.” The result benefited form currency gains of US$92 million.”
GI’s combined ratio was fairly stable, at 98.4% for the first half of 2016 compared to 98.3% for the first half of 2015.
In addition, the current accident year loss ratio improved by three percentage points compared to the full-year 2015, while the expense ratio decreased by 0.8 percentage points to 30.9%, Zurich Insurance adds.
“Reinvigorated underwriting discipline in General Insurance has resulted in an improved attritional loss ratio,” Group CEO Mario Greco says in the statement.
“Our efficiency program is beginning to deliver results and we have taken steps to strengthen our geographic footprint by enhancing our position in the U.S., Malaysia and Australia while exiting several positions where we saw limited potential,” Greco points out.
The insurer announced the sale of its GI businesses in Taiwan and Morocco in June, as well as its operations in South Africa in Botswana in June.
The idea is that the Group will adopt a “simpler organization and management structure to make the company more agile and accountable while bringing management closer to customers,” the statement notes.
Other results include the following: