May 14, 2017 by Canadian Underwriter
Zurich Insurance Company Ltd. recently reported a 2.2-point deterioration in its first-quarter combined ratio in property and casualty insurance in North America, while the worldwide combined ratio increased 3.4 points, due in part to a recent change in the way lump sum awards are calculated in bodily injury rate in Britain.
Zurich reported Thursday its financial results for the first three months of 2017. In its property and casualty segment, Zurich reported direct written premiums of US$8.545 billion in the three months ending March 31, down from $8.679 billion in Q1 2016. All figures are in U.S. dollars. The loss ratio was 67.2% in the latest quarter, compared to 65.9% during the same three months of 2016.
The combined ratio was 100.7% in the latest quarter, up 3.4 points from 97.3% in Q1 2016. However, that ratio improved when excluding the change in the Ogden rate, Zurich suggested. That rate is used to calculate lump sum awards in Britain in bodily injury cases, Markel reported earlier when it released its Q1 results. “Effective March 20, 2017, the Ogden Rate decreased from plus 2.5% to minus 0.75%, which represents the first rate change since 2001,” Markel said at the time. The effect of that change “is most impactful” to Markel’s “U.K. auto casualty exposures through reinsurance contracts written in the Reinsurance segment.”
For Zurich, the “ex-Ogden” combined ratio improved to 97.2%, compared to 98.1% during all of 2016. In the latest quarter, “the significant weather events in the U.S. and cyclone Debbie in Australia together accounted for” roughly $80 million in losses, Zurich reported.
In North America, Zurich reported a loss ratio of 66.9% in Q1 2017, compared to 68.6% in Q1 2016. Also in North America, the combined ratio was 98.9% in Q1 2017 compared to 97.7% in Q1 2016. “The North America combined ratio has increased due to a higher impact from catastrophes and a lower level of favorable prior year reserve releases,” Zurich said.
In commercial insurance in North America, Zurich reported net earned premiums and policy fees of $1.557 billion in the most recent quarter, compared to $1.764 billion in the first three months of 2016. The loss ratio, in commercial insurance in North America, was 75.1% in Q1 2017, compared to 70.8% in Q1 2016.
The combined ratio, in commercial insurance in North America, was 102.8% in Q1 2017, compared to 96.4% in Q1 2016.
In retail insurance in North America, Zurich reported net earned premiums and policy fees of $709 million in Q1 2017, compared to $649 million in Q1 2016. The loss ratio, in retail insurance in North America, was 48.7% million in Q1 2017, compared to 62.5% in Q1 2016. The combined ratio, in retail insurance in North America, was 90.5% in Q1 2017, compared to 101.3% in Q1 2016.
Company wide, Zurich reported total direct written premiums – including life and Farmers – of $12.814 billion in the latest quarter, compared to $12.76 billion in Q1 2016.