Zurich Insurance Group has announced it currently estimates aggregate losses of about US$275 million in connection with mid-August’s series of explosions at a container storage station in the Port of Tianjin in China.
The US$275 million estimate for Tianjin losses is net of reinsurance and before tax, notes a company statement this week providing a preliminary update on its expected results for 2015 Q3. Zurich – which cautions the nature of many of the losses and the extended remediation period to complete repairs means the final costs remains uncertain – plans to provide a further update when the company’s 2015 third quarter results are released Nov. 5, 2015.
Beyond the Tianjin port claims, the multi-line insurer reports it now expects weaker than expected profitability in its General Insurance business in the first half of 2015 will continue in 2015 Q3.
“Specifically, large losses excluding those associated with the Tianjin explosion will be at levels similar to the results for the first half 2015,” the statement notes. “Further, recently completed reserve reviews indicate a likely negative impact of around US$300 million in the third quarter in relation to current and prior year liabilities for U.S. auto liability and certain other lines of business.”
As it stands now, the expectation is the General Insurance business will report an operating loss of about US$200 million for the third quarter of 2015. The Global Life and Farmers businesses are expected to perform in line with expectations.
Kristof Terryn, CEO of General Insurance, is conducting an in-depth review of the General Insurance business in light of the deterioration in profitability in certain parts of the business. Again, an update on the review will be provided when 2015 Q3 results are released Nov. 5.
The recent deterioration in the trading performance in the Zurich Group’s General Insurance business contributed to the announcement this week that Zurich has terminated its discussions in connection with a possible offer for RSA.
Instead, the company statement notes, the Group’s focus “will be on taking the necessary actions to deliver on the required performance of the General Insurance business.”
Overall, Zurich remains committed to achieving its financial targets for 2014 to 2016. That includes net cash remittances to the Group after all central costs in excess of US$9 billion over the three years.