Group business operating profit (BOP) of
Earnings per share grows 8% in USD; net income attributable to shareholders rises to
Strong top-line growth becomes more significant profit driver with Property & Casualty (P&C) GWP up 10% and Life new business premiums up 17% on a like-for-like basis1
P&C BOP strong at
Strong retail P&C margin improvement vs H2-22, rate increase in H1-23 of 4%; Commercial P&C rate increase at 7% (9% in
Life BOP rises 11% to
Farmers BOP of
Very strong capital position with Swiss Solvency Test (SST) ratio at 263%3
Group Chief Executive Officer
'We've achieved a return on equity that's among the highest in the industry, while minimizing volatility, maintaining a strong balance sheet and taking advantage of the growth opportunities available to us.
'Our 2023-2025 targets are our most ambitious yet, but our agility, flexibility and focus on delivering results make me confident that we will achieve them.'
Select financial highlights (unaudited)
(For a more comprehensive set of financial highlights see below)
in USD millions, for the six months endedJune 30 , unless otherwise stated 2023 20224 Change inUSD5
Business operating profit (BOP) 3,720 3,738 (0%)
Net income after tax attributable to shareholders (NIAS ) 2,492 2,344 6%
Business operating profit (after tax) return on common shareholders' equity (BOPAT ROE) 22.9% 21.2% 1.7pts
Group business operating profit is at the same high level as in the prior year, with 3% growth when measured in local currencies. Net income after tax attributable to shareholders (
P&C BOP of
In
Life BOP rose 11% to
Farmers BOP rose 1% to
Business performance
Property & Casualty
in USD millions, for the six months endedJune 30 , unless otherwise stated 2023 20224 Change inUSD5 Change like-for-like1,5
P&C business operating profit (BOP) 2,247 2,379 (6%) (2%)
P&C gross written premium and policy fees 24,560 22,753 8% 10%
P&C insurance revenue 20,163 18,648 8% 10%
P&C combined ratio 92.9% 91.6% (1.3pts)
Property & Casualty (P&C) business operating profit down 6% to
P&C business operating profit (BOP) of
The combined ratio increased 1.3 percentage points year over year to 92.9% as the Group continues to maintain a cautious approach to reserving to minimize volatility.
Retail P&C saw a material improvement in margins in the first half of 2023 compared with the second half of 2022, with the accident year combined ratio (excluding catastrophes) improving by 2.9 points to 97.0%. Commercial P&C maintained strong returns with an accident year combined ratio (excluding catastrophes) of 90.1%, compared with 90.4% in the second half of 2022.
Gross written premiums grew 10% on a like-for-like1 basis, adjusting for currency movements, with growth in both retail and commercial insurance across all regions. In EMEA, growth was driven by a strong performance across the region, particularly in
The Group achieved price increases of about 6% in the first half of the year, supported by a commercial insurance rate change of 7% and a recovery in the retail business.
Life
in USD millions, for the six months endedJune 30 unless otherwise stated 2023 20224 Change inUSD5 Change like-for-like1,5
Life business operating profit (BOP) 939 847 11% 18%
Life present value of new business premiums (PVNBP) 8,242 7,283 13% 17%
Life new business contractual service margin (NB CSM) 536 625 (14%) (10%)
Life insurance revenue, short-term contracts 1,089 1,012 8% 8%
Life fee revenue, investment contracts 316 247 28% 30%
Life BOP rises 11% to
The Group's Life business delivered a strong performance during the first half of the year, with growth in BOP and new business premiums.
In the first half of the year, life insurance new business premiums increased 13% in
Short-term insurance contracts, predominantly related to the
First-half BOP of
Farmers
in USD millions, for the six months endedJune 30 unless otherwise stated 2023 20224 Change inUSD5
Farmers Exchanges2
Gross written premiums 13,572 13,503 1%
Gross earned premiums 13,101 12,642 4%
Combined ratio 111.6% 104.4% (7.2pts)
Surplus ratio6 30.2% 35.0% (4.8pts)
Farmers
Farmers business operating profit (BOP) 993 982 1%
Farmers Management Services (FMS) fee income 2,251 2,218 2%
Farmers Life present value of new business premiums (PVNBP) 408 436 (7%)
Farmers Life new business contractual service margin (NB CSM) 55 52 5%
Farmers BOP up 1% compared with prior year as increase in fee income at FMS offset by underwriting loss in Farmers Re and transaction costs in Farmers Life
The Farmers Exchanges,2 which are owned by their policyholders, reported gross written premiums growth of 1% in the first half of the year. The reduction in commercial rideshare business volumes in the first quarter dampened the benefit of increased rates following a continued focus on improving the underwriting performance. On an underlying basis, excluding the commercial ride share business, gross written premiums increased by 5%. Gross earned premiums increased by 4% over the same period.
Excluding catastrophe losses, the Farmers Exchanges2 combined ratio improved 1.1 percentage points to 94.1%. The continued strong focus on pricing led to an earned rate impact of 12.5% for the period. The Farmers Exchanges2 surplus ratio6 decreased to 30% as a consequence of the underwriting loss in the period, mainly due to an exceptional frequency of catastrophe losses.
Farmers Management Services (FMS) fee income rose 2% compared with the prior-year period, driven by the increase in gross earned premiums at the Farmers Exchanges.2
Farmers Life new business premiums decreased by 7% to
Capital position
As of
1 Like-for-like comparisons represent the change in local currencies and after adjusting for acquisitions and disposals.
2
3 Estimated Swiss Solvency Test (SST) ratio as of
4 The comparative figures as presented in this news release have been restated for IFRS 17. The restatement does not apply to Farmers Exchanges' figures.
5 Parentheses around numbers represent an adverse variance.
6 Surplus ratio as of
Upcoming events
Appendix
IFRS 17 glossary
Insurance revenue reflects the amount of premium Zurich is entitled to in exchange for insurance services provided in the period to its policyholders. For most P&C and short-term Life contracts, the insurance revenue is similar to gross earned premiums.
New business premiums (PVNBP) is calculated as the present value of new business premiums discounted at the risk-free rate, gross of reinsurance and before the effect of non-controlling interests.
Contractual service margin (CSM) is a separate component of insurance liability representing unearned profits from in-force Life contracts (excluding short-term and investment contracts), before the effect of non-controlling interests and taxes.
Further information about IFRS 17 at Zurich can be found here.
Financial highlights (unaudited)
The following table presents the summarized consolidated results of the Group for the six months ended
in USD millions, for the six months endedJune 30 unless otherwise stated 2023 20221 Change2
Business operating profit (BOP) 3,720 3,738 (0%)
Net income attributable to shareholders after tax 2,492 2,344 6%
P&C business operating profit (BOP) 2,247 2,379 (6%)
P&C gross written premiums and policy fees 24,560 22,753 8%
P&C insurance revenue 20,163 18,648 8%
P&C combined ratio 92.9% 91.6% (1.3pts)
Life business operating profit (BOP) 939 847 11%
Life present value of new business premiums (PVNBP) 8,242 7,283 13%
Life new business contractual service margin (NB CSM) 536 625 (14%)
Life insurance revenue, short-term contracts 1,089 1,012 8%
Life fee revenue, investment contracts 316 247 28%
Farmers business operating profit (BOP) 993 982 1%
Farmers Management Services (FMS) fee income 2,251 2,218 2%
Farmers Management Services managed gross earned premium (MGEP) margin 6.7% 6.7% 0.0pts
Farmers Life present value of new business premiums (PVNBP) 408 436 (7%)
Average Group investments3 142,494 169,107 (16%)
Net investment result on Group investments3 2,569 770 nm
Net investment return on Group investments3,4 1.8% 0.5% 1.4pts
Total return on Group investments3,4 2.7% (10.8%) 13.5pts
Shareholders' equity 23,843 26,047 (8%)
Swiss Solvency Test5 263% 267% (5pts)
Diluted earnings per share (in CHF) 15.47 14.79 5%
Book value per share (in CHF) 147.17 167.24 (12%)
Return on common shareholders' equity (ROE)6 20.3% 17.7% 2.6pts
Business operating profit (after tax) return on common shareholders' equity (BOPAT ROE)6 22.9% 21.2% 1.7pts
1 The comparative figures as presented in this news release have been restated for IFRS 17. The restatement does not apply to Farmers Exchanges' figures.
2 Parentheses around numbers represent an adverse variance.
3 Including investment cash and derivatives.
4 Calculated on average Group investments.
5 Ratios as of
6 Shareholders' equity used to determine ROE and BOPAT ROE is adjusted for unrealized gains/(losses) on available-for-sale investments and cash flow hedges.
Further information
The Half Year Report 2023, as well as supplemental financial information to accompany the investor presentation, is available on Zurich's webpage.
IFRS 17 at Zurich
Further information about IFRS 17 at Zurich can be found here. A financial supplement for full-year 2022 results under IFRS 17 is available here.
Q&A session for media
There will be a conference call Q&A session for media starting at
+41 58 310 50 00
+44 207 107 0613
+1 631 570 5613
Q&A session for analysts and investors
There will be a conference call Q&A session for analysts and investors starting at
Participants who wish to attend the Live Q&A session will need to register ahead of the call under this link (Zurich Q&A call registration) and follow the on screen instructions.
Following registration, you will receive details of the call, together with your personal access details (PIN) for the event by email. At the time of the event, you will need to choose the dial in number and call it, enter the passcode of the event (1099879#) and your personalized pin followed by the # sign.
(C) 2023 Electronic News Publishing, source