ZURICH Insurance posted a better than expected annual operating profit on Thursday (Feb 22) and announced a share buyback of up to US$1.25 billion, as insurers ride out the impact of a global pandemic, wars and climate disasters.
Operating profit at Europe’s fifth-largest insurer rose 21 per cent to a record US$7.4 billion for the year to Dec 31, beating the US$7.1 billion average estimate in an analyst poll compiled by the company.
Insurers have coped well with unexpected claims in recent years from issues such as Covid-19, natural catastrophes and the war in Ukraine, mainly by raising premiums and excluding some business.
However, they face further risks of war or damage-related losses this year from any broader fall-out from the Israel-Gaza conflict and from elections in many countries, including the United States. Climate change is also contributing to greater losses from hurricanes and wildfires.
“It’s been a pretty unstable world for quite a long time, the group has been very resilient through that,” chief financial officer George Quinn told a media call.
“There’s no reason to expect any of that to change.”
Zurich last year set more ambitious three-year financial targets, including a 2025 goal for business operating profit after tax return on equity (BOPAT ROE) of more than 20 per cent. BOPAT ROE for 2023 came in at 23.1 per cent.
“One year into the three-year plan, we are beating or running to beat all the targets for 2025,” chief executive Mario Greco said on a media call.
Zurich raised its guidance for compound annual EPS growth to more than 10 per cent, compared with its original target of 8 per cent.
Rival AXA on Thursday set new targets, including estimated compound annual growth in underlying earnings per share of 6-8 per cent for the 2023-2026 period.
Greco said that Zurich would “reconsider the opportunities” for its German life back book after its plan to offload the US$20 billion portfolio to Viridium Holding fell through last month.
Zurich said it planned to increase its dividend by 8 per cent to 26 Swiss francs (S$39.75) per share. REUTERS
