Zurich 2009 Net Income up 6% to $3.2 Billion; Farmers Boosts Profits
The Zurich Financial Services Group posted across the board income gains in all of its core business segments and targeted growth in profitable market areas, particularly in Global Life and from Farmers.
The Group generated an increased business operating profit (BOP) in 2009 of $5.593 billion, an 8 percent increase from 2008, and posted net after tax income of $3.215 billion. As a result the Board of Directors announced that it would propose a dividend increase to the shareholders to CHF 16.00 [$15.07].
“2009 was an excellent year for Zurich. We generated a strong operating performance across all our core businesses and emerged from a challenging year with one of our strongest balance sheets ever,” noted CEO Martin Senn. “It is that proven ability to generate consistent earnings and achieve growth in targeted market segments that underpins my confidence looking forward, as it enables Zurich to face both challenges and opportunities from a position of strength.”
Other “performance highlights” included the following:
• BOP return on equity after tax of 17.2 percent
• Net income return on equity of 12.6 percent
• General Insurance gross written premiums and policy fees of $34.2 billion, down 8 percent or 4 percent in local currencies, and a combined ratio of 96.8 percent, an improvement of 1.3 percentage points
• Global Life new business value, after tax, up 4 percent to $782 million, with new business margin, after tax (as percent of APE), of 21.3 percent and new premiums (APE) up 12 percent or 19 percent in local currencies
• Farmers Management Services’ management fees and other related revenues up 9 percent to $2.7 billion
• Shareholders’ equity of $29.7 billion, an increase of 34 percent
• Diluted earnings per share of CHF 24.21 [$22.82], up 4 percent
Strong Growth at Farmers
Zurich’s Farmers Management Services (FMS) grew its management fees and other related revenues by 9 percent to $2.7 billion, reflecting an 8 percent gross earned premium growth at the Farmers Exchanges (Exchanges), which Zurich manages but does not own.
The earnings report explained that “underlying drivers of this growth were the acquisition of 21st Century in July of 2009 and the transfer of North America Commercial’s Small Business Solutions book to the Exchanges in June 2008.” As a result FMS’ gross management result improved by 13 percent, contributing to a 10 percent higher business operating profit of $1.291 billion and an improved managed gross earned premium margin of 7.2 percent.
Zurich added that the “integration of 21st Century continues to progress in line with Farmers’ successful integration track record.
“Farmers Re, which provides reinsurance to the Exchanges, nearly doubled its premium volume due to an increase of the existing All Lines quota share reinsurance treaty, executed in various steps, from 5 percent to 35 percent as of December 31, 2009 in connection with the acquisition of 21st Century.
“In combination with a higher investment income as a result of the increased participation in the All Lines quota share reinsurance treaty, Farmers Re’s business operating profit rose to $228 million, contributing thereby to an increased business operating profit for the Farmers segment of $1.6 billion.
The complete report, additional information and a replay of the conference for analysts and media, held today, February 3, may be obtained on the Group’s web site at; www.zurich.com.
Source: Zurich Financial Services