NU Online News Service, Feb.4, 12:15 p.m. EST
Zurich Financial Services Group reported net income for 2009 rose by 6 percent to $3.2 billion compared with $3 billion in the previous year.
The company said that it saw profitability in “all core business segments and targeted growth in profitable market segments, particularly in Global Life and Farmers.”
Listed as highlights by the Zurich, Switzerland-based firm were:
o Business operating profit (BOP) of $5.6 billion from $5.2 billion, an increase of 8 percent. BOP return on equity after tax of 17.2 percent.
o Return on equity of 12.6 percent.
o General Insurance gross written premiums and policy fees of $34.2 billion, down 8 percent or 4 percent in local currencies, from $37.2 billion, and a combined ratio of 96.8, a 1.3 point improvement.
o Global Life new business value, after tax, up 4 percent to $782 million from $753 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.
o Farmers Management Services’ management fees and other related revenues up 9 percent to $2.7 billion from $2.5 billion.
o Shareholders’ equity of $29.7 billion from $22.1 billion, an increase of 34 percent.
o Diluted earnings per share of CHF 24.21 ($22.76), up 4 percent from 23.35 ($21.96).
The company said in 2009 the group had cut expenses by $400 million and achieved an average rate increase of 3 percentage points in its general insurance segment.
As a result, Zurich said it will give shareholders a gross dividend of 16 Swiss francs per share on March 30, an increase of 45 percent over last year.
Additionally, the firm said it will eliminate 1.8 million shares from its 2008 buy-back program.
Martin Senn, Zurich CEO, said in a statement that the company board’s proposed dividend reflects “confidence in Zurich’s business strategy and sustainability of its results.” He added he is proud of the businesse’s “ability to continue generating such long-term shareholder value while balancing the need to retain the strong and prudent solvency position our customers respect.”
The company’s report said its general insurance arm had performed well against “contracting insurance markets,” but a continued focus on underwriting discipline, while maintaining profit margins, negatively impacted volumes. Business operating profit of $3.5 billion was down 2 percent in dollars but up 1 percent in local currencies, it said.
Zurich also said that ability to capitalize on growth opportunities in targeted market segments helped to mitigate the impact of pricing discipline and lower volume.
Farmers Re, it was noted, nearly doubled its premium 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 Dec. 31, 2009 in connection with the acquisition of 21st Century.
In combination with a higher investment income as a result of increased participation in the all-lines quota share reinsurance treaty, Farmers Re’s business operating profit rose to $228 million, said Zurich.
Net investment results for the group were said to have contributed $6.1 billion with net capital losses of $1.4 billion driven by impairments on both debt and equity securities.