Zurich reports strong momentum across all business segments

• Property & Casualty (P&C) gross written premiums up 11% on a like-for-like1 basis with growth in both retail and commercial insurance
• Life new business value up 25% on a like-for-like1 basis driven by favorable business mix and higher APE sales
• Farmers Exchanges gross written premiums 19% higher (7% like-for-like1)
• Continued delivery of customer-focused strategy, with approximately 1.5 million net new retail customers added, up from about 600,000 in the first half
• Capital position very strong with Swiss Solvency Test ratio estimated at 203%3 as of September 30, 2021
• Nine-month performance and market trends confirm confidence in achieving 2022 targets

Zurich - Zurich Insurance Group has today announced that it has continued to make strong progress toward achieving its 2022 strategic and financial goals, with Property & Casualty (P&C) gross written premiums continuing to benefit from the improvement in the pricing environment.

Group Chief Financial Officer George Quinn says: "Recent claims events are likely to extend the hard market, with the gap between rate increases and loss cost inflation likely to persist for longer than previously expected. Technical profitability is expected to continue to improve despite catastrophe losses which are 3 to 4 percentage points higher than the long-term average. In Life, the Group benefited from a more profitable new business mix, with increases in sales of protection and unit-linked business. Farmers Exchanges2 produced strong top-line growth benefiting both from the inclusion of the MetLife business and robust like-for-like1 performance.”

“These trends, including our robust customer growth and our very strong balance sheet, allow us to look forward with confidence to achieving our targets.”

Key Figures

The group announced that for the nine months ended September 30, P&C gross written premiums (GWP) were US$31,152bn compared with US$27,258bn in the corresponding period in 2020, a 14% increase. Life annual premium equivalent (APE) were US$2,753 compared with US$2,573 in the corresponding period in 2020, a 7% increase. The Group says it saw Farmers Exchanges GWP also increase to US$18,225 compared with US$15,285 achieved in the corresponding period in 2020.

Recognising the urgent need for action to address climate change, Zurich in September announced new measures to accelerate cuts in carbon emissions from operations. These include reducing the CO2 footprint of air travel by 70% from 2019 levels, switching the fleet to electric and hybrid vehicles, moving to paperless communication with customers and converting another 50 properties to sustainable standards. These measures are set to reduce CO2 emissions by more than 40,000 metric tons per year, equivalent to the amount absorbed annually by 2 million trees.

Commentary - Property & Casualty

Gross written premiums in Property & Casualty (P&C) for the first nine months increased 11% on a like-for-like1 basis, adjusting for currency movements, acquisitions and disposals. They rose 14% in U.S. dollar terms, with growth amplified by favorable currency movements.

Growth was supported by higher premium rates, driven by increases in commercial insurance across all regions. The Group’s leading North American crop insurance business contributed about 2 percentage points to growth as a result of higher prices for agricultural commodities.

In Europe, Middle East and Africa (EMEA), gross written premiums increased 6% on a like-for-like1 basis compared with the previous year. In retail, growth was driven by both personal lines and SME business, and benefited from a normalization of economic activity compared with the previous year. In commercial insurance, gross written premiums grew in all major markets, most notably in Switzerland and the UK, supported by rate increases.

North America grew 15% on a like-for-like1 basis compared with the previous year, with crop insurance contributing about 5 percentage points to growth. Rate increases remained strong at 13% in the first nine months, and 12% in the third quarter discrete.

In Asia Pacific, gross written premiums rose 8% on a like-for-like1 basis compared with the previous year. This was driven by growth in retail business most notably in Japan and Australia, which benefitted from a partial recovery of travel insurance, as well as growth in commercial insurance. In Latin America, gross written premiums rose 17% on a like-for-like1 basis, with a strong rebound in all major businesses from the relatively low levels recorded in 2020 as a result of COVID-19-related restrictions.

The third quarter saw an elevated level of catastrophe losses, including the major flooding in Germany and a series of other weather events in Europe in July, and Hurricane Ida in the United States in August.

Life

In the first nine months, Life new business annual premium equivalent (APE) increased 5% on a like-for-like1 basis, adjusting for currency movements, acquisitions and disposals. The increase reflects positive sales momentum in unit-linked and protection business. Together with the corporate savings business, these products accounted for 91% of APE sales over the first nine months.

In EMEA, APE sales increased by 6% on a like-for-like1 basis, compared with the same period in 2020. This was driven by strong growth of unit-linked business in Ireland, Italy and Switzerland, and favorable sales of protection in Spain and the UK.

In North America, APE sales decreased 8% on a like-for-like1 basis, excluding the group life business which was sold in the prior year. In Asia Pacific, lower sales in Japan, Indonesia and Australia led to a new business APE decline of 10% on a like-for-like1 basis. The decrease in Australia was in part due to repricing actions to improve margins.

APE sales in Latin America increased 7% on a like-for-like1 basis, reflecting higher sales volumes of individual protection at Zurich Santander and growth of unit-linked business in Chile and Brazil. These were partially offset by the non-renewal of a large corporate life and protection account in Chile.

New business value (NBV) increased by 25% on a like-for-like1 basis, driven by the more favorable sales mix and higher sales volumes in EMEA and Latin America. On a reported basis, NBV increased by 30%.

The new business margin improved to an attractive level of 30.4% as reported and on a like-for-like1 basis.

We continue to see areas of COVID-related excess mortality within Life, but the overall strength of the business allows this to be absorbed without having a material impact on the segment’s financial results.

Farmers

The Farmers Exchanges, which are owned by their policyholders, reported an increase of 19% in gross written premiums in the first nine months of the year. Growth on a like-for-like1 basis of 7%, which excludes the contribution of the MetLife transaction, was driven by the continued improvement in most lines of businesses and the absence of the 2020 COVID-19 premium refunds of USD 311 million. Gross earned premiums, which lag written premiums, were 16% higher on a reported basis and 4% higher on a like-for-like basis.

The Farmers Exchanges2 surplus ratio decreased 3.2 percentage points to 40.0%, mainly driven by elevated claims.

Farmers Management Services (FMS) management fees and other related revenues increased 13% on a reported basis and were 1% higher on a like-for-like1 basis, driven by the higher premium base at the Farmers Exchanges.

Farmers Life new business APE sales increased 8% compared with the prior year. New business value increased 10%, mainly driven by higher sales volumes and positive modeling enhancements, which were partially offset by operating variances.

Capital position

As of September 30, 2021, Zurich’s Swiss Solvency Test (SST) ratio is estimated at 203%3 and remains well in excess of the Group’s target level of at least 160%. Anticipating the introduction of IFRS 17 Zurich has taken the opportunity to strengthen some of the assumptions within the life business which had a modest impact on the SST ratio for the quarter.