Zurich Financial weathers the storms well
Net profit at Zurich Financial Services soared by 30 per cent in 2005 to a record $3.2 billion (SFr4.2 billion) despite record hurricane claims.
Switzerland’s largest insurer said on Thursday that all its businesses had contributed to what it termed an “outstanding result”. The rise was above market expectations.
The company said in a statement that the total impact of the costliest-ever United States hurricane season and other natural catastrophes was $1.3 billion, in line with its earlier forecasts.
But its diversified risk portfolio helped to mitigate the heavy storm losses, the company said.
It proposed a dividend of SFr7 ($5.3) per share, an increase of 75 per cent compared with 2004.
The rise in profit is considered a sign that Zurich has regained its earnings power after years of restructuring in which it repeatedly had to boost claims reserves.
Record performance
“We are reporting a record performance following the insurance industry’s most severe natural catastrophe year on record,” commented Zurich’s chief executive, James Schiro.
“It was achieved on the basis of our commitment to operational excellence and supported by our well-diversified portfolio and strong balance sheet.”
In the life insurance operation, business operating profit – Zurich’s own gauge of underlying profits – rose 16 per cent, while investment income was $7.8 billion, up by four per cent.
Schiro told journalists in a conference call that he was confident about the company’s future performance.
“As always in this business there will be challenges ahead. We don’t know what they may be but we are confident to deliver yet another powerful performance.”
He was cautious when asked about possible acquisitions.
“I don’t believe acquisitions are a strategy. When all else fails, you say my strategy is acquisitions. My purpose here is to drive growth and to look at all the options that are available to us,” he said.
swissinfo with agencies
2005 was the costliest year on record for insured natural disasters. Claims including those from 13 hurricanes and 26 named storms may cost insurers $50.3 billion, one survey company has estimated.
Zurich Financial Services said last October that it expected $600 million in costs from Hurricane Katrina, which struck the US Gulf Coast in August.
It said Hurricane Wilma, which struck Florida in October, will cost it as much as $300 million.
Financial figures 2005
Pre-tax profit: $5.466 billion (+49%)
After-tax profit: $3.33 billion (+29.5%)
Net profit: $3.214 billion (+30.3%)
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