ZURICH's top-line for the first three quarters shows good growth
"I am pleased with the development of our businesses in the year to date, particularly against a challenging industry backdrop in the third quarter. We expect the third quarter natural catastrophe events to drive improvements in pricing across our business," George QUINN, Chief Financial Officer, pointed out.
"New business volumes and customer retention in Property & Casualty and Life are both up, while the Farmers Exchanges continue to deliver consistent growth. The Group is strongly capitalized and has continued to make progress against its strategic targets", he added.
Property & Casualty
Gross written premiums in Property & Casualty (P&C) for the first nine months of 2017 rose 1% in local currency after adjusting for acquisitions and disposals and declined 2% in U.S. dollar terms. This reflects improved levels of retention and new business. Rates overall increased by around 1%, mainly driven by Europe, Middle East & Africa (EMEA).
In EMEA, excluding the disposals of South Africa, Morocco and the Middle East, gross written premiums declined by 2%, due to reductions in Germany, the UK and Spain. Gross written premiums for North America were flat compared to the prior year period, with growth in higher margin lines offsetting declines in large commercial. In Asia Pacific, gross written premiums were up 8% in local currency, reflecting the incremental premium from underwriting the Cover-More travel business in Australia, while gross written premiums for Latin America increased by 12% in local currency, mainly driven by the retail business in Brazil and Mexico.
As mentioned in the Group's news release of October 19, 2017, aggregate claims in the third quarter of 2017 related to hurricanes Harvey, Irma and Maria, for the Group's Property & Casualty business, are estimated to be approximately USD 700 million net of reinsurance and before tax. As indicated at the time of the release, these events will result in estimated net-of-tax losses of USD 620 million with a consequent negative impact on the Group's effective tax rate for the year. There were a number of other natural-catastrophe and weather-related events during the third quarter including the Mexican earthquakes, and severe storms and floods in EMEA and Asia.
The Group continued to focus on improving technical performance and efficiency during the third quarter. Additional effort will be required to achieve the Group's underwriting goals, while progress on efficiency has been achieved through a further reduction in other underwriting expenses.
Life new business APE volumes increased by 1% in local currency compared with the prior year after adjusting for acquisitions, and were flat in U.S. dollar terms. This was primarily driven by strong sales in the UK, Ireland and Switzerland. On a reported basis, volumes in Asia Pacific increased as a result of underlying growth and the inclusion of the acquisitions in Malaysia and Australia. In Latin America, continued growth in Brazil and in individual protection business at Zurich Santander was offset by lower sales of corporate protection in Chile.
New business value increased 17% year-on-year in local currency and adjusting for recent acquisitions, with higher values in most regions. This was largely due to strong volume growth of protection products in Brazil, improved business mix in Spain and Italy, favorable assumption updates in Asia Pacific and beneficial yield movements across Europe, Brazil and Japan.
As a result the overall new business margin increased by 2.4 percentage points to 23.2%.
2 - Ratios as of September 30, 2017 and December 31, 2016, respectively. Ratio for September 30, 2017 reflects midpoint estimate with an error margin of +/- 5 pts.
3 - Parentheses around numbers represent an adverse variance.
4 - Percentages represent the change in local currencies and are adjusted for acquisitions and disposals.