Price hikes support Zurich top line, but units remain to be offloaded

Price rises across the board of around 6% helped insurer Zurich to report better first half results, but the group is yet to complete on a number of deals to offload units in Chile, Germany and Spain.

The insurer stated: "The group achieved price increases of about 6% in the first half of the year, supported by a commercial insurance rate change of 7% and a recovery in the retail business."

So-called business operating profit (BOP) came in at $3.7bn for the period, with return on equity (defined as "BOPAT ROE") was 22.9%.

Earnings per share grew 8% in dollar terms, with net income attributable to shareholders up to $2.5bn.

Life new business premiums were up 17% on a like-for-like basis.

There are ongoing deals to offload units in multiple markets, the insurer confirmed in the results, including:

• On 8 May 2023, Inversiones Suizo-Chilena SA entered into an agreement to sell the annuity book of Zurich Chile Seguros de Vida SA to Ohio National Seguros de Vida SA, a Chilean life insurer and indirect subsidy of Constellation Insurance Inc. The transaction is expected to complete in 2024.
• On 24 June 2022, Zurich Inurance Group agreed to sell its legacy traditional life insurance back book in Germany to Viridium Holding AG, a specialists in the management of life insurance portfolios (run-off) in Germany. The sale is subject to regulatory approvals.
• On 9 December 2021, Zurich Insurance plc entered into an agreement to sell its legacy medical malpractice portfolio in Spain. The transaction is subject to regulatory approval and is expected to be completed in 2024.

Sustainability challenge

Not mentioned in the report is how Zurich and other insurers will progress on net zero commitments.

Along with other providers, Zurich left the UN led Net Zero Insurers Alliance in the spring this year. The industry has citied risks both of the commitments of the Alliance being too weak in response to climate change, but also, eg, legal risks linked to the political backlash against 'ESG' seen in the US market.

The phrase 'net zero' is not mentioned in the latest results, according to a key word search. The next United Nations Conference Of the Parties, COP28, takes place in late November-early December in Dubai. As the host presidency, the UAE government has issued a letter to all Parties ahead of the event identifying four "paradigm shifts":

• Fast-tracking the energy transition and slashing emissions before 2030;
• Transforming climate finance, by delivering on old promises and setting the framework for a new deal on finance;
• Putting nature, people, lives, and livelihoods at the heart of climate action; and
• Mobilizing for the most inclusive COP ever.

Elements of these "shifts" may yet impact on insurance groups such as Zurich and the wider insurance sector.