Zurich Financial Services Group has reported strong growth in all business segments, resulting in net income for 2007 of $5.626 billion, a 22 percent gain from the $$4.62 billion achieved in 2006. Business operating profit rose 10 percent to $6.614 billion.
“We may be operating in a difficult market environment,” commented CEO James J. Schiro, “but the strength of our balance sheet, the diversity of our risk portfolio and our ability to execute on our strategy delivered excellent results in 2007, and make us confident in our ability to continue driving success going forward.”
Other “Performance Highlights” included the following:
— Return on equity (ROE) of 21.0 percent
— General Insurance gross written premiums and policy fees of $35.7 billion, an increase of 4 percent or up slightly in local currencies, and a combined ratio of 95.6 percent, an increase of 1.7 percentage points
— Global Life new business value of $729 million, up 35 percent, with new business margin ( percent of APE) of 24.7 percent5 and APE up 18 percent or 11 percent in local currencies
— Farmers Management Services’ management fees and other related revenues up 6 percent to $2.3 billion
— Shareholders’ equity of $ 28.8 billion, an increase of 13 percent
— Diluted earnings per share of CHF 46.37, up 17 percent
The good results should make shareholders happy. Zurich’s Board of Directors has proposed to raise the Group’s dividend by 36 percent to CHF 15.00 ($13.575) per share, representing a 32 percent payout of earnings to shareholders.
Zurich also announced that “as a part of its capital management plans the Board has authorized a repurchase of CHF 2.2 billion or approximately $2 billion worth of shares over the course of 2008. This compares to the share buyback conducted in 2007 of CHF 1.25 billion or approximately $1 billion.”
Schiro indicated that the dividend and share buyback evinced the Group’s “commitment to creating long-term shareholder value, as well as our confidence in the ability of our people to deliver on our strategy.” He also noted that Zurich’s restructuring initiative – “The Zurich Way” – had enabled the Company to continue “to realize operational improvements and strengthen its growth capabilities, comfortably exceeding the benefit improvement target of $ 700 million after tax for 2007.”
Schiro added: “The Group will continue to leverage its global capabilities to target opportunities for profitable growth, both organic and through tactical bolt-on acquisitions, by systematically expanding into new customer segments, enhancing product offerings in life and general insurance, and strengthening distribution capabilities, such as the addition of new partnerships or the improved productivity and numbers of tied and independent agents.”
Farmers Management Services fees grew “in line with full year written premium growth of over 5 percent at the Farmers Exchanges, which Zurich manages but does not own, and reflects the positive impact that continued investments in distribution capabilities and product enhancements have had in surmounting an overall flat market trend,” said the bulletin. “Examples include improving the productivity of exclusive and independent agents across the US, adopting a targeted focus on ethnic customer groups, and finalizing the rollout of Bristol West’s products throughout the Exchanges’ distribution platform.
“The strong performance shown by Farmers resulted in an increased business operating profit of $ 1.3 billion, up 4 percent, while the continuing investments in strategic growth and infrastructure initiatives contributed to the lower operating margin of 46.6 percent, down by 3.5 percentage points.’
The full earnings report may be obtained on the Group’s web site at: www.zurich.com.
The presentation to analysts and media will be video webcast on the web site. A web cast playback will be available after 4 p.m. CET today, February 14.
Source: Zurich Financial Services
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