Continued top-line growth and strong solvency position

“The Group continues to be on track to exceed its strategic and financial targets for the 2020-2022 cycle,” said Group Chief Financial Officer George Quinn. “We saw robust premium increases across the Group, most notably in our North American Property & Casualty business, where rate increases drove double-digit top-line growth. We expect margin trends in our commercial insurance business to be positive into 2023. The Life business continues to experience positive operating trends which are offset by the effects of the strong U.S. dollar and weaker financial markets. Farmers is demonstrating strong, rate-driven growth. Our capital position is excellent and the strong delivery through this strategic cycle positions us well as we look forward to setting out our plans for the next three-year cycle at our upcoming Investor Day.”

Property & Casualty premiums grew strongly in the first nine months, with rate increases in commercial insurance continuing to drive an expansion in margins. Growth was especially strong in North America, with gross written premiums up by 14%, boosted by the Group’s leading crop insurance franchise and rate increases of 8%. The retail business grew 13% on a like-for-like basis¹, driven by strong growth across all regions.

In Life, new business volumes grew by 2% on a like-for-like basis¹, while new business value was 11% lower, driven by a combination of modelling and assumption updates and higher interest rates.

Gross written premiums at the Farmers Exchanges² were up 11%, benefiting from the inclusion of the acquired MetLife business and increased pricing.

Zurich’s focused execution of customer strategy helped it add approximately 1.1 million retail customers since the beginning of the year.³

Zurich will provide an update on its strategic objectives and targets for the period 2023-2025 at its Investor Day on November 16, 2022, in Zurich, Switzerland. The presentations will be available on the Group’s website on the day of the event with a real-time webcast beginning at 10:30 a.m. CET. For details, see www.zurich.com.

Gross written premiums in Property & Casualty for the first nine months rose 13% compared with the previous year on a like-for-like¹ basis, adjusting for currency movements. They rose 8% in U.S. dollar terms, reflecting the strengthening of the U.S. dollar against major currencies.

Higher premium rates, driven by commercial insurance, supported growth. The Group expects commercial insurance rates to remain above loss cost trends into 2023. Within retail, the Group expects pricing to reflect inflation trends at renewal in 2023.

In Europe, Middle East and Africa (EMEA), gross written premiums increased 10% on a like-for-like¹ basis. Growth was driven by a strong performance across the region, most notably in the UK, Switzerland and Germany. Premium rates increased 9% in commercial insurance and 3% in retail insurance.

North America grew 14% on a like-for-like¹ basis compared with the previous year, with crop insurance contributing almost 40% of the growth. North America’s strong performance continues to benefit from rate increases, which have been developing better than expected since the beginning of the year and which remain above loss cost trends.

In Asia Pacific, gross written premiums increased 19% on a like-for-like¹ basis compared with the previous year. Higher retail sales and a rebounding travel insurance business in Australia drove strong growth across the region.

In Latin America, gross written premiums increased 22% on a like-for-like¹ basis, benefiting from strong growth in both retail and commercial insurance across the region.

The third quarter saw elevated natural catastrophe losses driven mainly by Hurricane Ian making landfall in the U.S for which, based on current estimates, the Group has recognized a net impact of USD 550 million on a pre-tax basis. Given this, the Group’s catastrophe loss ratio for the first nine months of 2022 is estimated to be about 2 percentage points above long-term trends. The higher frequency and severity of natural catastrophe events in recent years underlines the importance of the steps the Group is taking to actively manage its exposure to these events.

In the first nine months, Life new business annual premium equivalent (APE) increased 2% on a like-for-like¹ basis, adjusting for currency movements, acquisitions and disposals. Growth was driven by higher sales in capital-efficient savings and protection products. In U.S. dollar terms, APE decreased 6% compared with the prior-year period, with growth in local currencies more than offset by U.S. dollar appreciation against major currencies.

In EMEA, APE increased 1% on a like-for-like¹ basis, compared with the same period in 2021. This was primarily driven by growth in corporate pensions in Switzerland and unit-linked business in Germany, which more than offset a reduction of low margin individual savings in Spain.

In North America, APE grew 22% on a like-for-like¹ basis compared with the same period in 2021, driven by corporate protection products.

In Asia Pacific, APE increased 4% on a like-for-like¹ basis compared to the previous year, as growth in Hong Kong, Indonesia and Australia was only partially offset by lower sales in Malaysia and Japan.

APE in Latin America increased 4% on a like-for-like¹ basis driven by growth in protection, partially offset by a slowdown in unit-linked sales.

New business margin remained attractive at 26.5% in the first nine months, down from 30.4% in the previous year. The lower margin reflects the impact of modelling and assumption updates, as well as adverse economic variances mainly related to higher discount rates. This resulted in new business value of USD 595 million, 11% below prior year on a like-for-like¹ basis.

The Farmers Exchanges², which are owned by their policyholders, reported an increase of 11% in gross written premiums for the first nine months of the year. Growth was driven by the inclusion of the acquired MetLife business for the full nine months, higher volumes of commercial rideshare business and rate increases across lines of business. Gross earned premiums, which lag written premiums, increased by 10% during the same period.

The Farmers Exchanges² surplus ratio fell to 34.7%, driven by the higher Farmers Exchanges² premium base on which it is calculated. A further contributor to the decline was a decrease in the ending surplus, due to a net underwriting loss during the period as well as unrealized capital losses from unfavorable movements in financial markets.

Farmers Management Services (FMS) management fees and other related revenues were in-line with the development of gross earned premiums at the Farmers Exchanges.²

Farmers Life new business APE was 2% below the prior-year period. New business value declined by 46% to USD 45 million, driven by lower sales volumes, the impact of higher discount rates and a shift in business mix to lower-margin products.

Capital position

As of September 30, 2022, Zurich’s Swiss Solvency Test (SST) ratio is estimated at 252%⁴ and remains well in excess of the Group’s target for an SST ratio of 160% or above. This compares to 262% as of June 20, 2022, with the reduction reflecting the full allowance for the CHF 1.8 billion share buyback announced in August, the unwinding of macro hedges put in place in the first quarter, the completion of the acquisition of the Deutsche Bank Financial Advisors business in Italy, as well as the impact of Hurricane Ian, partially offset by favorable market movements. Net debt issuance in the third quarter added 1 percentage point to the SST ratio, also including the recent repurchase of EUR 500 million of dated subordinated debt.

¹ Like-for-like comparisons represent the change in local currencies and are adjusted for the announced sale of the Italian life and pensions back book to GamaLife expected to be completed in the fourth quarter of 2022 subject to regulatory approval.
² Zurich Insurance Group has no ownership interest in the Farmers Exchanges. Farmers Group, Inc., a wholly owned subsidiary of the Group, provides certain non-claims services and ancillary services to the Farmers Exchanges as its attorney-in-fact and receives fees for its services.
³ Based on 9 retail markets: Australia, Brazil, Germany, Japan, Italy, Santander JV, Spain, Switzerland, and UK.
⁴ Estimated Swiss Solvency Test (SST) ratio, calculated based on the Group’s internal model approved by the Swiss Financial Market Supervisory Authority FINMA.
⁵ Parentheses around numbers represent an adverse variance.
⁶ Ratios as of September 30, 2022, and December 31, 2021, respectively.

Further information

Q&A session for media

There will be a conference call Q&A session for media starting at 08:30 CET. Media may dial in using the details provided below. The call will be held in English. Please dial in approximately 10 minutes prior to the start of the conference call.

Q&A session for analysts and investors

There will be a conference call Q&A session for analysts and investors starting at 13:00 CET. Media may listen in. A podcast of this Q&A session will be available from 17:00 CET.

Participants who wish to attend the Live Q&A session will need to register ahead of the call under this link (Zurich Q&A call registration) and follow the on screen instructions. Following registration, you will receive details of the call, together with your personal access details (PIN) for the event by email. At the time of the event, you will need to choose the dial in number and call it, enter the passcode of the event (9459805#) and your personalized pin followed by the # sign.