Zurich Insurance Group (ZURN) H2 2023 earnings summary

Executive summary

• Record 2023 BOP of USD 7.4bn, up 21% YoY and 27% in local currencies; BOPAT ROE reached 23.1%.

• Strong P&C, Life and Farmers results; 2023–2025 EPS CAGR guidance increased to above 10%.

Financial highlights

• NIAS rose 10% to USD 4.4bn; diluted EPS increased 12% to USD 29.7 and adjusted EPS rose 20% to USD 38.5.

• Insurance revenue increased to USD 56.1bn from USD 50.8bn; net investment result on Group investments rose 43% to USD 4.7bn.

• Operating cash flow was USD 7.3bn, up from USD 5.0bn; shareholders’ equity was USD 24.9bn versus USD 26.2bn.

• Net capital losses were USD 1.4bn, including a one-time USD 0.4bn Farmers Life reinsurance loss; restructuring costs were USD 0.3bn.

• Cash remittances totaled USD 4.8bn; the proposed dividend and planned buyback represented ~100% of FY-23 adjusted EPS payout.

Outlook and guidance

• FY-24 P&C insurance revenue is expected to grow at a mid-single-digit rate; Life BOP is expected to be at least in line with FY-23’s record level.

• FY-24 P&C current-accident-year discount impact is expected to be lower YoY; finance expense from discount unwind is forecast at ~USD 1.2bn.

• Farmers Exchanges GWP growth is expected in the mid-single digits, with FMS MGEP margin at 7.0%; Farmers Life BOP is forecast to grow at a low-single-digit rate.

• FY-23–25 EPS CAGR is expected to exceed 10%, above the prior 8% target; Group Functions and Operations net expenses are forecast at USD 800–850m and the effective tax rate at 25–27%.

• Positive business momentum is expected to continue through the financial cycle; investment income should benefit from reinvestment yields above book yields.