Zurich Insurance Surpasses Expectations with Strong Annual Profits and Share Buyback Plan

Zurich revised its forecast for compound annual EPS growth to surpass 10%, contrasting with its initial aim of 8%.

Zurich Insurance (ZURN.S) revealed a surpassing annual operating profit on Thursday and declared a share buyback of up to 1.1 billion Swiss francs ($1.25 billion), as insurers navigate through the repercussions of a global pandemic, conflicts, and climate calamities.

The operating profit of Europe’s fifth-largest insurer escalated by 21% to a pinnacle of $7.4 billion for the year concluding on Dec. 31, outstripping the $7.1 billion average estimate in an analyst poll compiled by the company.

Insurers have adeptly managed unforeseen claims in recent times stemming from issues like COVID-19, natural disasters, and the conflict in Ukraine, predominantly by augmenting premiums and excluding certain business segments.

Nevertheless, they confront further perils of conflict or damage-induced losses this year arising from any wider repercussions of the Israel-Gaza conflict and from elections in numerous countries, including the United States.

Climate change also contributes to escalated losses from hurricanes and wildfires.

“It’s been a pretty unstable world for quite a long time; the group has been very resilient through that,” remarked Chief Financial Officer George Quinn during a media briefing.

“There’s no reason to expect any of that to change.”

Zurich established more ambitious three-year financial objectives last year, incorporating a 2025 target for business operating profit after tax return on equity (BOPAT ROE) exceeding 20%. BOPAT ROE for 2023 surpassed expectations at 23.1%.

“One year into the three-year plan we are beating or running to beat all the targets for 2025,” affirmed Chief Executive Mario Greco during a media briefing.

Zurich revised its forecast for compound annual EPS growth to surpass 10%, contrasting with its initial aim of 8%.

Rival AXA (AXAF.PA) unveiled new targets on Thursday, including estimated compound annual growth in underlying earnings per share of 6-8% for the 2023-2026 period.

Greco disclosed that Zurich would “reconsider the opportunities” for its German life back book after its plan to divest the $20 billion portfolio to Viridium Holding collapsed last month.

Zurich’s shares ascended by 2% at 0834 GMT, surpassing a 1.4% increase in European insurance stocks (.SXIP).

Zurich announced intentions to boost its dividend by 8% to 26 Swiss francs per share.