Zurich profit down on turnaround efforts
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Zurich Insurance Group Ltd. on Thursday said it posted net income of $858 million for the fourth quarter of 2014, down 20% compared with the fourth quarter of 2013.
The Zurich-based multiline insurer said quarterly profit had been affected by weaker business operating profit for its general insurance business, which is undergoing a turnaround program, as well as by foreign exchange movements, lower reserve releases and expenses.
For the quarter, Zurich's general insurance operations posted a business operating profit of $518 million, down 29.6% from the fourth quarter of 2013. The operations posted gross written premiums of $7.96 billion, down 3.6% from the prior-year quarter.
During the fourth quarter, Zurich's general insurance business suffered a $247 million loss on the sale of its Russian retail business, one of the areas that the insurer previously had said it would exit as part of the general insurance turnaround plan.
In a call with analysts, Zurich Chief Financial Officer George Quinn said that the fourth quarter also saw an uptick in attritional losses and adverse development in its U.S. crop insurance business, among other things.
For the full 2014 year, Zurich posted net income of $3.90 billion for 2014, down 3.2% compared with 2013. Gross written premiums were $52.01 billion, up slightly from $52.0 billion in 2013. The insurer posted an investment income of $9.21 billion for 2014 compared with $7.40 billion for 2013.
Zurich posted a combined ratio of 97.3% for its general insurance operations for 2014 compared with 98.0% for 2013. Mr. Quinn said ratio had been helped by a low level of natural catastrophes.
Mr. Quinn said that while improvements were being made in the performance of Zurich's general insurance business, there was “still work to be done.”
In a research note, Rene Locher, senior equity analyst at MainFirst Bank A.G., said that Zurich's operating results had been below the bank's — and the market's — expectations.
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