Zurich posts record profit, announces $1.25 billion share buyback

(Reuters) — Zurich Insurance posted a better-than-expected annual operating profit on Thursday and announced a share buyback of up to 1.1 billion Swiss francs ($1.25 billion), as insurers ride out the impact of a global pandemic, wars and climate disasters.

Operating profit at Europe's fifth-largest insurer rose 21% to a record $7.4 billion for the year, beating the $7.1 billion average estimate in an analyst poll compiled by the company.

Insurers have coped well with unexpected claims in recent years from issues such as COVID-19, natural catastrophes and the war in Ukraine, mainly by raising premiums and excluding some business.

However, they face further risks of war or damage-related losses this year from any broader fall-out from the Israel-Gaza conflict and from elections in many countries. Climate change is also contributing to greater 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,” Chief Financial Officer George Quinn said on a media call.

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

Zurich last year set more ambitious three-year financial targets, including a 2025 goal for business operating profit after tax return on equity) of more than 20%. BOPAT ROE for 2023 came in at 23.1%.

“One year into the three-year plan we are beating or running to beat all the targets for 2025,” CEO Mario Greco said on a media call.

Zurich raised its guidance for compound annual EPS growth to more than 10%, compared with its original target of 8%.

Rival Axa SA on Thursday set new targets, including estimated compound annual growth in underlying earnings per share of 6% to 8% for the 2023-2026 period.

Zurich said it planned to increase its dividend by 8% to 26 Swiss francs per share.