Zurich Insurance’s reported 2018 net income after tax of $3.72 billion, a 24 percent jump from $3.0 billion it reported in 2017 – primarily driven by growth in its life business and improved underwriting in its property and casualty business.

Zurich’s results “demonstrate further progress against the targets and the priorities we outlined in November 2016,” said Group CEO Mario Greco, during a call with financial analysts. “They have been achieved despite a challenging financial market in the latter part of the year and continued elevated natural catastrophe activity.”

Further, the company is on track to exceed its targets for its three-year strategic period from 2017 to 2019. “We have achieved cumulative net cost savings of approximately $1.1 billion toward the target of $1.5 billion in savings by the end of 2019,” according to a letter to shareholders, signed by Greco and Chairman Michel M. Liès.

The company’s overall business operating profit (BOP) for the 12 months ended Dec. 31, 2018, was $4.6 billion, up 20 percent over $3.8 billion reported in 2017. Breaking down the figures into life and P/C, the BOP at Zurich’s life business increased by 23 percent in 2018 to $1.6 billion (from $1.3 billion reported in 2017.)

Further, the BOP for its P/C business rose 35 percent to $2.1 billion during the year, compared to $1.6 billion in 2017. The 2018 BOP was mainly driven by improved underwriting performance, reflected in an improvement of 3.1 percentage points in the combined ratio.

Zurich’s combined ratio in 2018 was 97.8 percent, compared to 100.9 percent during 2017. (When a combined ratio is over 100 percent, the company loses money on its underwriting.)

Greco said both 2017 and 2018 “demonstrated the effectiveness of our underwriting” as the company had a below-average share of the elevated natural catastrophe events in the United States. (In 2017, catastrophe losses amounted to 5.8 percent of the combined ratio, but in 2018 that had lowered to 4.0 percent.)

Looking forward, Zurich is expecting its underwriting performance to be at the upper end of 95 to 96 percent “as the impact of business mix shifts, rate increases and expense reductions” continue to make their impact on earnings, Greco said.

Global Footprint

During 2018, the company continued to strengthened its “leadership positions in the faster growing regions in Asia and Latin America, and we have built out a leading position in the fast-growing travel and assistance business through targeted acquisitions, while also continuing to build additional distribution partnerships,” he said.

In Latin America, the group acquired QBE’s Latin American operations and the individual and group life business of EuroAmerica in Chile. It also acquired the leading regional travel and assistance businesses Travel Ace and Universal Assistance, which strengthened the global reach of Cover-More, the group’s travel and assistance business, explained the company in its annual results announcement.

In Asia, the group announced the planned acquisition of an 80 percent stake in PT Asuransi Adira Dinamika (Adira Insurance) as well as an agreement to enter into long-term cooperation with Indonesia’s fifth-largest bank, PT Bank Danamon Indonesia, and the country’s second-largest provider of automotive financing, Adira Finance. Completion is expected in the first quarter of 2019.

Investing in Innovation

Greco said the group continues to invest in innovation and launched in 2018 its inaugural Zurich Innovation World Championship, where more than 450 companies from 49 countries on four continents submitted innovative solutions covering a wide range of applications to the insurance industry.

The four winners, which were chosen by Zurich for their innovative customer-focused solutions, were named at the end of January 2019 as Chisel AI, zesty.ai, LifeNome and Soldier.ly.

“We look forward to working with the winners to bring new and innovative solutions to our business,” Greco said.

The group also launched the first application based on CoverWallet’s technology in Spain under the European-wide agreement between the two groups. Also in Spain, the group launched Klinc, a provider of on-demand coverage for personal possessions, while in the U.S., the Farmers Exchanges launched Toggle, a new brand targeting millennials, which offers on-demand, customizable renters insurance.

In addition, Zurich launched its first application for connected homes in collaboration with Vodafone in Italy, with additional markets to follow over 2019. The group also entered a strategic collaboration with the InsurTech company Snapsheet to deploy its virtual claims technology, beginning with the Irish market, said Zurich in its annual results announcement.

“These initiatives will help ensure that our customers benefit from simpler interactions with our businesses and greater levels of customer service while delivering greater levels of efficiency,” Greco said during the analysts’ call.

“We are very pleased with the excellent progress achieved in 2018 in executing our customer-led strategy. We set challenging goals and are delivering against them,” he said in a statement. “We have continued to strengthen our profitability and lower costs while growing our business, expanding our global footprint and broadening our range of innovative solutions to meet the changing needs of customers. This performance gives us great confidence as we enter the next phase of our development over the year ahead.”

*This story appeared previously in our sister publication Insurance Journal.