February 22, 2024


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Zurich Insurance looks to higher prices to cushion COVID-19 hit

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Zurich Insurance looks to higher prices to cushion COVID-19 hit

ZURICH/LONDON (Reuters) – Zurich Insurance’s (ZURN.S) life insurance and property and casualty businesses have taken a hit from the COVID-19 pandemic, but rising commercial insurance rates will provide support, its CFO said on Thursday as the company reported a 40% profit drop.

FILE PHOTO: The logo of Zurich Insurance Group is seen on a building in Bern February 10, 2014. Zurich Insurance Group announced their 2013 financial results on February 13. REUTERS/Thomas Hodel

Insurers have been hit across the board by pandemic-related claims including for travel, business interruption and event cancellation, in addition to life insurance.

“It’s been a relatively extraordinary six months,” Chief financial officer George Quinn said. “The challenge is not over.”

Europe’s fifth-largest insurer said it expected COVID-19 related insurance claims at its Property & Casualty business to be $750 million for the full year, the same level it indicated in May.

Zurich’s first-half business operating profit fell 40% to $1.7 billion, hit by payouts linked to the pandemic and weaker financial markets, but it was in line with analyst forecasts for $1.69 billion.

The company said the coronavirus outbreak had reduced its operating profit by $686 million.

CFO Quinn told Reuters the impact on the insurer’s life insurance business would be around $120 million, based on claims and policy changes.

In addition, claims related to civil unrest, mainly in the United States, totalled $122 million, Quinn said.

The port warehouse explosion in Beirut last week was not likely to represent a major loss for the insurer, he told a separate media call.

Zurich said its commercial insurance rates rose 8% in the first six months, but Quinn said rises accelerated in the second quarter and the trend was “really positive”.

Net profit fell 42% to $1.18 billion, also in line with consensus forecasts. Combined ratio at Zurich’s property and casualty business, which measures the profitability and financial health of insurance companies, weakened to 99.8% versus 95.1% a year earlier.

Zurich’s shares fell 1.2% at the open, compared with a 1% fall in European insurance stocks .SXIP.

JP Morgan described the results as “fractionally ahead,” reiterating their overweight rating.

Reporting by John Revill. Editing by John Miller and Jane Merriman

Our Standards:The Thomson Reuters Trust Principles.

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