Insurance companies Zurich strives for further growth and wants to increase returns
Zurich Insurance Group has set itself new, more ambitious targets for the next three years. The global insurance group wants to continue to grow profitably and pay out generous dividends to shareholders in the future.
21.11.2024, 07:24
21.11.2024, 08:11
SDA
Zurich has already generated market-leading shareholder returns in the past and sees new opportunities to accelerate its success story, Group CEO Mario Greco was quoted as saying in a press release ahead of Thursday's investor meeting.
Aiming for high returns
Zurich is now launching a three-year plan with "the most ambitious targets in history", Greco said. From 2025 to 2027, the Group is aiming for an adjusted return on equity on operating profit (BOP) of at least 23 percent. To achieve this, equity will be adjusted for unrealized capital gains and losses.
In the three-year program, which actually runs until the end of 2025, the benchmark for the return is at least 20 percent. The Group had already clearly exceeded this in 2023 (23%) or in the first half of 2024 (25%).
As far as the profit growth target is concerned, Zurich aims to increase adjusted earnings per share (EPS) by an average of more than 9 percent over the next three years. For this year, Zurich expects EPS growth of more than 10 percent, compared to the previous target of a lower 8 percent.
Focus on corporate customers and pension solutions
In the new strategy period, the Group is focusing on business with larger corporate customers (Commercial), for example. With even more disciplined underwriting when concluding insurance contracts, the aim is to improve portfolio quality and increase operating profit to over USD 4.2 billion by 2027 after USD 3.6 billion in 2023.
Meanwhile, Zurich is aiming to return to long-term profitability in the private customer business and with SMEs (retail), according to the statement. Improvements in underwriting as well as an optimization of the business mix and the use of economies of scale should also pave the way here. The recently announced takeover of travel insurance for private customers from the US group AIG was an important step in this direction.
In addition, the company is also aiming for strong growth in premiums in life insurance, for example in the pension protection business, averaging 8 percent annually. In addition, the business with unit-linked pension products is expected to bring even more money into the coffers. The pension business will now be combined into a single global unit.
Zurich also hopes that the business with its US partner Farmers, for which the Group provides services, will contribute to growth.
Further "attractive" distributions
Greco intends to continue to create "considerable added value" for shareholders in the future with a "very attractive" dividend policy, according to the statement. The payout ratio on the profit generated will remain at around 75% in the future and the SST solvency ratio should remain above the 160% mark.
To ensure that sufficient funds are available for this, cumulative cash remittances of over 19 billion dollars are to be generated over the next three years. In the previous program from 2023 to 2025, such cash flows of 13.5 billion were targeted.
