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Home / Insurance / Zurich's capital target disadvantages market expectations

Zurich's capital target disadvantages market expectations



(Reuters) – Zurich Insurance's new capital target disappointed market expectations on Thursday, although claims related to the COVID-19 pandemic and higher losses from natural disasters bit less than expected to full-year revenues.

Insurance companies have faced strong claims from cancellations of events and business interruptions among government blockades to slow the spread of COVID-19, while a damaging hurricane season in the US put further pressure on earnings in the second half.

Zurich has been looking to raise premiums to help curb influence.

The full-year result of $ 3.83 billion – a decrease of 8% from 2019 – easily beat the average expectations of $ 2.93 billion in the company's own survey of 21

analysts, thanks to a sharp rise in property prices / accidents and investment portfolio gains at the end of the year.

Business profit fell 20% to $ 4.24 billion, says Europe's fifth largest insurer.

The Group's life insurance business exceeded expectations, as key markets in Asia and the Pacific, particularly Australia, saw strong improvements.

"We expect the trends that have driven (our strong operating profit) to continue into this year, so we expect to see further improvements in corporate performance," Chief Financial Officer George Quinn told reporters.

But a recently established capital adequacy target and a downward revision of current solvency as the group switched from one measurement system to another, disappointed analysts.

Shares fell 1.1% in early trading, as the Swiss insurance company said it would now target a Swiss solvency test (SST) of 160% or more after 182% for the year.

"The new target of at least 160% seems low compared to competitors," says Vontobel's analyst Simon Foessmeier in a note.

COVID-19 related P / C receivables, net after reinsurance and related claims reductions, amounted to $ 450 million for full year, which was delayed during the first half of the year.

Managers said they did not expect to see any significant impact from COVID-19-related claims on P / C operations in 2021, but could expect pandemic-related life insurance claims – which had $ 173 million. impact 2020 – to continue.

Disaster losses meanwhile were $ 588 million higher than in 2019.

Zurich proposed an unchanged dividend of 20 Swiss francs per share.

More insurance and risk management news about the coronavirus crisis here.


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