(Reuters) — Zurich Insurance Group reported a better-than-expected 25% rise in first-half operating profit on strong performance across the board and announced a 1.8 billion Swiss franc ($1.91 billion) share buyback on Thursday, which sent their shares. higher.
Europe’s fifth-largest insurer said it was on track to hit all of its 2022 targets.
Zurich’s ability to exceed its three-year financial targets despite the Covid-19 pandemic and the war in Ukraine “gives us great confidence that we can handle unexpected, unprecedented things and still deliver,” CEO Mario Greco told Reuters.
The insurer will set new three-year targets later this year which are likely to be more challenging. Some may focus on different metrics, Mr. Greco.
Operating profit was $3.39 billion, with both property/casualty and life businesses outperforming.
Analysts on average had seen the companies̵7; operating profit of $3.28 billion, according to a consensus forecast compiled by the company.
Insurers are facing weak investment results due to market falls due to the war in Ukraine and inflationary pressures hitting their customers’ wallets.
But rising premiums have helped commercial insurance divisions.
Zurich’s property/casualty business posted a first-half total expense ratio – a measure of underwriting profitability where a level below 100% indicates a profit – of 91.9%, a record, thanks to higher rates and lower natural disaster and weather claims.
Property/casualty rates rose 9% while claims inflation was around 5% to 6%, Greco said.
Rival Allianz’s results last week missed forecasts, although Axa fared better than expected, boosted by health insurance sales.
Zurich said the share buyback, which will begin in the coming months, would offset an expected profit dilution from the agreed sale of its German life book.
The buyback would not affect Zurich’s dividend policy, Greco said.
Zurich shares were up 1.9% by 0914 GMT, compared with a 0.6% gain for European insurance stocks.
Barclays analysts described the results as “strong” and reiterated their “overweight” rating.