Full year 2018 results show strong performance in a challenging market and claims environment, with the business operating profit (BOP) up 20 percent. BOPAT ROE was 12.1 percent for the year.
“The results position the Group to deliver fully on the targets for the 2017 to 2019 plan period, with progress across all areas of the business both from a financial, as well as from a strategic perspective.”
Executing on key strategic priorities
2018 saw the Group continue to make strong progress on key strategic priorities. The Group further strengthened its positioning in the fast developing regions of Southeast Asia and Latin America, as well as the rapidly growing global travel and assistance segment, through a number of targeted acquisitions.
On track to meet our 2017–2019 financial targets
The Group continued to build on the positive performance of 2017, making further progress in terms of profitability across the businesses, while remaining on track to meet the financial targets set out in November 2016.
As part of this, the Group achieved a further USD 400 million of cost savings over the course of 2018, with cumulative net savings of approximately USD 1.1 billion achieved to date, and with further savings expected to be delivered over the course of 2019.
2017–2019 financial targets
Target range: 100–120%
Estimated Z-ECM ratio2
Target: >USD 9.5bn
Cumulative cash remittances
As of FY 2018
Target: USD 1.5bn
Cumulative net expense savings
As of FY 2018
1 Business operating profit after tax return on equity, excluding unrealized gains and losses.
2 Full year 2018 Z-ECM reflects midpoint estimate with an error margin of +/–5 percentage points.
A strong capital position and focus on cash generation
During the year, management continued to improve the Group’s focus and optimize the use of capital. The Group’s internal economic capital model (Z-ECM) remained very strong at an estimated 125 percent,2 and above the target range.
Conversion of earnings into distributable cash was strong with USD 3.8 billion of cash remittances over the year.
In line with the stated dividend policy, the board proposed a 6 percent increase in the dividend to CHF 19 per share.
Progress made across all businesses
Property & Casualty results demonstrate further strong progress with a business operating profit up 35 percent in another year of elevated natural catastrophe events and with a negative headwind from mark-to-market effects on assets held at fair value. The top line remained stable on a like-for-like basis. The accident year combined ratio excluding catastrophes reduced by a further 0.4 percentage points driven by an improved underwriting performance.
The strength of the Group’s reserves was clearly demonstrated, with prior year reserve development of 2.3 percent in line with the upper end of the indicated 1–2 percent range.
In 2019, the Group expects to deliver further improvement in underwriting results as the benefits of portfolio shifts, higher rates in North America and lower expenses continue to earn through.
The Group’s Life business delivered an excellent performance, with growth across all regions reflecting the success of the Group’s strategy of focusing on protection and unit-linked business. Overall, Life’s business operating profit increased 23 percent in the year, driven by continued portfolio growth and further cost improvement. The quality and resilience of the Life performance remains high, with earnings driven largely by loadings and fees and technical margins.
The Farmers Exchanges,1 which are owned by their policyholders, showed continued progress in both customer metrics and underwriting performance over the year, resulting in gross written premiums growth from continuing operations of 3.7 percent and a 1.7 percentage points reduction in the overall combined ratio to 99.9 percent. Growth was also supported by the continued successful expansion of the Farmers Exchanges into the eastern U.S. and growth in the commercial rideshare. Growth in the Farmers Exchanges continued to drive growth at Farmers Management Services, while Farmers Life showed a strong new business value increase.
Group Chief Financial Officer
1 Provided for informational purposes only. Zurich Insurance Group has no ownership interest in the Farmers Exchanges. Farmers Group, Inc., a wholly owned subsidiary of the Group, provides certain non-claims administrative, management, and ancillary services to the Farmers Exchanges as its attorney-in-fact and receives fees for its services.
Continued strong performance across all businesses
Property & Casualty (P&C)
Combined ratio (%)
Like-for-like GWP growth (%)4
BOP growth (USDm)
2018 APE share of non-traditional products (%)
Combined ratio (CR) (%)
GWP growth (USDm)5
3 Provided for informational purposes only. Zurich Insurance Group has no ownership interest in the Farmers Exchanges. Farmers Group, Inc., a wholly owned subsidiary of the Group, provides certain non-claims administrative, management, and ancillary services to the Farmers Exchanges as its attorney-in-fact and receives fees for its services.
4 In local currency and adjusted for closed acquisitions and disposals.
5 Continuing operations only, excludes discontinued operations (21st Century outside of California and Hawaii, Business Insurance Independent Agents, and other businesses).