Zurich Insurance Group Ltd

Ladies and gentlemen, welcome to the Zurich Insurance Group update for the three-month-ended March 31, 2022 conference call. I am Sandra, the call school operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. John Hawking, Head of Investor Relations and Rating Agency Management. Please go ahead, sir.

Good afternoon, everybody, and welcome to Zurich Insurance Group's first quarter results call. On the call today is our Group CFO, George Quinn. Before I hand over to George for some introductory remarks, just as a reminder for Q&A, if you keep your questions to two each, that would be much appreciated. George, please. Thanks, John.

Good afternoon. Good morning to all of you. Thank you for joining us. So before we start the Q&A, I just want to give you a few comments. So as you've seen from the press release today, groups made a strong start to the year with good growth across all the businesses. Strength and resilience of the balance sheet also gives us confidence in our ability to successfully navigate an uncertain macro and geopolitical environment. And this performance, combined with what you saw in the last couple of years, means we're on track to exceed all of our targets for 2022, which, as you all know, is the final year of this strategic cycle. In the first quarter, our property and casualty business has continued to perform strongly, top-line growth of 8% on a reported basis, 12% like for like, driven by the continued strength of commercial insurance, where we've seen rate increases of 9% in the quarter. In North America, we've seen particularly strong growth with GWP up 17%, driven by a combination of underlying growth, the crop business, and rate increases of 9% in that market. Although rate increases have moderated somewhat from 2021, I think as we expected, there are signs of stabilization at that at that high level, and we see that continue into April. We're confident that margins will continue to expand well into 2023, despite the inflationary pressures. Life business also performed well. Our continued focus on unit-linked protection product leads to strong growth and new business volumes. And while the new business margin was lower than the high level that we reached in the prior year, this was due to mix effects within our preferred segments. And despite the market volatility, we remain confident that our life earnings guidance for the year will hold. Farmers' exchanges, which are owned by their policyholders, grew GWP by 29%, benefiting from the inclusion of the acquired MetLife P&C business, which was completed at the start of Q2 2021. There was also strong underlying growth in the mid-single-digit range in line with the guidance that we've previously given. Balance sheet remains very strong with the solvency test ratio estimated to be 234% at the end of the quarter, up from 212% at the beginning of the year, and the underlying development has benefited from the rising yield environment. However, as you will have seen today, there's a temporary benefit of about nine points from a a tactical hedge that we've put in place over the assets, just given the heightened risks that we see currently. With that, I think we can start the Q&A.