Zurich Insurance Group Ltd

Ladies and gentlemen, welcome to the Zurich Insurance Group Health Year Results 2023 conference call. I'm Andre, the chorus call 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 one on your telephone. For operator assistance, please press star and zero. 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, everyone, and welcome to Zurich Insurance Group's half-year 2023 results Q&A call. On the call today is our Group CEO, Mario Greco, and our Group CFO, George Quinn. Before I hand over to Mario for some introductory remarks, just as a reminder, it would be appreciated if you keep the questions to two apiece. Thank you very much, Mario.

Hi, everyone. Thank you, John. And good afternoon, everybody, and thank you for joining us. I'm here, of course, with George Green, our group CFO. Before we answer your questions, I wanted to provide you with a few remarks on our results. We have made a very strong start to our new financial cycle. Pop at $3.7 billion is flat on the record result from a year ago, and it's higher in per share terms. NEOS is the highest in the first half period since 2008, with US dollar EPS up 8%, on track for the target we set back in November. Pop-up ROE is extremely strong at 22.9%, and while this tends to be stronger in the first half given the dividend payment, this clearly demonstrates the quality of our business portfolio. I am particularly pleased to see robust growth continuing across the business. in property and casualty with 10% growth in grassroots and premium in constant currency for commercial and 9% for retail. And in life, where we saw 17% like-for-like growth in new business premiums and 18% growth in BOP. We will continue to look for opportunities to selectively grow the business in a disciplined way, capitalizing on the hard work of previous cycles where we have focused on simplification, improving customer experience, and building distribution. You will also see in the results that we have incurred some costs in the first half as we look to rationalize our all-news real estate portfolio. Looking at our business segments now in turn, property and casualty first. The property and casualty business today reports an excellent combined ratio of 92.9%. Headline PNC BOP was down 6%. However, adjusting for foreign exchange in the absence of a real estate gain of last year, we were ahead 3% over last year. Lower CAT losses and significantly higher investment income were offset by a very strong comparative period for underlying underwriting results in the first half of 2022. Rates continue to develop more positively than we expected at the start of the year. Commercial overall saw 7% rate increases, with 9% in North America. In property, we've seen significant acceleration. Rate increases of 18% in the second quarter. Overall, we see a stable outlook for commercial rate for the rest of the year. In retail, we saw rate increases by 4% with higher rate increases still achieved on the motor portfolios. I'm pleased to see early signs of results improving in our retail portfolio with the accident year ex-CAT combined ratio improving by 2.9 points on the second half of last year. we expect to retain results to continue to improve. While the commercial combined ratio was moderately higher than a year ago, we continue to see rate increases in excess of lost cost trends and expect returns in this portfolio to remain highly attractive. Life business, life continues to perform extremely strongly. The business is positioned very well with excellent access to distribution, tight focus on unit link and protection both from a new business and from a balance sheet perspective. The shift to IFRS 17 provides significant additional transparency for investors with our fast-growing protection focused to JV with Santander in Latin America now more visible. We've also provided some additional disclosure which shows how we are sustainably growing the stock of CSM which bodes well for the future profits emerging from the live business. We look forward to completing both the Germany and Chile backbook transactions later in the year, both of which will further improve the risk profile of the portfolio. Farmers now. Farmers management services had a strong first half of the year with BOP-UP 8%, driven by 5% underlying growth at the farmers' exchanges. We remain confident in achieving the targets we set out on the investor day back in November. Farmers knew our life business BOP was impacted by charges related to their insurance transaction, which was completed on 1st of August. As I explained in May, we will look to redeploy the 1.8 billion of cash released elsewhere in the group. The new farmers management team, led by Raul Vargas as CEO, They are looking forward to presenting their plans for the business to you at the investor update in London in November. Now looking to the future, I'm very pleased at the start we have made to our new cycle. And I see significant opportunities for the business to grow and to generate attractive returns for shareholders. Thank you very much for listening and we're now ready to take your questions.