Zurich Insurance Group Ltd

Thank you very much and good afternoon everybody and welcome to Zurich Insurance Group's full 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 a reminder for the Q&A, we currently ask you to repeat a maximum of two questions. Thank you, Mario.

Thank you, John, and welcome to everyone and thanks for being on the call. As tradition, before we answer your question, I wanted to provide you with a few remarks on our results. We've made a very strong start to our new financial cycle, and we're well ahead of all targets for the 23 to 25 cycle. We've seen particularly strong growth in both P&C and life, with the management action of farmers already showing excellent results. Given this positive momentum, we expect to achieve EPS growth above 10% over the cycle. BOP is up 21% to a record level of $7.4 billion, with earnings per share up 12% in U.S. dollars. BOP at ROE is strong at 23.1%, with returns remaining extremely high, even as we have continued to carefully grow the business in P&C, with 10% growth in gross return premium in cost and currency for commercial and 13% for retail. In life, where we saw 26% like-for-like growth in new business premiums and 39% growth in BOP. I'm particularly pleased with the strength and the speed of the improvement of farmers, where farmers management services business operating profits grew by 10% year on year, And the farmers' exchanges reported a Q4 combined ratio of 89.8%, a substantial improvement from earlier in the year. The proposed dividend at 26 Swiss francs, up 8% on prior year, or 19% in U.S. dollar terms, will be supplemented by a share buyback of 1.1 billion Swiss francs. Now, looking at... the business segments starting from property and casualty. The property and casualty business today reports an excellent combined ratio of 94.5% with Bob up 7% on a reported basis or 10% in local currencies. The strength of the group's reserves is evidenced by consistent prior year reserve development. The steps taken to manage exposure to natural catastrophes has resulted in a cut loss ratio within the guided range and improving year on year. Commercial insurance continued to show stronger returns, contributing $3.5 billion to BOP at a combined ratio of 91.4%. Commercial overall saw 7% rate increases, 9% in North America. In property, rate increases have remained in the teens, while rates in commercial auto and excess liability are seeing continued momentum. Overall, we see a stable outlook for commercial rates for the rest of the year. In retail, we continue to see early signs of results improving. Various weather events impacted the results in the second half, and there is significant room for improvement, which we expect to deliver over 2024 and 2025. Across retail P&C, we saw rates increase by 4% with higher rate increases achieved on the motor portfolios. On life, the life business performed extremely strongly, reporting an all-time high BOP of US$2.1 billion, with top-line growth across all parts of the business. Life new business premiums grew 24% in US dollar terms. Short-term insurance contracts saw insurance revenue increase at 13%, while fee revenues from investment contracts were up 22%. We continue to expect this business to grow strongly going forward with BOP in 2024 anticipated to at least match the record result achieved in 2023. And farmers, 2023 was a transformational year for farmers with the management actions we outlined back in November having a significant impact on the performance of the business. Looking into 2024, we expect the momentum to continue. Farmers' management services saw BOP grow by 10%, supported by growth at the farmers' exchanges and a return of the margin to 7%. The exchanges saw a dramatic improvement in the combined ratio, which fell below 90% in the fourth quarter, with the surplus ratio already approaching the lower end of the range indicated for the end of 2024. Underwriting results should continue to be supported by continued rate actions, the benefit from expense measures taken last year, and underwriting optimization. We now expect mid-single growth in the exchanges premiums for 2024, with growth in policy in force anticipated by the end of the cycle. Let me also stress that we made triple-digit profits on the farmers reinsurance management. Looking to the future. I'm pleased at the start that we have made to our new cycle. And I see significant opportunities for the business to continue growing and to continue generating attractive returns for shareholders in excess of the market and the peers. Thank you very much for listening and we're now ready, George and I, to take your questions.

We will now begin the question and answer session. Anyone who wishes to ask a question or make a comment may press star and 1 on the touch-tone telephone. You will hear a tone to confirm that you have entered a queue. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use only handsets while asking a question. Kindly limit yourself to two questions only. Anyone with a question may press star and 1 at this time. The first question comes from Andrew Sinclair from Bank of America. Please go ahead.