Zurich Insurance Group Ltd

Thank you very much, and good afternoon, everybody, and welcome to Zurich Insurance Group's half-year 2024 results Q&A call. On the call today is our Group CEO, Mario Greco, and the Group CFO, Claudio Cordioli. Before I hand over to Mario for some introductory remarks, just a reminder for Q&A, if you could keep it to two questions, that would be much appreciated. Mario.

Thank you, John. Good afternoon, everybody. Thank you for joining us today. I'm here, as John said, with Claudio Cordioli, our Group CFO. Before Claudia and I answer your questions, I wanted to provide you with a few remarks on our results. We have achieved excellent results in the first half of the year, a performance which positioned us well to exceed all of our targets for the 2023-2025 cycle. We remain on track to achieve compound EPS growth in excess of 10% for the planned period, as we announced a while ago. BOP at $4 billion in the first half is at record level, driven by strong results in property and casualty, with the record levels of BOP in both life and farmers. BOP at ROE reached a new high of 25% in the period. We continue to carefully invest in growing the business, while generating highly attractive returns on capital. Property and casualty produced 7% growth in insurance revenue in the first half, with particularly strong growth in retail. In life, we saw short-term protection revenues increase by 12% on a like-for-like basis. And farmers' management services revenues grew in the mid-single digits. In addition, we completed our acquisition of 70% of Kotak General Insurance in India, and we also announced an agreement to purchase AIG's personal travel insurance business, a transaction which will more than double the size of Covermore, giving it a leadership position in the key U.S. market and globally. Now, looking at our business segments in turn. I start with property and casualty. The property and casualty business today reports an excellent combined ratio of 93.6%, with a BOP of $2.2 billion up 3% on a life-for-life basis. Our leading commercial insurance business has a combined ratio of 91.4%, despite an accumulation of small and mid-sized weather events. In the first half, North America commercial saw rate increases of 6%, and we remain pleased with how rates are responding to changes to lost cost trends. Commercial auto in particular saw rate increases in the mid-teens for the period. In commercial property, we took the decision to moderate growth in the first half of the year, given the slowing of rate increases in our continued efforts to actively manage cat exposure. This was mainly in large accounts, and we continue growing strongly in the middle market. Looking ahead, market conditions remain favorable, despite the pace of rate increases reducing in some of the lines where we have seen significant cumulative rate moves in recent years. We also see opportunities for structural growth in areas like middle market, accident and health, and ENS. Retail P&C reports a command ratio of 96.4%, which was higher year-on-year, driven by elevated weather versus the prior year and persistent inflationary trends in motor. However, as in commercial, we're able to increase rate with particularly strong action taken in the core European motor markets of Switzerland and Germany. The work we have done in recent years on customer centricity is paying off as we see an increase in customer retention, despite pushing through significant rate increases. We continue to take a conservative approach to reserving. BYDs for the first half was positive at 1.6%, in the middle of the 1% to 2% guidance range. Moving now to life. The life business continues to perform extremely strongly. reporting an all-time high BOP of $1 billion for the first half and remains on track to at least match last year's record result for the full year. We saw particularly strong growth in highly attractive short-term protection, where revenues increased by 25% year-on-year stable margins. Fee revenues for investment contracts increased by 10% on prior year. The stock of CSM increased in the period on a local currency basis, And we continue to be focused on low capital intensity growth across our live franchise. Moving now to farmers. Farmers continues to see the benefits of the decisive actions taken over the last 18 months. Record BOP in the first half, driven by Farmers Management Services and Farmers 3. Farmers Management Services saw BOP grow by 10% year on year. supported by growth at the exchanges. The combined ratio at the farmers' exchanges improved by 16 percentage points year-on-year to 95.2% despite significant catastrophe losses, reflecting the earned throw of rate increases and the benefits of the expense actions. The improved underwriting performance at the exchanges also drove a significant improvement in the result of farmers' rates, where BOP for the first half was $81 million, so more than $100 million above last year. We're well positioned now to exceed all of our targets for this cycle. In particular, we expect to generate compound EPS growth in excess of 10%. Market conditions remain favorable, more so than we had anticipated at this point. And we see today many opportunities to profitably grow the business, especially in the commercial area. Thank you for listening, and we're now ready to take your questions.

We will now begin the question and answer session. Anyone who wishes to ask a question or make a comment, please press star and 1 on the touchtone telephone. You will hear a tone to confirm that you have answered the queue. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to choose only answers while asking a question. Anyone who has a question, may press star and one at this time. Arthur's question comes from the line of Andrew Sinclair, Bank of America. Please go ahead.