Zurich Insurance Group Ltd

Good afternoon everybody and welcome to Zurich Insurance Group's first quarter 2025 results Q&A call. On the call today is our Group CEO Mario Greco and our Group CFO Claudia Cordioli. Before I hand over to Claudia for some introductory remarks, just a reminder for the Q&A, we kindly ask you to keep to a maximum of two questions please. Claudia, over to you.

Thank you, Mitch. Good afternoon, everyone, and thank you for joining us today. I'm Claudia Cordioli, Group CFO. I'm here with our CEO, Mario Greco. I will first share a brief overview of our results for the first quarter of 2025, after which we will open for questions. Before looking at our individual business lines, the key message I would like to highlight is the solid start Zurich has made to the new financial cycle. Our uniquely diversified footprint focused on delivering sustainable, Quality growth, coupled with strong capitalization and financial resilience, all underpin the current quarter's performance and how we manage the business for the long term. Now, turning to each of the key businesses, I'll start with P&C. I'm pleased to report positive top-line growth with insurance revenue up 6% like-for-like. This compounds a strong prior year comparison where revenues increased 5% in the full year. Aggregate pricing across both retail and commercial lines continued to appreciate this year. Combined with ongoing management actions on the P&C portfolio, which I will touch on later, the quality of growth continues an upward trajectory. In commercial P&C, we continue to grow the business profitably. Gross written premiums grew 2% in U.S. dollars and 4% like for like. with positive pricing momentum of 3% rate increases. North America specifically continued to experience overall rate increases of 6%, with particular strength in commercial auto, up 16% on top of a double-digit price increase in the prior year. We continue to improve the quality of the portfolio, exiting business which doesn't meet our thresholds. Excluding those actions, this quarter underlying growth in North America would have been 5%. Selective growth in middle market and specialty, together with proactive portfolio management, resulted in an improvement to the underlying profitability of the North American book. In retail, gross written premiums rose 11% in U.S. dollars. The first-time inclusion of AIG global personal travel insurance and assistance in Zurich numbers contributed approximately half of this growth, adding 13 million of policies. Additionally, we capitalized on a positive pricing environment where rates increased 5% across the book. Momentum in both motor and property pricing continued strongly in the quarter, adding to price rises in 2024. Overall, the prospects are strong for our retail business, giving us confidence in returning to the desired long-term level of profitability. Now, shifting to life, the business delivered an excellent 18% increase in gross premiums in the quarter. Strength in unit-linked protection and the new capital-efficient saving products in Spain helped to propel the level of growth. Efforts continue on the build-up of our global protection platform which will accelerate growth in line with our 2027 ambitions. Switching gears to farmers, farmers management services underlying fee revenues rose 3% year-on-year, including the strong performance in the brokerage entities with fee service revenues up 34%. The farmer exchanges reported a 5% increase in gross return premiums with new business increased customer retention, and price, the primary drivers. The three-month rolling PIF trend continues to improve. The effect of ongoing management actions at the farmers' exchanges continues to manifest in strong underlying underwriting profitability despite elevated catastrophe losses, including the wildfires in California in January. This translates into an outstanding surplus ratio of 42.6% at the end of March, the highest for farmers since end of 2020. Raul Vargas and the team continue to improve the financial position of the exchanges and position them for growth. And finally, we closed out the quarter with a very strong SST ratio of 256%, reflecting a prudent approach to capital management. The three points increase compared with a full year level was driven by net capital generation and additional cash reinsurance secured in 2025. The SST ratio remained extremely strong throughout the month of April despite market volatility, ending the month approximately 10 percentage points below the March quarter end, hence confirming again the resilience. So in summary, our businesses started the year very positively, delivering revenue growth underpinned by strong capital position and expanding margins. With our geographically diversified business, outstanding track record, and robust balance sheet, I am confident that we will continue to deliver on our targets by focusing on the things we can control and managing the business for long-term value creation. With that, Mario and I will be happy to take your questions.

We will now begin the question and answer session. Anyone who wishes to ask a question can press star and 1 on the touch-tone telephone. You will hear a tone to confirm that you have entered the 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 who has a question or a comment may press star and 1 at this time. The first question comes from Andrew Sinclair from Bank of America. Please go ahead.