Zurich Insurance Group Ltd

Ladies and gentlemen, welcome to Zurich Half Year Results 2025 conference call. I am Valentina, the Colo 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 STA and 1 on your telephone. For operator assistance, it is best STA and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mitchell Todd, Head of Investor Relations and Rating Agency Manager. Please go ahead, sir.

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

Thank you, Mitch. Hello. Good afternoon, everyone. Thank you for joining us today. Before we take your questions, I'd like to share a few brief reflections on our half-year results presented this morning. Zurich has delivered another outstanding performance through the first half of 2025, continuing the strong performance delivered in the past years. There are three important aspects of our results which I would like to highlight. Group business operating profit reached the record U.S. dollar 4.2 billion, up 6% year-on-year with each of our geographic and business segments showing positive progression. And this result underscores the strength of our diversified portfolio and the discipline execution across all business lines. Second, core ROE climbed to a highest ever 26.3%. Over the last decade, this represents a sizable 15 percentage point increase and talks to the ongoing optimization of our capital allocation. And lastly, our financial resilience underpinned by an SST ratio of 255% at the end of June, coupled with the high cash conversion of our earnings positions us strongly to continue generating attractive, durable returns for investors. Let me briefly touch on the performance across our individual business segments. And I start with property and casualty this time. There we achieved an all-time high BOP of US dollar 2.4 billion, up 9% year-over-year. The combined ratio improved by 1.2 percentage points to 92.4%, driven by strong underwriting results in both commercial and retail. Now, looking at commercial insurance specifically, we delivered further improvement to profitability, with a 90 bps decline in the combined ratio to 90.5% for the half year. We continue to see favorable growth opportunities in our preferred segments, such as specialties and middle markets. We're also very happy to see the U.S. commercial auto performance showing strong margin improvement after all the underwriting actions we took last year and in these six months. The property market is showing a reduction of the hard rates of the past years, but remains attractive and profitable. The liability market, however, despite strong rate increases, is still not profitable enough, and we underwrite it with great discipline and attention. Retail property and casualty had a notable progression with a 2.4 percentage point improvement to a combined ratio of 94.1%, supported by rate momentum and underlying improvements to the motor and property portfolios. EMEA Motor, in particular, saw an 8 percentage point increase in rate. We continue to see pricing conditions supportive of profitable growth across our property and casualty business. You will see in our half-year materials we have provided you with additional details on our sizable specialty business. In the first half of 2025, this portfolio generated U.S. dollars 4.9 billion of gross return premiums at a highly profitable 86.5% accident-year combined ratio, excluding CATs. We believe our underwriting skills, data availability, strong customer engagement across a range of diversified business lines differentiate us in the specialties business. This is one of our preferred growth engines. We will tell you more about the strong opportunity we see for our specialty business at our investor day in November. In short, the property and casualty market gives us a multitude of opportunities to execute on value-enhancing growth, in the medium to long term with our usual underwriting discipline. Turning to life, we sustained last year record BOP of $1 billion, which actually grew 4% year-on-year on an underlying basis, allowing for the one-off contribution of 2024 from the conclusion of our German life back book sale. Cross-written premiums up 14%, New business premiums up 20% on a like-for-like basis. They point to a solid foundational platform for future growth prospects. We are particularly excited about the traction of our new global life protection unit. We see a structural opportunity to accelerate growth of capital light, high-margin protection solutions addressing the prevailing protection gap across our key markets, with a widened offer for customers. Our protection sales grew 3% over the period, at an expanded margin of 15.7% during the half year. And finally, turning to the considerable improvement underway at farmers, they delivered its strongest half year ever, with BOP at 4% to U.S. dollars 1.2 billion. The farmers' exchanges reported a combined ratio of 90.5% despite exposure to the California wildfires. Most impressively, the exchanges returned to policy count growth in Q2 for the first time in over a decade. Strong underlying profitability combined with a surplus ratio in excess of 45% sees the exchanges raise their future growth ambition to a meet to high single-digit percentage growth rate. Farmers Management Services and Farmers Re both contributed positively. with agency brokerages showing strong growth in fee revenues and bulk. The agency brokerages are proving themselves to be a valuable tool both to generate new business and to retain existing customers. Looking ahead, we entered the second half of the year financially resilient and with a strong underwriting culture focused on driving continued momentum across our businesses towards our 2027 financial ambitions. which I just remind you of now. A compounded annual growth rate over 9% in core EPS from the 2024 baseline of $40.1 per share. A core ROE in excess of 23%, cash remittances exceeding 19 billion cumulatively. Thank you for your attention. Claudia and I are now happy to take your questions.