Zurich Insurance Group Ltd

Welcome to the call this afternoon. I have with me our Group CEO Mario Greco and our Group CFO Claudio Cordioli. Before I hand over to Mario for the introductory remarks, could I please remind you to keep your questions for the Q&A session to a maximum of two, please. And also as a reminder, we'll not be taking any questions on the potential offer for Beazley PLC. For any information on that, please refer to our website. And with that, I'll hand over to Mario.

Thank you, John. Good afternoon, everybody, and thank you for joining us. Let me provide a few remarks on our results before Claudia and I will hand you questions. We've made a very strong start to our new financial cycle with the record results, which indicate that we're well on track to achieve or even exceed our 2027 targets. Pop is at 14% to a record level of $8.9 billion, with core EPS at 13%. Net income attributable to shareholders is also the record level of 6.8 billion US dollars. Core ROE reached a new high of 26.9%, and as we continue to produce exceptional returns on capital while carefully pursuing disciplined growth. Profitability reached the record level across each of P&C life and farmers. P&C gross return premiums exceeded $50 billion for the first time, while their BOP exceeded $5 billion also for the first time. Life produced an underlying increase of 10% in BOP, while farmers produced another outstanding result with growth in policy count accelerating through the year, supported by the exchanges reporting a command ratio of 84.6%. Crucially, we also continue to demonstrate a structurally high level of conversion of earnings into cash, with remittances of $7.4 billion. This, together with Zurich's signature financial strength, underpins a proposed dividend of 30 Swiss francs, which is at more than 7% on prior year, supported by a payout ratio of 76%. This means that the dividend will have increased by 50% since 2020, by 76% since 2016, and this is the eighth increase in 10 years. Looking at our business segments in turn, the P&C business today reports an excellent combined ratio of 92.6% with the BOP up by 22%. Commercial insurance saw the combined ratio improve by 1.2 percentage points year over year to 91%. It was especially pleasing to see the benefits of the ongoing portfolio optimization actions that we have spoken about showing in the results. Crop produced much improved results with the combined ratio in the low 90s. while commercial auto in the United States saw a year-on-year improvement of more than 18 points in the combined ratio. We continue proactively steering the portfolio, taking corrective actions on areas where there is scope for improvement, while pursuing careful growth in strategic priority segments such as middle market and specialty. Within specialty, we see construction as a particular opportunity. We have a unique set of skills and capabilities, with Zurich playing a leading role in supporting the rapid AI-driven growth in demand for data centers. In the US alone, last year, we were involved in insuring more than 200 projects with a total insured value of $150 billion. We see similar secular growth trends across the broader technology space, and also in infrastructure more generally. We continue to reserve carefully with the strong results of the year achieved while also continuing to build our balance sheet strength. For retail, while there is still plenty of opportunity to improve returns from here, 2025 saw a very encouraging level of improvement. Retail P&C BOP increased by 50% year over year. with the results having improved fourfold from the level reported in 2023. Growth in retail growth switching premium was very strong, with a 16% increase in U.S. dollars and 7% on a like-for-like basis. This was supported by positive rate increases of 5%. However, is it also good to see the underlying structural improvement being driven by increasingly sophisticated pricing and risk selection. The January renewals in key markets such as Switzerland and Germany give us confidence in our ability to drive further upside from here. The life business continues to perform extremely strongly, reporting an all-time high BOP of $2.3 billion, with both the insurance service result and the fee result improving year on year. We also ended the year with a record high CSM. Our strategic focus on protection continues to pay off with a 5% increase in protection gross return premium year-on-year on a like-for-like basis. For the discrete second half, growth accelerated to 7%, driven by recovery of the bank assurance sales in South America. New business premiums in the CSM perimeter grew by 14%, on a like-for-like basis to $19.5 billion, while short-term insurance sales grew by 9% in local currency, with promising signs of renewed momentum in bank insurance in Brazil. Farmers. 2025 was another year of delivery for farmers, with the exchanges producing 4% growth in gross return premium, supported by a combined ratio of less than 85%. A major milestone was reached with the policy count growing organically for the first time in over 10 years. Since turning positive in Q2, growth has accelerated through the year. The farmers team have a clear roadmap to continue improving the product offer, driving distribution efficiency, and accelerating the growth rate to the mid to high single digits range. Now looking into the future, I'm pleased at the start we have made to our new cycle. That's really a very good start into the three-year plan. And we see significant opportunities for the business to grow and generate attractive returns for our shareholders. Before we turn to the Q&A session, I would like to make clear that we will only take in questions related to this results announcement. and we will not be making any further comments, basically, as John said before. With that, Claudia and I will now be delighted 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 one 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 two. 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 one at this time. The first question comes from Michael Hutner from Berenberg. Please go ahead.