Zurich Insurance Group Ltd

Ladies and gentlemen, welcome to the Zurich update for the first quarter 2026 conference call. I am Valentina, the call 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 Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. For operators distant, please press star and 0. The conference must not be recorded for publication or broadcasting. At this time, it's my pleasure to hand over to John Hawking. Please go ahead.

Thank you very much, Valentina, and welcome, everybody, to Zero Concurrence Group's first quarter 2026 Q&A call. On the call today, we have our group CEO, Mario Greco, and the group CFO, Claudio Cordieri. Claudio will make some introductory remarks, but I'd like to remind everybody to please keep their questions to two. Thank you very much. Gladio.

Thank you, John. Good afternoon, everyone. Thank you for joining us today. I'm Carly Perdioli, Group C4, and joined by our Group CEO, Mario Greco. I share first a brief overview of our results for the first quarter of 2026, after which we will open for questions. We have started the year strongly with high-quality growth accelerating across targeted business lines and customer segments, including specialty, middle market, and life protection. While the external geopolitical environment is uncertain, we are structurally well-positioned with a diversified product and geographic mix, and we think confident that we will meet or exceed our 2027 targets. Now, turning to each of the key businesses, I'll start with P&C. P&C has started the year strongly with GWP up 8% on a lifelong basis. Growth was broad-based with strong performances in North America and in EMEA. In commercial P&C, we continue to deliver disciplined growth with sustained delivery in our strategic segments of global specialty and middle market, supported by strong growth across the rest of the portfolio. Gross rate on premiums grew by 9% like for like. Great environment was broadly stable versus the second half of the year, providing attractive margins despite continued pressure in large account properties and E&S. Auto liability rates remain positive, and we are seeing early signs of stabilization in some specialty lines, including U.S. financial lines. Importantly, our book remains well indexed to inflation. In international property, Q1 renewals drove a mid-single-digit increase in issuer values. Overall, our focus remains firmly on underwriting discipline and enhancing portfolio quality, to support sustainable profitability. Global specialty. Global specialty grew GWP by 7% like for like, with our leading U.S. construction business growing by 21%. Our growth in this space is structural, not cyclical, and we continue to see secular growth opportunities, given long-term infrastructure trends. not least in the data centers as hyperscalers invest to meet demand for AI computing capacity. As one of the leading engineering and construction insurance franchises, Zurich has a dedicated construction team of approximately 300 colleagues in the US and about 100 experts in the rest of the world. Our construction book reached premiums of around $800 million in Q1 and profitability remains high as infrastructure spend gains space in the U.S. and beyond, with UK and continental Europe also playing an important role in our portfolio. Leader market continues to benefit from investments that we made in recent years in product technology and targeted recruitment of specialist underwriters. Here as well, premiums grew by 7%, with EMEA delivering outstanding growth of 15%. Overall for the group, middle market has grown steadily, generating around 2.2 billion of premiums globally in the first three months, reflecting the scale we have built and the effectiveness of this segment. In the U.S., this has been driven by a multi-year infrastructure rollout, now with more than 30 offices nationwide, so that we can be close to our customers and distribution partners. These offices are staffed by a growing, dedicated, and rising workforce, focused on servicing our selected industry verticals. We are now applying the same playbook in Europe, where last year alone we hired over 100 middle market professionals and have recently launched dedicated industry verticals such as Life Science. As in the U.S., these efforts are supported by technology investments that are already improving speed and commercial rates. Now, retail P&C. The cost rate in premiums rose by 7% on a like-for-like basis in U.S. dollar, with momentum across all regions, supported by rate increases of 5%. Importantly, this growth reflects our continued focus on pricing excellence, sophisticated risk selection, and disciplined portfolio construction. As a result, retail profitability continues to trend positively, building on the trends in recent years. Retail remains an attractive and scalable growth area where we see meaningful opportunities over the coming years while maintaining a clear focus on return. Now shifting to life. The life business had a very strong quarter, both in terms of growth and profitability, with our global protection business producing a particularly strong performance. Overall life GWP grew by 5%, or minus 5% on a life-for-life basis, with the protection business growing tenuous by 9%, slightly above our three-year targets. Growth was broad across EMEA, LATAM, and EMPAC, showing first benefits of our strengthened global focus on life protection business. New business CSM was up 18% year-on-year, at a margin of 7.4%, reflecting a higher quality mix of the business. Growth in short-term insurance contracts, mainly related to our highly attractive Latin America protection business, was 9% higher, like for like, while our investment business enjoyed a 10% higher free revenue, despite volatile markets. Overall profitability in life showed a further strong improvement in Q1. Switching gears now to farmers, farmers' management services underline free income, rose 4% year-on-year, supported by a 4% increase in gross return premiums at the farmers' exchanges. Growth was driven by higher policy counts, while rates in most lines remained flat or up low single digits. Policy momentum remained strong, with policies in force increasing by 84,000 in the first quarter and further 49,000 in April. This was supported by robust new business, which saw double-digit growth in Q1 and solid retention. The independent agency channel was the main contributor to farmers' growth, benefiting from actions to improve pricing competitiveness, broaden the product offering across states, and increase agent engagement. Importantly, the exclusive agency channel returned to policy growth in both March and April, marking a clear inflection point. In addition, the exchange and surplus ratio improved further, reaching 56.4% at the end of March, providing significant financial flexibility to pursue growth in a disciplined fashion. And finally, we closed out the quarter with a very strong SST ratio of 275%. which does not include the impact of the new equity issued in March to partially fund the proposed acquisition of Beasley. So, in summary, our business has started the year very positively, delivering disciplined revenue growth, underpinned by a strong capital position. With our geographically diversified business, strong track record, and robust balance sheet, I am confident that we are on track to meet or exceed our 2027 targets. With that, Mario and I will be happy to take your questions.