Zurich Insurance Group Ltd

Ladies and gentlemen, welcome to the Zurich Half Year Results 2026 conference call. I'm Vicky, the course call 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 star and 1 on your telephone. For operator assistance, please press star, then 0. Transcription by CastingWords

We will not be taking any questions on the proposed acquisition of Beasley or comment on its results, given we are still two separate independent companies. Before I hand over to Mario for some opening remarks, please can I remind you to keep your questions for the Q&A session to a maximum of two. Over to you, Mario.

Thank you, Adrienne. Good afternoon, everyone, and thank you for joining us today. Before we take your questions, I'd like to make a few remarks on our half-year results. I'd like to start with three messages that I'd like to highlight today. First, we delivered another record result. Business operating profit increased 13% to $4.8 billion and core EPS grew 11.5% with every business segment contributing to this growth. These results reflect the strength of our diversified model Our focus on execution and our ability to generate attractive returns through the cycles. Second, we are seeing strong momentum in our strategic growth areas. In property and casualty, our diversified portfolio allows us to expand selectively in areas where we see attractive returns, such as specialty and middle market. In life, protection growth reached double digits, well ahead of our targets, and our farmers Policy Count growth continues to build with exchanges gaining market share for the first time in a decade. And lastly, today's results reinforces our confidence in meeting or exceeding our 2027 financial targets. We continue to see attractive growth opportunities across our business, supported by structural trends such as investment in AI infrastructure and rising demand for protection solutions. Now, let me briefly touch on the performance across our key business segments. And as usual, I start with property and casualty. Gross written premiums grew 7% to nearly US$30 billion, with an all-time high operating profit of US$2.8 billion, up 16% year-on-year. Combined ratio was an excellent 92.7%, reflecting the strength of our underwriting and active Portfolio Management. Within commercial property and casualty, specialty remains a key growth area with premiums up 8% and an underlying combined ratio of 91.2%. Construction was a particular strength, growing 18%, supported by demand from AI-related infrastructure, not just in the U.S., but around the globe. This is an area where our risk engineering, underwriting expertise, global capabilities such as our fully integrated global industry vertical and ZRS expertise give us a meaningful competitive advantage. And this supports our leadership position. We currently lead on around 70% of our underwritten data center projects. Within our customer segments, middle market also continue to perform strongly with premiums up 7% driven by growth in Germany, Italy and France and targeted expansion in the U.S. Across our commercial portfolio, margins remain healthy following several years of cumulative rate increases. We continue to see pressure in line signs such as U.S. large property and E&S, while financial lines and cyber are showing signs of stabilization as the market responds to increasing claim complexity and emerging AI-driven threats. Casualty rates continue to increase, reflecting persistent loss-cost trends. Importantly, the breadth of our portfolio across geographies, products, and customer segments give us the flexibility to dynamically manage our portfolio through different market cycles. NatCard losses remain low at 1.9% of combined ratio. Reflecting actions we have taken over recent years to reduce cat exposure in our portfolio. In terms of the recent wildfire events in Central Europe, we currently do not see a material impact on our results. You will have seen in our materials from this morning that the prior year development contributed 2.4 points to the combined ratio, somewhat above our usual level. We expect PYDs to remain modestly elevated in the near term, supported by positive experience from shorter lines, particularly from EMEA property, where we took a conservative approach following the inflation spike in 2022. In addition, the 2025 accident year has developed very favorably for global travel and for our U.S. crop business. Our approach to long-term lines remains unchanged and we continue to carefully monitor trends in casualty given continuing social inflation. On retail property and casualty, the operating profits grew 14% year-on-year and the underlying combined ratio improved by a further 60 basis points to 94.6%. Rates remain positive and we continue to see improvement in motor and property, supported by investment in pricing and claims. In EMEA Motor, for example, the combined ratio has improved by more than five points over the last two years to a healthy 96.2%, close to our longer-term ambition of operating below 96%. Turning to life now, business delivered the record operating profit of 1.3 billion US dollars. It is up 16% on a like-for-like basis. We're particularly encouraged by the pace of growth we're seeing in protection, where premiums grew 10% ahead of our targets. Growth was supported by strong performance in the UK, Australia, and Latin America, where we saw continued expansion in our bank assurance partnerships and our joint venture with Santander returning to volume growth. Beyond protection, both our savings and unit link businesses contributed to earnings growth, benefiting from strong customer inflows and favorable financial market impacts. As a result of this, we are raising our live profit guidance for the year. Looking ahead, we see significant opportunity to grow protection further as we continue to help customers address their increasing needs for protection and health solutions.