The Zurich Group earned significantly less in 2020 than in 2019.
The reason: Corona. Zurich has numerous companies that have insured themselves against officially ordered closures, for example in the event of an epidemic. Compensation and travel insurance benefits have been significantly higher than in other financial years due to corona.
Despite Corona, the shareholders earn
For 2020, Zurich reported an operating profit, called Business Operating Profit (BOP), of 4.24 billion US dollars, according to a statement on Thursday. That’s a fifth year-on-year decline, but more than analysts had anticipated in advance.
$ 852 million for corona cases
In total, costs of 852 million dollars were incurred across the entire group in connection with Corona, writes Zurich. She had warned of this early on after the outbreak of the pandemic. Natural catastrophe losses also depressed earnings by $ 588 million.
This had a particularly negative impact on results in the largest division, claims business. Operating profit fell by almost 30 percent to $ 2.08 billion and the combined ratio, which is decisive for business, deteriorated by 2 percentage points to 98.4 percent.
Other areas grew for it
However, the division grew: Adjusted for currency effects, acquisitions and disposals, gross premiums in claims business increased by four percent. It is said that the company has grown particularly in corporate banking in Europe, the Middle East, Africa and North America.
This was partly due to price increases totaling eight percent. In North America alone, premium rates for corporate customers have risen by 17 percent, according to Zurich.
Bad customer contact due to lockdown
The re, premium income fell by an adjusted four percent and the relevant key figure for new business (APE) fell by as much as seven percent.
That also had to do with the official lockdowns, which made customer contact more difficult, explains Zurich. In addition, 2019 was an exceptionally good year for the division.
Dividend of CHF 20 per share
The business of the US partner Farmer, for whom Zurich provides services, also fell slightly in terms of gross premiums by 3 percent. But Zurich wants to grow in the future with Farmers, and towards the end of 2020 it was announced that it would take over the non-life business of US insurer MetLife. This is intended to increase the size of Farmers in the east of the country.
The bottom line was that Zurich posted a net profit of $ 3.83 billion after $ 4.15 billion in the previous year. Despite the decline in profits, shareholders should again benefit from a dividend of CHF 20 per share. In this regard, Zurich is one of the most generous companies on the Swiss stock exchange.
Not a catastrophe despite Corona
The high payout is also possible because Zurich is still well capitalized despite high Covid and natural catastrophe payments. Zurich estimates solvency based on the Swiss solvency test at 182 percent.
The aim is at least 160 percent.