Profits at Zurich soared as the Swiss insurer cut costs and operating profit at its general insurance segment rose by 182 per cent.
Full year net income attributable to shareholders rose 74 per cent to $3.2bn (£2.6bn). Fourth quarter income swung from a loss of $424m in 2015 to a gain of $685m.
Business operating profits rose by 55 per cent year-on-year to $4.5bn, with the insurer proposing a dividend of 17 Swiss francs per share.
Meanwhile the combined ratio of the general insurance division was 98.4 per cent, meaning the insurer made profits on its underwriting activities, before investment activities were taken into account.
The general insurance division’s operating profits rose to $2.4bn.
Why it’s interesting
A year ago Zurich’s interim chief executive Mario Greco was reporting a “disappointing result” for 2015, with profits down 37 per cent to $2.9bn ($2.3bn).
Since then the bank has a new chief executive and a new plan, and it seems the medicine is working, with profits returning to almost the level they were in 2014.
Greco, formerly of Italian insurance giant Generali, came in with a mandate to cut costs and exit unprofitable portfolios. The plan also included a simplification of its business model, with the aim of increasing accountability. It seems that turnaround plan is working.
What Zurich said
Greco said: “We are very pleased with our results for 2016. Both global life and farmers continued to grow well while general insurance benefited from a stronger underlying performance across all regions. We’ve exceeded our target cash remittances and created a more efficient operation delivering savings of $300m as promised."
We are on track to create a simpler structure, underpinned by smart investment and greater customer focus, that will ensure we are equipped to realise the group’s full potential.
What a difference a year (and a new chief executive) makes. Investors will hope Zurich’s new simplification plan signals it has turned a corner for good.