Zurich Insurance said Thursday that its operating profit fell in 2020 due to the impact of the coronavirus pandemic.
Full-year business operating profit at the Swiss insurer came to $4.24 billion, down 20% from $5.30 billion in 2019. Net income after tax attributable to shareholders fell 8% to $3.83 billion.
The coronavirus pandemic had a negative effect of $852 million on the result, the company said. However, the company said there was some recovery in the second half of the year.
The insurer notes that these losses were somewhat offset by an improved underlying performance, notably in P&C business.
Within P&C, gross written premiums increased by 4% to $35.5 billion, as the unit recorded BOP of $2.08 billion, which is down 28% on the figure recorded in 2019.
At 98.4%, the P&C combined ratio deteriorated by 2 percentage points, which was driven entirely by the impact of the pandemic and elevated catastrophe losses.
Turning to the insurer’s Life segment, and BOP fell by 4% year-on-year to $1.42 billion. However, excluding $173 million of COVID-19 related items, Life BOP was 7% up on the prior year total.
Life new business annual premium equivalent (APE) sales deteriorated by 7%, on a like-for-like basis, to $3.63 billion. Zurich attributes the dip in sales to government-imposed restrictions related to the COVID-19 outbreak, and expected reductions in several markets from exceptional levels in 2019.
At the same time, new business value (NBV) declined by 16% on a like-for-like basis, driven by lower new business volumes, unfavourable economic assumption changes due to lower yields in EMEA, and also operating assumption changes impacting mainly Australia and Japan.
Mario Greco, Group Chief Executive Officer (CEO), commented: “Our results confirm the strength of our business, the agility of our people and the timeliness of our digital strategy. We kept our business fully operational throughout the year and our actions underlined our strong sense of social responsibility.
“We stayed closer to our customers than ever before, helping them beyond our contractual obligations, including refunds and discounts, waiving exclusions for pandemics, adjusting premiums, suspending cancellations and working with them to change payment plans or providing tenants with partial rent relief.
“Together with the Z Zurich Foundation, we assisted front-line medical teams, supported production of hospital ventilators and continued to support charities caring for the vulnerable as donations were drying up due to the crisis.
“We acted as a responsible employer, protecting our people and their families with free health benefits, including COVID-19 hospitalization coverage, testing and flu vaccinations, and will extend this to COVID-19 vaccination as it becomes more widely available.
“At the same time, we continued fighting climate change, including through impact investing, new resilience services for commercial customers and the Zurich Forest, a project in Brazil to restore a biodiverse habitat and mobilize employees for climate action. More than 100,000 seedlings have already been planted.”
At Farmers Exchanges, gross written premiums were broadly stable at an underlying level, explains Zurich, at $20.1 billion. Gross earned premiums fell slightly to $20.1 billion, as the combined ratio weakened to 100.7% against 100% a year earlier.
Farmers BOP fell by more than $206 million year-on-year to $1.5 billion, driven by higher mortality and assumption updates in the life business, as well as reduced fee revenues as a result of premium credits to customers at the Farmers Exchanges and lower investment income.
“Our business performed well, with strong growth in commercial insurance. And we continued to execute against strategic priorities. Our achievements include the renewal of our distribution partnership with Deutsche Bank, the creation of Global Business Platforms to drive innovation, and the Farmers agreement to acquire MetLife’s property and casualty business in the U.S., which lays the foundations for further growth.
“I am proud of the way we acted in 2020 and the results we achieved, and looking ahead I’m confident in the strength of our business, our strategy and our employees to deliver on our goals,” continued Greco.