Zurich Insurance announces $1.25 billion buyback after record profit

FILE PHOTO: The logo of Zurich Insurance is seen at its headquarters in Zurich, Switzerland January 13, 2022. REUTERS/Arnd Wiegmann/File Photo

By Carolyn Cohn and Miranda Murray

LONDON (Reuters) – Zurich Insurance posted a better than expected annual operating profit on Thursday, led by strong performance in its life business, and announced a share buyback of up to 1.1 billion Swiss francs ($1.25 billion).

Operating profit rose 21% to a record $7.4 billion for the year to Dec. 31, beating the $7.1 billion average estimate in an anbalyst poll compiled by the company.

Insurers have coped well with unexpected claims in recent years from issues such as COVID-19, climate disasters and the war in Ukraine, mainly by raising premiums and excluding some business.

Zurich, Europe’s fifth-largest insurer, last year set more ambitious three-year financial targets, including a 2025 goal for business operating profit after tax return on equity (BOPAT ROE) of more than 20%. BOPAT ROE for 2023 came in at 23.1%.

“One year into the three-year plan we are beating or running to beat all the targets for 2025,” Chief Executive Mario Greco said on a media call.

Zurich raised its guidance for compound annual EPS growth to more than 10%, compared with its original target of 8%.

Rival AXA on Thursday set new targets, including estimated compound annual growth in underlying earnings per share of 6-8% for the 2023-2026 period.

Greco said that Zurich would “reconsider the opportunities” for its German life back book after its plan to offload the $20 billion portfolio to Viridium Holding fell through last month.

Operating profit in Zurich’s life business rose 39% in dollar terms to $2.1 billion, against a forecast $1.8 billion. Property and casualty operating profit rose 7% to $3.9 billion versus a forecast of $4.1 billion.

KBW analysts described the results as “mixed”, pointing to the below-forecast property and casualty profit, reiterating their “underperform” rating on the stock.

Zurich said it planned to increase its dividend by 8% to 26 Swiss francs per share.

($1 = 0.8778 Swiss francs)

(Reporting by Carolyn Cohn and Miranda Murray; Editing by Bartosz Dabrowski, Rashmi Aich and David Goodman)