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General insurance rebound buoys Zurich earnings

Zurich Group’s net profit jumped 74% to $US3.2 billion ($4.2 billion) last year as its major general insurance division posted a stronger performance across all regions.

General insurance operating profit surged to $US2.4 billion ($3.1 billion) from $US864 million ($1.1 billion) in 2015, with a more benign catastrophe period contributing to the gain.

“Ongoing focused underwriting actions and expense initiatives are expected to lead to further improvement over the coming years as areas of weaker performance are being addressed,” Zurich said.

The acquisition of US agricultural insurer RCIS helped the general insurance combined operating ratio improve 5.1 percentage points to 98.4%.

The earnings gains were delivered despite a 3% decline in gross written premium (GWP) to $US33.1 billion ($43.4 billion).

“The decrease was largely due to the ongoing focus on profitability and measures to ensure the right geographic footprint, including exiting markets in South Africa and Morocco,” the company said.

International markets GWP was flat in local currency, with underlying growth in Latin America offset by the exit of business lines in Australia that did not meet required profitability levels.

North American commercial GWP fell 2% and Europe, Middle East and Africa GWP fell 4%.

The insurer is targeting a combined operating ratio of 95-96% over the 2017-19 period, while net earned premium is forecast to be broadly stable this year compared with last year, as Zurich focuses on profitability over volume.

Zurich says its acquisition of Australia-based Cover-More is expected to close in the first half, positioning the company as a top-three global travel insurer.

The group expects a more positive economic environment this year. “While there are uncertainties in the world, there are also signs of an improving backdrop in terms of growth both in the US and Europe.”

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