Earnings call transcript: Zurich Insurance’s Q1 2025 Shows Strong Growth

Zurich Insurance Group (ZURN) reported robust financial performance for the first quarter of 2025, driven by significant growth in its Property & Casualty and Life business segments. Despite the lack of immediate market reaction data, the company’s strategic initiatives and strong financial metrics suggest a positive outlook.

Key Takeaways

• Property & Casualty insurance revenue increased by 6% on a like-for-like basis.
• Life business gross premiums surged by 18%.
• Farmers Management Services recorded a 3% rise in underlying fee revenue.
• Strong SST ratio of 256% at the end of the quarter, up from 253% in 2024.

Company Performance

Zurich Insurance demonstrated solid growth across its business lines in Q1 2025. The Property & Casualty segment saw a 6% revenue increase, while the Life business experienced an 18% rise in gross premiums. These results highlight the company’s ability to capitalize on favorable market conditions and strategic expansions in key regions like Italy, the UK, and Switzerland.

Financial Highlights

• Property & Casualty Revenue: Increased by 6% year-over-year.
• Life Business Gross Premiums: Rose by 18% compared to Q1 2024.
• Farmers Management Services Fee Revenue: Up 3% year-on-year.
• SST Ratio: 256%, a 3-point improvement from the end of 2024.

Outlook & Guidance

Zurich Insurance remains confident in achieving its targets for 2025, with expectations of continued elevated pricing in commercial lines. The company is focusing on expanding its Farmers exchanges and monitoring geopolitical developments that could impact performance. Investors should note the attractive dividend yield of 4.72% and strong financial fundamentals, evidenced by a perfect Piotroski Score of 9.

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Executive Commentary

Claudia Cordioli, Group CFO, emphasized the company’s long-term focus and strategic management, stating, "We are managing the business for the long term." She also highlighted Zurich’s approach to setting achievable targets, saying, "We never change targets... We like to underpromise and overdeliver."

Risks and Challenges

• Potential impacts of US tariffs and geopolitical developments.
• Inflationary pressures that could affect cost management.
• Market saturation in key regions.
• Challenges in exiting unprofitable business lines in the US commercial segments.
• Exposure reduction in motor programs and crop insurance.

Zurich Insurance Group’s Q1 2025 performance underscores its strong market position and strategic foresight, setting a positive tone for the rest of the year.

Full transcript - Zurich Insurance Group AG (ZURN) Q1 2025:

Valentina, Chorus Call Operator, Chorus Call: Ladies and gentlemen, welcome to Zurich Q1 twenty twenty five Results Conference Call. I’m Valentina, the Chorus Call operator. I would like to remind you that all participants will be in listen only mode and the conference is being recorded. The presentation will be followed by a Q and A session. The conference must not be recorded for publication or broadcast.

At this time, it’s my pleasure to hand over to Mr. Todd, Head of Investor Relations and Rating Agency Manager. Please go ahead.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Your manager, Mitch? Unmute. Mitch, unmute. They didn’t unmute themselves. They didn’t unmute themselves.

Okay. Say something.

Valentina, Chorus Call Operator, Chorus Call: Ladies and gentlemen, please hold the line. The connection with the speakers has been lost. The conference will continue shortly. Thank you.

Claudia Cordioli, Group CFO, Zurich Insurance Group: Hello? At

Valentina, Chorus Call Operator, Chorus Call: this time, it’s my pleasure to hand over to Mitchell Todd, head of investor relations and rating agency manager. Please go ahead, sir.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Good afternoon, everybody, and welcome to Zurich Insurance Group’s first quarter twenty twenty five results q and a call. On the call today is our group CEO, Mario Greco, and our group CFO, Claudia Cordioli. Before I hand over to Claudia for some introductory remarks, just a reminder for the q and a, we kindly ask you to keep to maximum of two questions, please. Claudia, over to you.

Claudia Cordioli, Group CFO, Zurich Insurance Group: Thank you, Mitch. Good afternoon, and thank you for joining us today. I’m Claudia Cordioli, group CFO. I’m here with our CEO, Mario Greco. I will first share a brief overview of our results for the first quarter of twenty twenty five, after which we will open for questions.

Before looking at our individual business lines, the key message I would like to highlight is the solid start Zurich has made to the new financial cycle. Our uniquely diversified footprint, focused on delivering sustainable quality growth, coupled with strong capitalization and financial resilience, all underpin the current quarter’s performance and how we manage the business for the long term. Now turning to each of the key businesses, I’ll start with P and C. I’m pleased to report positive top line growth with insurance revenue up 6% like for like. This compounds a strong priority of comparison where revenues increased 5% in the full year.

Aggregate pricing across both retail and commercial lines continued to appreciate this year. Combined with ongoing management actions on the p and c portfolio with our data on data, the quality of growth continues at a fourth trajectory. In commercial p and c, we continue to grow the business profitably. Gross written premiums grew 2% in US dollars and 4% like for like, with positive pricing momentum of 3% rate increases. North America, specifically, continued to experience overall rate increases of 6% with particular strength in commercial auto, up 16% on top of a double digit price increase in the prior year.

We continue to improve the quality of the portfolio, exiting business which doesn’t meet our threshold. Excluding those actions, this quarter underlying growth in North America would have been 5%. Selective growth in Middle Market and Specialty together with proactive portfolio management resulted in an improvement to the underlying profitability of the North American book. In retail, gross written premiums rose 11% in US dollars. The first time inclusion of AIG global personal travel insurance and assistance in Zurich numbers contributed approximately half of this growth, adding 13,000,000 of policies.

Additionally, we capitalized on a positive pricing environment where rates increased 5% across the book. Momentum in both motor and property pricing continued strongly in the quarter, adding to price rises in 2024. Overall, the prospects are strong for our retail business, giving us confidence in returning to the desired long term level of profitability. Now shifting to life. The business delivered an excellent 18% increase in gross premiums in the quarter.

Strength in unit linked protection and the new capital efficient saving products in Spain helped to propel the level of growth. Efforts continue on the buildup of our global protection platform, which will accelerate growth in line with our 2027 ambition. Switching gears to Farmers. Farmers management services underlying fee revenue rose 3% year on year, including the strong performance in the brokerage entities with fee service revenues up 34%. The farmer exchanges reported a 5% increase in gross written premiums with new business, increased customer retention, and price, the primary drivers.

The three month rolling piece trend continues to improve. Effect of ongoing management actions at the Farmers Exchanges continues to manifest in strong underlying underwriting profitability despite elevated catastrophe losses, including the wildfires in California in January. This translates into an outstanding surplus ratio of 42.6% at the March, the highest for farmers since end of twenty twenty. Raul Vargas and the team continue to improve the financial position of the exchanges and position them for growth. And finally, we closed out the quarter with a very strong SST ratio of 256%, reflecting a prudent approach to capital management.

The three points increase compared with the full year the full year level was driven by net capital generation and additional cash reinsurance secured in 2025. The SST ratio remained extremely strong throughout the month of April despite market volatility, ending the month approximately 10 percentage points below the March end, hence confirming again the resilience. So in summary, our businesses started the year very positively, delivering revenue growth underpinned by strong capital position and expanding margins. With our geographically diversified business, outstanding track record, and robust balance sheet, I am confident that we will continue to deliver on our targets by focusing on the things we can control and managing the business for long term value creation. With that, Mario and I will be happy to take your questions.

Valentina, Chorus Call Operator, Chorus Call: We will now begin the question and answer session. Anyone who wishes to ask a question can press and one on the touch tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press and 2. Participants are requested to use only handsets while asking a question.

Kindly mute yourself to two questions only. Anyone who has a question or a comment may press star and one at this time. The first question comes from Andrew Sinclair from Bank of America. Please go ahead.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Afternoon, everyone. Thanks very much. Two for me. So first is just on US commercial pricing. I see it’s fairly confident again from this day, but we’ve we’ve heard some cautious comments of of The US, some of your peers.

But but you talked again about increasing margins in North America today. What what would it take to to lead to margin pressure in in North America? And and and what are you seeing this that’s so much better than peers is is question one. Question two was was actually on life new business. Just looking to see if you can give us some more details on on both of the the profit margins for for unit linked protection and and savings.

And likewise, the growth rates on a p d n p p p basis. To to be honest, I I probably find that sort of product breakdown more helpful at the quarters than than the geographic breakdown if that’s possible. That’s it for me. Thanks.

Claudia Cordioli, Group CFO, Zurich Insurance Group: Thank you, Andrew. So on the first point on on CI, on commercial insurance rates and and The US environment in particular. As we said in in in our release, we we view the broad based environment as very constructive. And I think the key point here is really the quality of growth. So if you if we peel the onion a bit below, you know, the the the overall headline, we need to look at the business line by line and market segment by market segment.

So the reason at the the CMD last year why we said we want to grow in the middle market segment was actually the stability and the resilience of rates in that segment. So we are looking at a situation in US where property rates start to moderate, but in the specifically, in the large accounts and the E and I space more so than elsewhere. This is why we are comfortable to go in the middle market segment where property is still in terms of rates, going up at mid single digit. Right? If we look at commercial motor, I was mentioning before, 16% is the is the the level of rate that we are getting.

Remember that this builds on a double digit rate growth already last year. Specialty is growing as well on a rate improvement of, you know, double digit range. Liability, 7% on primary and double digit on on assets. So it really depends on the segment. It really depends on the line of business, and we’re targeting the growth in a way that it it improves the the the underlying margins.

So we’ve been exiting some of the business that wasn’t profitable, as mentioned before. We’ve been reducing our exposure to some programs and to some of the most relationships we had that has, on one side, impacted our top line growth. So it’s visible. Right? It kind of went next the the the underlying growth in the market, but it does improve margin year over year.

I hope that answers your question.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Yeah. Comprehensive. Thanks. And and on the life business?

Claudia Cordioli, Group CFO, Zurich Insurance Group: On the life of your business, we’re very happy actually with the the overall level of of margins that we are getting. The the slight decrease that you see year on year on on the margin is actually determined by the growth in in the savings business, in the new capitalized product that we launched in Spain. And the reason why this business appears to generate lower profit margins compared to last year is that the majority of the profit from this business is not coming through CSM, but through net investment income. So if you were to adjust for that, the margin would be actually stable year on year. Now we’re very happy about the way Unique Link is developing.

In Italy, in in The UK, in Switzerland, the margin is very strong. We can provide you with with individual breakdowns. And the same applies to to the protection business, which is actually also stable year on year. Thanks.

Valentina, Chorus Call Operator, Chorus Call: The next question comes from Michel Houtenet from Berenberg. Please go ahead.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Thank you very much. And and again, lovely results. Thank you. Two questions. One is, can can you share your thoughts on on Beloj?

I think, obviously, called it a once in a lifetime opportunity. I would have thought it it one might have seen it the same for for for Zurich. And then the the the second is is a more precise question on Farmers. So the surplus ratio improved, which which makes me think the underlying margin was was selling. Can you can you give us a little bit of a feel for how where where where it is or where it was?

Thank you.

Claudia Cordioli, Group CFO, Zurich Insurance Group: Thank you, Michael. So on on Humbalov, look, there is a friendly agreement between two Swiss players. They have agreed to merge in a in a merge of of equals factor. And I think that’s a very clear solution. So nothing much to comment from our side.

On the farmers’ surplus ratio, you’re right. So despite, again, the California wildfires impact in in the first quarter, Farmers has been able to improve the the underlying combined ratio. So that’s a very positive further positive development, actually. And they also benefited from some investment income additional tailwind. So overall, you should expect their combined ratio to be to be still below a hundred despite the the the cash.

And again, there’s some some additional investments investments support. So overall, they are they are positioned very well for for going back to growth. And the point that I would like to stress from from the communications that we made is that we are seeing the piece decline rate slowing down in March. We’re still a small negative, the rolling average, but we we we see the the time clearly turning.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Would can I just ask, would that mean that we could even see a a margin in the this loading number in in Q2? We could

Claudia Cordioli, Group CFO, Zurich Insurance Group: It’s early to tell. We could. We give you an update August, Michael. Okay.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Super. Thank you.

Valentina, Chorus Call Operator, Chorus Call: The next question comes from William Hawkins from KWB. Please go ahead.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Oh, KWB. Hello. First of all, please, thank you already for the detail about the North America. I’m just trying to reconcile in your press release the gross written premium change and the insurance revenue change because they’re interestingly different. Your gross written premiums are up 8%, but your insurance revenue is only up about 4%.

Is that a sign that your insurance revenue should be accelerating at some point? Because I think one is earned and one is written. Or or is there some other kind of technical explanation? The the heart of my question there is I’m wondering whether the figures we’re gonna be seeing are gonna be showing accelerating growth because of that relationship. And then secondly, please, yeah, I was interested in your life short term contract figures.

The the like for like 15% growth was was pretty significant. And and I’m just wondering, the I’ve been thinking that that line item is maybe a mid single digit growth for for profits. And I’m wondering if I’ve been under appreciating the growth momentum that you’ve got in short term insurance contracts or if ultimately this higher growth in volume is gonna be diluted in some way in terms of the profit growth?

Claudia Cordioli, Group CFO, Zurich Insurance Group: Thank you. Thank you, William. So on on the first question, yeah, you you gave the answer yourself. So indeed, there’s there’s some time in that in the recognition of of the premium, so you will see earn eventually catching up with with premium. So there is some business that we are hiking that’s by key nature, and and that explains the the gap between between GWT and and GT.

But it will it will pick up eventually. On the short term business, well, I think in in this case, you’ve got two two things going on. One, and that’s probably the the the most impactful in this case, is the fact that we are growing significantly in in Latin America with the business in in in relationship in in sorry, in in collaboration with with Santander, with the joint venture there. And you’ve got significant impact from the US dollar and and the the Brazilian peso devaluation depreciation side. So that that’s that’s probably the the the biggest the biggest impact in here.

It’s a business that’s going very nicely. We continue to like it very much. It’s very profitable. Hopefully, the current situation will stabilize.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Oh, sorry. Just just to be clear, if the like for like growth is 15% in revenue, does that generally point to similar growth in profits? Or is there a reason to assume that profits will be very different from revenue?

Claudia Cordioli, Group CFO, Zurich Insurance Group: I would assume it’s in line. I would assume it’s in line.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Excellent. Thank you.

Claudia Cordioli, Group CFO, Zurich Insurance Group: Thank you.

Valentina, Chorus Call Operator, Chorus Call: The next question comes from Andrew Baker from Goldman Sachs. Please go ahead.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Great. Thank you for taking my questions. The first one, just curious how you’re thinking about any direct or indirect impacts from The US tariffs. And can you just remind me your EPS sensitivity to US dollar weakening? And then secondly, there’s no mention of the crop portfolio in the release.

You’re able just to provide an update on how volumes are developing here and also where you’re at in your turnaround journey? Thank you.

Claudia Cordioli, Group CFO, Zurich Insurance Group: So on the your question on on on tariffs and geopolitical situation, look, I mean, as I said in my my initial remarks, we are managing the business for the long term. We’ve got a very clear strategy. We are also, as an organization, able to to adapt flexibly to to the changes in the environment, and we continue to be extremely committed to deliver on our targets. You’ve seen now q one top line. We are very happy about the way the business started into the year.

The quality is very high. The growth is what we would expect. So there’s no indication for now that we would, you know, do anything differently or we will not be able to achieve our targets for the three years, but also come below our expectation for the full year. So we are planning full steam ahead. We’ll we’ll adjust in the short term if and and when required.

I’m very confident that the business will deliver. Sorry. Second question. EPS. EPS.

Yeah. We we don’t see the sensitivity on on EPS from the US dollar depreciation. We we give a sensitivity on on SST, which is, you know, 10% up or down will will drive a 7%, eight % movement in in our capital position.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Great. Thank you. And then on the crop business?

Claudia Cordioli, Group CFO, Zurich Insurance Group: On the crop business. So the crop business has started the year in a positive fashion. We’ve we’ve taken a lot of actions with the new leadership in the second half of last year and in the beginning of this year. As you know, in the in the prop business, there’s there’s two fundamental things that are happening at the beginning of the year. One is the decision about the governmental program, the participation there, and the degree of private business that we are writing.

And then the second point, which is obviously independent from us, is the price fixing in February. So February was obviously before a lot of the the tariffs and trade related announcements. At that point, the price was was fairly stable. We’ll see when yields will become known at the end of the year and the price the price definition will will catch up with with the development during the year that’s only November. So there’s some time to go for us until there.

But so far, we are happy about the the mix of the portfolio that has changed. So under the new leadership, we are decreasing the private products in in our portfolio, the the relative share of private products in our portfolio. We are improving the geographic footprint as well. So decreasing our dependency on the number of states. So we have more varied in terms of of products and and also state mix.

So we are happy about what we can control. The rest, we we need to pick up again this this question in October, November.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Perfect. Thank you so much.

Claudia Cordioli, Group CFO, Zurich Insurance Group: Thank you.

Valentina, Chorus Call Operator, Chorus Call: The next question comes from Andrew Green from Autonomous. Please go ahead.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Oh, hello. Yeah. A couple of questions, please, from here. Firstly, could you give a bit more detail in the on the SST movement from December to March? Particularly, think you talked about the impact of cat reinsurance.

Whether you could remunerate that. And then secondly, could you give us some of your thoughts on the proposals going through the House of Representatives in The US section eight nine nine, which could apply to the taxes on US subsidiaries of overseas multinationals?

Claudia Cordioli, Group CFO, Zurich Insurance Group: Thank you, Andrew. So on on the SST movement from December to to March, we have three points. The two bigger drivers of this, one point is is the profit. So the the the new business addition and and the profitability of the new business over and above the approval for the dividend. And then the second the second driver, actually, the biggest driver for two points is the cash reinsurance.

So a few things happened in reinsurance. One, we’ve been buying in January an additional top layer on top of the the usual program for a hundred million capacity. And then the second thing which we’ve done in April, taking advantage of the good underwriting, obviously, from from the security team, but also the favorable price environment. We’ve been buying global aggregate that will protect us in in lower layers for orientatively, I would say, one four, one five type of scenarios. So those are two very positive developments the way I’m looking at it.

On one side, as I mentioned before, I think it’s a testament to the really great underwriting by the Zurich team and in in particular, the the progress that has been made in US with respect to the cat exposure. But it’s also a fact that we’ve been able to negotiate in the in the current favorable environment also the the aggregate cover, which is a very positive step. On second point, on on tax, maybe maybe more broadly, and we can come back to you on on the details, Andrew. We are we are obviously domiciled in US for the business that we run-in US. We are regulated on a on a state by state level.

We run our business out of US entities. We pay our taxes in US. So we don’t expect impact from the tax, you know, discussions or the tax initiatives in US for for now. But we can come back to you with with further details.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Thank you.

Claudia Cordioli, Group CFO, Zurich Insurance Group: Thanks.

Valentina, Chorus Call Operator, Chorus Call: The next question comes from Will Hart Castle from UBS. Please go ahead.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Oh, hi there. Yeah. First one is just a follow-up on that aggregate protection actually. It seems here to be offering quite a lot of cover down the tower. I just wanted to know is that covering all geographies and how much the capacity was there?

The second one is just thinking about the farmers guidance, the three year guidance on revenue growth. There’s been an awful lot of moving parts since that was struck actually. You know, whether that’s just interesting to your confidence on that target. You know, we’ve got US pricing changing, potential supply demand changes post California wildfires, just some that spring to mind. Thank you.

Claudia Cordioli, Group CFO, Zurich Insurance Group: So on the on the aggregate, yes. It is covering all the geographies. And as I mentioned before, I think it’s a it’s a very good step taking taking into account the the the robustness of of our underwriting. We were able to to to place the way we wanted it, so leveraging both alternative capacity, collateralized capacity, and and traditional reinsurance. So I’m it’s quite an innovative deal.

I’m very happy about that. So on Farmers, the guidance is is very, positive. We we don’t we don’t have any any indication that they will not be able to to meet the full year guidance. The one thing But

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: then then well, sorry. I just think you you you should know us. We never change the things that we announced. You know, we can exceed, we can miss, but we never change it. So what was announced was was announced.

It’s always we want to exceed the targets, and we’re confident we will as farmers, but it’s unthinkable for us to change targets announced. We don’t do that.

Claudia Cordioli, Group CFO, Zurich Insurance Group: All indicators we are seeing are actually positive in this respect. So you will see I would expect a different mix of the growth drivers between rates, which was obviously the the key driver for for growth in the past the past and the number of policies and the number of customers. We mentioned in the release that new business is positive and it’s it’s quite a significant positive, which I think is a very good sign. We also mentioned that retention is increasing, which hasn’t been the the case for a number of years. So, Will, if I start if I sum up those two indicators, they tell me actually that they are absolutely on the right path for growth in terms of customers and policies.

And, obviously, rates at some point will start to moderate. That that’s obvious. Right? They got a lot of rates like everyone in the in the industry over the last eighteen months, twenty four months. But that’s fine.

That’s fine. I think the mix would change, we will see a continued growth in in the g GWP.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: That’s really clear. Thank you.

Valentina, Chorus Call Operator, Chorus Call: The next question comes from Fahad Vandabi from Kepler Cheuvreux. Please go ahead.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Oh, hello. Thank you for taking my questions. Could I ask about US middle market? What premiums did you book in q one or and or what do you expect for growth in full year 2025? And could I also ask how much of your commercial premiums are US auto?

Thank you very much.

Claudia Cordioli, Group CFO, Zurich Insurance Group: So we don’t we don’t give the guidance by by segments and and by products at this stage. We might think about doing that maybe in in in the future, for middle market, but we decided not not to do it on a on a quarterly basis. The so the growth that we’re seeing in the first quarter for the reasons that that I mentioned at the beginning of the call is, you know, in underlying terms, very strong when it comes to to property, when it comes to liability, specialty, a number of lines. And it’s slightly well, it’s slightly it’s it’s moderated by some exits in in the motor business and in US program. But if we look at the the classical, say, p and c lines within middle market, they’re actually going up 11% year on year, and that’s supported by rate rate, but also the the the growing exposure.

And as I said, it’s partially set by those very deliberate actions that the the teams have taken.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Okay. Thank you.

Claudia Cordioli, Group CFO, Zurich Insurance Group: On on the motor premiums, it’s it’s a significant line for for for for The US obviously, for for for The US business. But it’s by far not the largest one, and it’s one line where we’ve been decreasing exposure despite the 16% price increase. From memory, I think 6% down is is is a year on year impact on on motor. So we’ve been taking, as I mentioned, very deliberate action.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Okay. Thank you.

Valentina, Chorus Call Operator, Chorus Call: Next question comes from Nimit Malhotra from Mediobanca. Please go ahead.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Yes. Good afternoon, everybody. So my two questions. The first one is on commercial margin. And here, I would say, you know, it’s obviously very good time to see the portfolio is helping the margin.

I’m just curious, do you think that any potential US inflationary pressures could put some of this at risk? Could you expect, obviously, some pricing increases along time? So just curious as to how you see this changing or potentially changing inflation landscape in The U. S. With respect to the margins, which today, we are still seeing are improving?

Second question is on the Life, the strong phenomenal growth. I think in full year results, you had indicated you do expect the outlook of flat profit to be to be possibly exceeded. Is it a fair assumption that with these kind of growth numbers you’ve seen in 1Q, you you get confidence or we should be more optimistic about life than even before about the flat outcome? Thank you.

Claudia Cordioli, Group CFO, Zurich Insurance Group: Thank you, Vinit. So on on your first question on on inflationary pressure on on pricing, I mean, obviously, insurance insurance prices do reflect inflation and do react to inflation. So should there be an increase in in US inflation due to the to the current trade discussions? I would expect the the prices for that. And just to give you a sense, if I look at the farmers book on on the home side, they typically reprice every 12 months.

The the policies are in use, and and with that, the the repricing can happen every six months sorry, every 12 months. The most of policies, majority renews every six months. So there is the opportunity to reprice if and and the same applies obviously to to to the commercial business should inflationary pressure come through. I would probably argue that we all learned from the COVID experience and from the inflationary pressure that that follows to be a bit quicker and a bit more flexible in reacting to to inflationary pressures. So I think everyone in the market is a bit more alerted to to to this type of development.

On the point on live growth, we we never change targets as as Mario has has reiterated before. So I will not do it. We also like to underpromise and overdeliver. So 2,200,000,000.0, which is which is our level of pop for last year, is already a very ambitious level. So at this point, given the uncertainty in the market and on we just spoke interest rates, inflation, and everything, I would stick to that.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Okay. Thank you, Claudia.

Claudia Cordioli, Group CFO, Zurich Insurance Group: Thank you.

Valentina, Chorus Call Operator, Chorus Call: The next question comes from Kamran Hussain from JPMorgan. Please go ahead.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Hi. Good afternoon. Two questions for me. The first one is just coming back to the commercial also kind of rate changes. So plus they’ve seen obviously a very big driver rate, but also very positive.

I’m just really interested in kind of where you are in the repricing cycle. That’s kind of when it starts and when you kind of think it will finish. Will it tail off in h two, or do you think it will continue going for the remainder of 2025? And the second question is just specifically in North America. What was the rate that you you’re guessing or seeing on the large account property?

Thank you.

Claudia Cordioli, Group CFO, Zurich Insurance Group: Sorry. Can can you repeat? What’s the rate?

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: The launch account property.

Claudia Cordioli, Group CFO, Zurich Insurance Group: Okay. Right.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: In North America. Yep.

Claudia Cordioli, Group CFO, Zurich Insurance Group: Yep. Okay. So on commercial auto, what are we in the pricing cycle? We we started we started already last year, as you know. I would expect prices to remain elevated over the course of 2025.

And the simple reason for that is that the the repricing was needed. So it’s needed to respond to to underlying loss trends. I think everyone in the in in the industry, and we we we are part of that, is getting more conservative in the in the last six. We we have been adding to our initial loss ratios to make sure that we don’t get surprised again by rising inflation or or anything of that kind. So that puts pressure on prices, and I I I would I would expect prices to remain elevated for the rest of 2025.

I would expect at the same time that our pruning actions start to to fade during the year. Right? So we we started already in the second half of of twenty twenty four. We’ve exited some accounts. We’ve been pruning some other exposures.

We continue to do so in the first quarter. So the rate of, say, exit or or decrease in our motor exposure should decrease throughout the year, if that makes sense. When it comes to to the property rates, as you were asking in The US, Overall, we are we’re a bit above 2% for the whole of of the book. As I mentioned before, middle market is mid single digit positive, and large account tends to be either zero or or slightly lower than that. So on the back of a number of years where rates were growing, now we we we we see rates moderating on on the large accounts, which is one of the reasons why we haven’t been going there.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Got it. Thanks so much, Sandra.

Claudia Cordioli, Group CFO, Zurich Insurance Group: Thank you.

Valentina, Chorus Call Operator, Chorus Call: The next question comes from James Shock from Citi. Please go ahead.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Thank you. Good afternoon. I want to talk about the Farmers Reinsurance program. So that’s think it’s been renewed at at this point, and it’s previously a 500,000,000 retention. I I presume the cost of that reinsurance is gonna be far higher this year.

But any update on how that’s renewed and the associated cost of it and whether the retention has has changed is very helpful. And then secondly, I was just interested in your FCR report that was released the other day. You can see in there that you’ve taken down your your current in the California earthquake exposures quite significantly. You know, hurricanes probably fall in that 40% or so. I appreciate that exact as at September 30.

So I think it’s probably not capturing the new reinsurance that you you mentioned earlier, Claudia. My question really is kind of what’s driven that sharp reduction at this point. And and why was there no associated change in the Nat Cat required capital, which has remained stable at 6% despite those reductions? Thank you.

Claudia Cordioli, Group CFO, Zurich Insurance Group: Thank you, James. So on Farmers Reinsurance, that’s actually a question for for the exchanges more than than for us. What I can say is that retention has gone up. That that was actually renewed before the wildfires, so it’s not consequence of the wildfires. Retention has gone up slightly compared to to the number that you mentioned, and that’s actually what determines the the loss that the exchanges have communicated on wildfires in in the first quarter.

So I think that gives you enough elements to to guide where where where the retention is sitting now. On the FCR ex sorry. Yes. FCR report and and the exposure on US’s hurricane. So we we’ve been actually consistently driving the policy of containment of US hurricanes and and earthquake as well, exposure in in in US specifically.

So that that was actually intentional. Also, last year, you might remember that CNA, so Zurich North America, has taken quite a cautious view on property already starting in the second quarter. And this made use of facultative reinsurance as well to to limit some of the the peak values in a in a local fashion. So that that’s really the result of it. Now with the additional cover that we bought on on a group level this year, that might decrease a bit further.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: So so sorry, Claudia. But I suppose my question is, why hasn’t the the risk capital actually come down, like, in parallel with the production Hurricane and California earthquake? It still stays the same at 6%.

Claudia Cordioli, Group CFO, Zurich Insurance Group: Let me come back to to you on that, James.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Okay. Perfect. Thank you

Claudia Cordioli, Group CFO, Zurich Insurance Group: so much. Thank you.

Valentina, Chorus Call Operator, Chorus Call: The next question comes from Dominik O’Mahony from BNP Paribas. Please go ahead.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Hello. Thanks for taking our questions. My first question is just on EMEA. Rates of of of three and and an outlook which I think is moderating. And I was wondering if you might unpack that for us a bit.

I was expecting May maybe quite strong rates in personal lines, you know, for instance, back in Germany. Is that right? Is that being offset by other factors in the year? If you could give us a bit more detail, that’ll be great. And and then the second one was you you’ve been very clear in talking about the management actions in PNC, some of the, for instance, the portfolio exits.

I just want to make sure I I got my hands around what those are. So we we’ve clearly got US commercial auto, US programs, as the crop resource that you spoke about. Is there anything else on the on the commercial side that you’d highlight as part of that sort of management action category. Thank you.

Claudia Cordioli, Group CFO, Zurich Insurance Group: Thank you, Dominic. So with respect to to EMEA and and the pricing level, you’re right. So there is some degree of moderation specifically in commercial property that we’re seeing across Europe. I mean, in in some countries more than others, but overall, again, on a very high level already from from the increases over the last couple of years, The the the rate increase is moderating a bit. On the retail side, we are extremely happy about the rates that we’re getting.

So motor in average, just to give you a a data point, is 8% rate increase. And if I look at Germany, which is the country that was in in the biggest need of correction, we are 16% 16% up. So very, very strong. We’re seeing also very strong rates in Spain, in Italy. We’re seeing rates increases of approximately 7% in in Switzerland Switzerland again on top of what was already obtained last year.

So I’m talking about motor here. So we are very happy about the way the retail book and the problematic part of the retail book is developing, and we’re happy to to go in in retail. One of the points that might not have come through in in the in the press release is as well the fact that US Dollar was actually appreciating compared to q one twenty twenty four. So if you look at the retail growth in Europe, there’s another probably 3% US dollar versus euro appreciation in the first quarter that’s partially affecting the the rate increase sorry, the the GWT increase. On the portfolio actions in your your second question, I I think you named the the the biggest ones.

So motor programs, crop, maybe the other thing that I will mention was the the net the the discipline, I would say, that we applied in E and S exposures and in property given that the rates started to to go down a bit. But I wouldn’t call that a management action because property is still giving a very positive a versus fee. We’re happy about the way the experience develops, about the the profitability of the book. So it’s not a management action. It’s just a bit more discipline in the NS property space.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Very clear. Thank you.

Claudia Cordioli, Group CFO, Zurich Insurance Group: Thank you.

Valentina, Chorus Call Operator, Chorus Call: We have a follow-up question from Michael Gutner from Berenberg. Please go ahead.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Fantastic. Thank you for this. On on the net track, you you gave a figure two figures, two point two and and one point six last year. And and can can you just talk a little bit about that? So you you you said you’re very happy with your aggregate cover.

Clearly, it’s it’s not biting at this level. What what what would be the kind of level where where you’re you’re pricing for in terms of nat cat? And within this and and and maybe how far are we from this with the with the with the current figures? Thank you.

Claudia Cordioli, Group CFO, Zurich Insurance Group: Yeah. Michael, we bought the aggregate April 1, so it would not cover everything that has happened in in the first quarter. I think, I mean, when it comes to to this year’s network capacity, there was there was the impact from the California wildfires, obviously, some severe combative storms in in US. Those are the biggest the biggest drivers. I will not derive from this three months figure a statement for for the rest of the year.

I think we’re very well equipped with the with the the additional cash aggregate, but also the the the top layers that that we bought. So I feel very comfortable with where we are in terms of net catastrophe position. And as we mentioned during the call before, also the the gross underwriting has been taking significant actions. So on the next position, I feel very comfortable.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Just just remind me the the aggregate, where does it bite in terms of its 3.2% or whatever the ratio might be?

Claudia Cordioli, Group CFO, Zurich Insurance Group: It’s one in five one in four to one in five, and I believe it’s eight fifty. It’s a hundred and 50,000,000 on a global level.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Super. Thank you so much.

Claudia Cordioli, Group CFO, Zurich Insurance Group: You.

Valentina, Chorus Call Operator, Chorus Call: This is our last question. I’d like to turn the call back over to miss Claudia Codioli for closing remarks.

Claudia Cordioli, Group CFO, Zurich Insurance Group: Thank you very much. So thank you thank you all for the questions and the interest. Before we close close the call, just let me reiterate the key messages for for today. So Zurich has made a very strong start in the financial cycle. The current quarter performance, as I said at the beginning, is underpinned by the diversified footprint that we’ve got, the focus on delivering sustainable quality growth, coupled with the strong capitalization and the financial resilience.

And we continue to manage the business for the long term, as you know. So thank you again, and turning back to you, Mitch.

Mitchell Todd, Head of Investor Relations and Rating Agency Manager, Zurich Insurance Group: Okay. Thank you everybody for dialing in and your interest in Zurich. If you do have any further questions, please don’t hesitate to call the investor relations team. Thanks very much. Goodbye.

Valentina, Chorus Call Operator, Chorus Call: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

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