(Reuters) — Zurich Insurance on Thursday posted a record first-half operaing profit and said it was on track to beat its 2025 targets, but concerns about natural catastrophe losses sent its shares lower.
Insurers have benefited from several years of rising premiums as a result of wars, the COVID-19 pandemic and natural catastrophes, but losses from the catastrophes — such as floods and wildfires — are a worry for investors.
“Natural catastrophes are risks that insurance companies can cover, the question is the cost,” Zurich CEO Mario Greco told a media call.
“They are more expensive than they used to be because the frequency of these events is totally different than it was in the past — much higher and also touching geographies that never had these events before.”
Zurich’s Farmers business has pared back some of its exposure to natural catastrophes in the United States, Mr. Greco said on a later media call.
Zurich posted a bigger-than-expected 7% rise in first-half operating profit to a record $4 billion. Analysts had on average expected operating profit of $3.9 billion, according to company-compiled poll.
Property/casualty operating profit for Europe’s fifth-largest insurer came in slightly below forecast, however, rising 3% to $2.2 billion, against expectations of $2.3 billion.
Operating profit in Zurich’s life business rose 13% to a record $1 billion, in line with forecasts, while operating profit at Farmers rose 12% to a record $1.1 billion, also in line with estimates.
Zurich said in a slide presentation that it was on track to exceed all of its 2023-2025 financial targets.
Finance chief Claudia Cordioli told a media call that, following Zurich’s purchase of American International Group Inc.’s travel business in June, the company was focusing on organic growth, but that it would “continue to look at the market” for potential acquisitions.
