Zurich Insurance Company SA has reported a 9% increase in gross written premiums amid tough underwriting conditions for the six months to June‚ demonstrating what the company referred to as a continued focus on improving the underlying profitability of the company.
The improvement in premium volumes from R1.9bn to R2bn was driven by Zurich's targeted growth and retention initiatives which are starting to take hold. Net earned premium was 8% higher than the prior period at R1.6bn, up from 2012's level of R1.4bn.
Zurich's underwriting result deteriorated in the current year because of an increase in claims in the property portfolio and motor in the personal segment. It says actions will be implemented to improve underwriting profitability.
Commenting on the results‚ chief executive Edwyn O'Neill said: "We are pleased to see progress in various strategic initiatives aimed at investing in high-potential growth areas and streamlining the business in all other areas. These initiatives will gain further momentum going into 2014. The growth in gross written premium is in line with expectations‚ although the bottom line for the first half of the year was disappointing."
Operating expenses increased by 7% to R272.5m, up from R255.8m last year. This was attributed to growth initiatives that include the global corporate‚ body corporate‚ travel and wineries insurance businesses that have been well received and will allow us to shape solutions that help customers manage risk.
Net acquisition costs‚ which increased by 14%‚ were impacted by a change in the portfolio mix and the payment of binder fees. Attributable investment income is slightly lower at R43.6m compared with R47,6m last year mainly because of lower interest rates.
"The group remains focused on achieving profitable growth, which is expected to come from the traditional intermediary channel and from a number of alternative distribution initiatives that have already shown exciting prospects," O'Neill said.
"We will continue to invest in enhancing our services and continue with our product diversification strategy to benefit brokers and customers‚" he added.
An interim dividend of 100 cents per share was declared.
