Zurich is showing promise in both the UK and group wide
By Content Director Saxon East
These large insurance companies ebb and flow between good and bad times.
Right now, Zurich is having a purple patch.
We know about Zurich’s performance in the UK, where it posted a strong first half performance this year and is also showing improved performance in broker service, according to Insurance Times’ Five Star Rating Reports.
But what about the group as a whole?
Let’s wind the clock back to 2015 - this was a difficult time for Zurich. Their bid for RSA was binned at the eleventh hour and then the results showed losses coming through from liabilities in the US and the Chinese explosion.
Shares had tanked to the lowest price in five years.
Then in 2016, former Zurich general insurance chief Mario Greco returned, but this time to run the business as chief executive.
It was the role he had always wanted.
He has grabbed the opportunity and the results have been impressive.
Shareholder returns over five years, including dividends, are 118.5% compared to an industry average of 87.8%, according to data from investment analysis firm Simply Wall Street.
The dividend has been stable and the yield is projected to reach 8% in the next couple of years.
At a 69% payout ratio, this should be sustainable.
Greco is paid $10m (£7.3m) a year and the value he has brought to the business means that he is arguably worth it.
However, success cannot be taken for granted. All it takes is a few bad appointments and things can turn.
The old expression ‘bad management drives out good management’ is particularly apt for insurance companies, which desperately need good leaders and managers to keep the workforce content.
Zurich is a giant company, with 55,000 employees worldwide - enough to fill the football ground of Newcaslte United.
With that many employees, it is a tricky firm to run. Things can go wrong in such a disparate business.
We can remember how RSA was running strong under former chief executive Andy Haste, but then problems in the smaller unit of Ireland caused huge damage to the business. It sank out of sight for a few years from a shareholder perspective.
Right now though, things are looking up at Zurich. Long may it continue.