H1 results: Ogden charge eats into Zurich global GI profit

Zurich’s global general insurance (GI) division saw its operating profit fall 15% in the first half of 2017 because of the $289m (£222m) hit it took in the first quarter from the cut in the Ogden discount rate.

The Zurich global GI profit fell to $1.02bn in the first half of 2017 from $1.2bn in last year’s first half.

The combined operating ratio (COR) deteriorated by 1.4 percentage points to 99.5% (H1 2016: 98.1%).

Excluding the Ogden hit, Zurich’s global GI division would have made an operating profit of $1.23bn in the first half of 2017, up 2% on the $1.2bn reported in last year’s first half.

The COR would have improved by 0.3 points to 97.8% excluding Ogden.

Zurich said the stronger underlying performance, when Ogden is stripped out, reflects rate increases and a falling cost base.

Group performance

At group level, the Ogden charge meant that group operating profit was almost flat at $2.17bn (H1 2016: $2.16bn).

Without the Ogden hit group operating profit would have increased by 14% to $2.46bn (H1 2016: $2.16bn).

Zurich chief executive Mario Greco said: “I am very pleased to report results that show what dedicated people can accomplish in a relatively short time, as we were able to grow our businesses in local currencies, improve our underwriting and expand our customer reach, all while reducing our cost base.”

He added: “Based on that performance, we are confident that we will maintain this positive momentum, which positions us well to improve our shareholders’ returns and drive sustainable dividend growth.”