Operating profit down for parent group, but performance is still ahead of analysts’ predictions

Zurich’s UK general insurance business has reported gross written premium (GWP) of £2.097bn for 2008, a 2% increase on 2007. Business operating profit hit £295m, up from £91m in 2007, and the combined ratio improved to 95.7%.

Guy Munnoch, chief executive of Zurich’s UK general insurance business, said a number of elements had contributed to the improvement

in combined ratio. “In September 2008 we had weather events and had some significant claims, but we were blessed with a relatively benign weather year from a catastrophe perspective.”

A programme of 900 redundancies also helped to drive down costs, he said, with most affected staff leaving in September after a “professional, sensitive and swift” process. “We recognised that to grow profitably through 2009 we had to take action in advance of that.”

Munnoch said he was bullish about 2009, providing rates hardened. “We will be leading the market in a number of areas. We pressed through rating action on the back end of last year and we are doing exactly the same the first month of this year – and will continue with it,” he said.

Meanwhile, the parent group posted an operating profit of $3.535bn (£2.386bn) in 2008, down 12% compared with 2007. Net earned premium increased 4% to $30.922bn, from $29.731bn in 2007.

The performance was, for the most part, ahead of analysts’ predictions. Citigroup, for example, forecast an operating profit of $3.445bn.

But some analysts remained cautious. Catherine Stagg-Macey, a senior analyst at Celent, said Zurich’s broad book of business should allow it to ride out the downturn. “That doesn’t mean there won’t be knocks along the way that require revisions to the company direction,” she said.

Munnoch said the UK business was a significant contributor to the group. “We contribute 11% of the group’s top line and 14% of its operating profit.”