Zurich Insurance Group on Wednesday announced its ambitious financial targets for the next three years, as insurers benefit from rising premium rates.
Global insurers have suffered losses as a result of unexpected events such as the COVID-19 pandemic, the Ukrainian war, and large natural disasters. However, in order to protect their profits, they have raised prices and limited coverage.
“We are extremely adaptable, agile, and quick to respond, and we are resilient,” CEO Mario Greco told Reuters.
“We know that things will not go as planned over the next three years…we know how to shift gears.”
In new 2023-2025 targets, Zurich aims to increase its business operating profit after tax return on equity (BOPAT ROE) to more than 20% by 2025 and generate compound organic growth in earnings per share of 8% per year.
The insurer is on track to exceed its previous three-year targets, and its new BOPAT ROE target is higher than its previous target of greater than 14%.
However, the most recent targets were set with reference to the new international accounting standard for insurers, IFRS 17, which Greco said increased return on equity by around 2.5 percentage points.
Zurich also targets cumulative cash remittances of more than $13.5 billion, as well as a Swiss Solvency Test (SST) ratio of at least 160%.
Zurich said it would maintain its dividend policy, which aims for a payout ratio of around 75% of net income attributable to shareholders. Greco stated that higher earnings would result in higher dividend payouts, but that there was little room to change the policy.
The targets do not anticipate the need for M&A, according to chief financial officer George Quinn, who added that the group has “the option, if things come up that make sense.”
Greco stated on the same call that he believed Zurich’s targets were unlikely to be replicated by many other insurers.
Last year, rival Allianz set three-year targets, aiming for 5-7% annual growth in earnings per share and a minimum 13% return on equity.
AXA stated earlier this year that it expected underlying earnings per share to grow at the high end of its target range of 3-7% by 2023, and that cumulative cash would exceed its 14 billion euros ($14.56 billion) target from 2021 to 2023.