Zurich’s Q1 results are fundamentally solid, though marked by a further $110m provision, this time in the US. This is the only upset in a set of results that is otherwise encouraging in many ways. Underlying profitability in the group’s operating divisions is improving, and solvency remains high. The valuation is consistent with the strength of the group. While we reiterate our PLUS rating on this basis, our preference within the sector in the short-to-medium term is for Allianz.
Zurich’s Q4 results are not spectacular, even though they are very solid. Especially, several leading profitability indicators have firmed up further, providing hope that 2013 could be better than expected. Despite 2012’s performance being significantly below the group’s potential (natural disasters and exceptional provisions in Germany), operating ROE came out at 9.3%. Management’s short-term 13-15% target is therefore achievable. PLUS rating reiterated.
Zurich’s Q3 2012 results were poor. The non-life division’s profitability was weak even after disregarding the $550m in exceptional provisions set aside for German business operations. Results for other divisions were in line or slightly above expectation, but not enough to make up for property & casualty (P&C) lines. There was one plus point though: solvency remains high enough for the group to pay out a stable dividend. At this juncture, this is the share’s main (seasonal) merit. PLUS rating reiterated.
Zurich has published very solid Q2 results. First half ROE of 13.8% is well above the sector average, in spite of the company having higher equity than the competition. Technical profitability continues to be boosted by premium increases, and management’s proactive approach to investment is keeping the negative impact of low interest rates on returns to a minimum. PLUS rating reiterated.
Zurich posted fundamentally good results in line with expectations. However, following strong recent performance, the market has today decided to focus on the weak performance of the life division to justify profit taking. This does not call our more long-term investment approach into question because the structural improvement of non-life profitability is continuing (70% of operating profit). PLUS rating maintained.
Zurich is a highly diversified insurer, both geographically and by business activities. For the past two years the management has been focusing on profitability rather than on volumes and has set itself a 16% long-term ROE objective. This figure should be seen in relation to the 11.9% achieved in 2011, a financial year which was hit by numerous natural disasters and weak financial markets.
Zurich posted a Q4 operating profit of $1 billion, slightly below expectations. The non-life segment was rather more affected than anticipated by major claims. However, the progression of premium rates remains favourable and the portfolio quality is improving. In the life division, the integration of the Santander business in 2012 will be an asset. Solvency has declined somewhat, but remains very high by comparison with the sector as a whole. The valuation is consistent with the superior quality of the fundamentals. PLUS code maintained.
Zurich posted a Q3 net result totalling $1.2 billion, almost twice the expected figure. This profit was helped by inherently non-recurring hedging gains on its investment portfolio. On the other hand, the operating profit and solvency were marginally better than expected. The recurrence of solid results and a robust balance sheet augur well for a stable high dividend. PLUS code maintained.
Q2 results posted by Zurich were excellent in every respect. Performance of all the divisions was better than expected while the trend of all the operational indicators is looking good. In this situation, we are confident that the management will be able to maintain its very attractive CHF 17 per share dividend in 2011. The attractive valuation supports our PLUS code for this share.
Following a period of uncertainty which lasted for several quarters, Q2 2011 results published by ZFS are excellent in every respect. The net profit was 17% ahead of expectations at $1.3 billion; all division posted good/very good results and the operational trend indicators are looking good. The group therefore generated more capital than expected to cover the payment of a very high dividend (current yield: 11%). Buy on recent weakness. PLUS code confirmed.
1st quarter results announced by ZFS are disappointing, especially after the good publications by its US competitors and rather favourable premium rates evolution (+3% in Q1). To put it bluntly, the group has been hit by a rather exceptional frequency of big claims, but still managed to achieve a respectable ROE at 8.3%. In the medium term, the dividend yield close to 8% and very healthy fundamentals deserve better than a 10% discount against the sector. PLUS code confirmed.
2010 was a transitional year for Zurich during which the new CEO paved the way for attainment of the target of a long-term return on equity of 16%. In our opinion, the group is better placed than the sector average because of its robust balance sheet and lower sensitivity to interest rates than companies which are more active in life insurance. PLUS code confirmed.
Zurich published Q4 results which were fairly good on the whole, but in line with expectations. There are probably no catalysts in this publication, but nothing to worry about either. In the final analysis, this may be an advantage in view of the pressure exerted on the margins of some life insurers who are sensitive to interest rates. We maintain our PLUS code because of the perfectly solid shareholders’ equity, an operational trend which can only improve on the US non-life insurance market and a 6.7% dividend yield.
Following the disappointing Q3 results announced last month, we were relying heavily on today’s Investor Day to confirm the group’s strategy and lift sentiment on the share. This exercise proved successful: the management presented objectives which we already knew, but the details are now credible. The most positive aspect noted by the market is the confirmation of capital management with a strong focus on shareholders’ interests. We are convinced that our PLUS code on this share is appropriate.
Zurich published disappointing Q3 results, although they were affected by a non-recurring item without which the result would have been in line with expectations. There are no catalysts in this publication at this stage. But the new CEO arrived at the beginning of the year and the management has scheduled an investors’ day for 2 December next. We have high hopes that this day will signal an inflexion point in the group strategy and in sentiment on the share. PLUS code confirmed in the meantime.
The Zurich share recently came under some pressure because of its mixed results on the non-life insurance side. However, by their very nature, these results are very cyclical and can recover quickly. On the other hand, the life division continues to gain importance within the group and its profitability is improving steadily. The share is still good value despite a high dividend yield (approximately 7%), which is consistent with the strong balance sheet. PLUS code confirmed.
Zurich published strong Q2 results, but they still do not reflect the quality of this group. The non-life division proved somewhat disappointing because the attainment of a combined ratio in line with expectations was only made possible by a more substantial reversal of reserves than planned. On the other hand, the importance of the life division for the group continues to grow and its profitability is gradually improving. In short, the share is good value despite a high yield dividend (almost 7%) which is consistent with the strong balance sheet. PLUS code confirmed.
Q1 results are very strong and confirm Zurich’s ability to cope with an environment which is not particularly favourable. A succession of natural disasters occurred in the early part of this year, but made no more than a small dent on the group’s profitability. In addition, Zurich has one of the strongest balance sheets in the industry. This enables the company to continue to make provisions for the payment of a high dividend of CHF 16, a fact which is not reflected in the 27% discount against the sector. PLUS code maintained.
In 2009, ZFS confirmed its status as a high quality insurance group. Profitability of its life and indemnity insurance business clearly reflects this fact. Furthermore, its very high solvency margin provides strong support for the share value. These factors, coupled with a dividend yield well above 6% are not fully acknowledged at present with the share still trading at a discount against the sector, on the basis of its 2010 results.
The group’s Q4 and annual results for 2009 were marginally better than the already high expectations. Their quality is in fact well above average in recurring terms. As a result the group can afford the luxury of rewarding its shareholders with a very high dividend of CHF 16 (6.6% yield) with no adverse impact on the financial strength of this group which remains a reference in the sector. The markdown of this share against the sector is not simply unjustified, it is unjustifiable. PLUS code confirmed.
Zurich’s Q3 results fell short of expectations, but they were affected by a great many non-recurring factors, both positive and negative. After reprocessing, it remains an insurer with extremely robust finances and is able to pay an attractive dividend thanks to its better than average longer-term profitability on the non-life insurance side and the promising development of its life insurance division. The current markdown of the share price remains hard to justify, even after this slightly disappointing publication. PLUS code confirmed.
ZFS is a diversified insurance group with defensive qualities, thanks to its great discipline in the area of subscriptions and its investment portfolio which is of better than average quality. In addition, the group presents an attractive growth profile, both organic and through targeted acquisitions in which the group has an excellent track record. Trading at a 17% discount against the sector, on the basis of its 2010 results, ZFS deserves better.
Zurich has published very strong H1 and Q2 results, 15% better than expected on the operational side. All the indicators are looking good with exemplary solvency, robust technical performance of non-life insurance, a strong commercial dynamic in life insurance and prospects for premium increases. Now the appointment of a successor to the present CEO is the only outstanding issue before investors are able to focus on these excellent fundamentals once again. PLUS code confirmed.
ZFS has published a seemingly disappointing net result for Q1 at $362 million against the expected $450. The group has made a capital loss of $1 billion on its financial investments. However, the intrinsic profitability of its life and non-life portfolios is stable and improving, at good levels. The outlook is positive, with subscription margin improvement and a restructuring programme currently in place. Financial strength remains a major reason for our recommendation to invest in this share. PLUS code confirmed.
ZFS has announced the acquisition of AIG’s motor vehicle insurance business in the United States at a price of $1.9 billion, corresponding to 1x tangible shareholders’ equity. The transaction makes perfect strategic sense because it enables the group to consolidate its position as the 3rd largest personal insurance group in the USA and become one of the three leading US direct insurers, with a superior growth profile. At the financial level, the deal is also a good proposition because it results in an immediate increase in shareholder value. PLUS code confirmed.
ZFS is a diversified and resilient insurance group. Its basic business area is defensive. The group’s solvency remains high and its ability to hold costs down is a vital advantage to preserve its margins. The group has one of the most robust balance sheets in the sector. These advantages are not reflected in the share price with a 20% discount against the sector PE 09e. We confirm our PLUS code for this share.
The net profit announced by ZFS for 2008 fell just short of expectations at $3 billion against the forecast $3.3 billion. The deficit is attributable to the performance of financial investments; that is understandable in the present environment. At operational level the result is in line with expectations and better reflects the group’s robust fundamentals. Shareholders’ equity was also hit by depreciation and currency movements, but the group’s solveency remains high. PLUS code confirmed.
The Q3 result announced by ZFS was affected by the tough financial markets; however, at operational level, the quality of the business model remains very good. The group’s solvency is a reference in the industry and the progress of business remains robust on the life insurance side. The group’s recent disappointing stock market performance reflects some manifestly unfounded fears and profit taking on a share which has still been doing 12% better than its sector since the beginning of the year. PLUS code confirmed.
ZFS confirmed the superior quality of its life and non-life portfolios in the first half of 2008. The group’s management is excellent, as shown by the value creating acquisition policy, outstanding risk management, current restructuring plan and dynamic capital management. Despite these positive factors, the share price is not high, with a slight discount against the sector. PLUS code justified. Zurich ZFS is one of o ur favourite financial stocks.
ZFS confirmed the superior quality of its life and non-life portfolios in the first half-year. The group has an excellent management, as attested by the value-enhancing acquisition policy, the prudent risk management, the ongoing restructuring plan and the dynamic management of capital. And all of this is reasonably priced, with a below par rating of 8% compared to the sector. PLUS code reiterated on one of our preferred financial stocks.
Q108 results are above consensus. The figures have been influenced by non-life insurance premium growth and the absence of negative currency fluctuation effects; on the other hand, the environment in the commercial segment in the US is difficult, as too is corporate business. In view of these good results, the management quality, very limited — indeed almost non-existent — exposure to subprime and CDOs and the attractive valuation, our PLUS code is confirmed.
2007 results are better than expected: the net profit rose by 22% to USD 5.6 billion; ROE stood at 21.0% versus 20.4% in 2006 while shareholders’ equity rose by 13% to USD 28.8 billion. These results are very strong and reflect the excellent fundamentals of ZFS (strong balance sheet, risk portfolio diversity, targeting profitable market segments and development of sophisticated risk, capital and investment management techniques). PLUS code maintained.
Results for the first 9 months of 07 are better than the consensus view. The net profit is up 25% at USD 4.15 billion; ROE at 21.4% against 21.0% in 9M06 and shareholders’ equity 11% higher at USD 28.4 billion. Given these good results, the high management quality, the very low exposure to subprimes and CDOs and an attractive valuation we repeat our PLUS code.
The results are excellent. Two factors in particular have come as a pleasant surprise: the share buy back program and the increased dividend. This share buy back also proves that the management is careful not to spend its shareholders’ money on overpriced acquisitions. The valuation remains attractive with a PER’07e at 9.5x and a markdown on its American competitors (non-life insurers at 10.5x) which is not justified. PLUS code confirmed.
Results are strong. Despite an unexpected increase in reserves in Great Britain, the combined ratio is less than 95%. Margins for new business continue to rise. The increase in the profit growth target is also positive. All these factors should lead to an upward review of the consensus for 2006 and 2007. The valuation remains attractive with a PER’07e of 9.8x vs a sector at 10.8x.
Results are substantially higher than expected. Every business activity reported strong performance, despite a particularly high level of claims. The improvement of the group’s financial situation could result in an upgrade by S&P to AA before the end of the year. The valuation remains attractive with a PER’06e of 9.6x against 11.6x for the sector. PLUS code confirmed.
The main topic at this investors’ day was European non-life activities (approximately 35% of premiums). Restructuring is over and the generation of revenue is now the main target, notably through the development of partnerships with banks (Deutsche Bank in Germany) or other institutions (AMAG in Switzerland, for example). The subscription policy should remain strict in 2006 with the focus on improved profitability. ZFS is our favourite share for 2006 with a PER’06 at 9x against a sector at 11.5x. PLUS code maintained.
The interview was reassuring an showed that ZFS has no intention of winning market shares at any price without regard to the risk. Further improvement of the financial situation, the substantially higher dividend and the prospect of an improved rating by S&P in 2006 are all factors favouring the share price. Furthermore, with a PER’06e at 8x against a sector average of 10.9x, the Swiss insurer remains very attractive. PLUS code confirmed.
Results are much stronger than expected. ZFS is well under way to regaining the confidence lost during the Hüppi era. The improvement of the group’s operating profitability shows that action is following words. The subscription policy is now strict and insurers should take advantage of the recent natural disasters to maintain high tariffs in 2006. The valuation remains attractive with a PER’06e of 8.5x against a sector at 10.5x. PLUS code maintained.
Despite better than expected results, the non-life insurance segment proved slightly disappointing. Restructuring of the life insurance business continues in order to improve its profitability. The management is being cautious about the coming month; this is hardly surprising since an environment of low interest rates is not particularly favourable to insurers. However, ZFS is trading at a PER’05e of 8.3x, which represents a 16% discount against the sector. PLUS code maintained.
The latest increase in reserves suggests that the big cleanout is nearing its end. Results, notably of the life insurance division, are good. With a PER’05e of 8.1x against a sector at 10.4x, the discount is likely to narrow. ZFS remains our favourite share in the European insurance segment for 2005. With four investor days organised during the year, the management intends to emphasize communication; this will help to persuade the market that the reserves are indeed adequate. PLUS code maintained.
The results are good. The non-life cycle will continue to benefit from high tariffs in 2005 when they will probably reach a peak. The life insurance business should then take over. The dividend could be increased at the beginning of 2005. The valuation is attractive (the share is trading at a PER04e of 9.5x). The risk associated with the reserves and the Spitzer affair has already been discounted. PLUS code maintained.
The presentation was of good quality and somewhat reassuring. The problem of the low level of reserves at ZFS is known to the market and is already discounted in the price. However, uncertainty still remains as to the amount that could be involved in the short term. Management seems to be adopting a cautious policy regarding the underwriting of risk and its desire to strengthen its capital base is somewhat reassuring. The stock is still attractive with a PER’05e of 7.1x against a sector at 9.1x.
This affair is in the news again at a time when ZFS has almost completed its restructuring process. The spectre of dubious past deals is also rearing its ugly head again. The impact is more damaging in terms of sentiment than on the financial side. Despite the recent bad news, the risk seems to have been more than discounted in the share price. With a PER’04e of 7.5x against 10.4x for the sector as a whole, the forthcoming completion of restructuring and a strong non-life insurance cycle, ZFS is a buy opportunity.
The published results are excellent. The non-life insurance segment continues to benefit from favourable conditions with high tariffs. Even if the cycle in this segment slows down, it remains extremely profitable. ZFS continues to be our favourite share in this sector in Europe, notably because of its exposure to non-life insurance but also because of a very attractive valuation with a PER’04e at 7.8x against 10.2x for the sector as a whole. PLUS code maintained.
The net profit of USD 2.1 billion published by the swiss insurance company exceeded all expectations by around USD 200 million. Restructuring and rationalization measures taken in 2002 enabled all the divisions of the group to report strong operating profit growth. We believe that the group will continue to generate growth in 2004 and it remains our favourite share in the insurance industry.
The USD 701 million Q3 net profit is clearly above the consensus which stood at USD 484 million. From an operating point of view, Zurich Financial Services (ZFS) has a good quality profile with 27% higher net premium income and a combined ratio up 16 points at 98.2%. Given the quality of the results at the end of the first nine months of 2003, the lower share price represents a buy opportunity.
The Q3 net profit of USD 701 million is well above the consensus forecast of USD 484 million. Operationally, Zurich Financial; Services (ZFS) has a high quality profile with 27% growth of net premium income and a combined ratio up 16 points at 98.2%. Nevertheless, the share has lost nearly 2.8% following the announcement of a further USD 354 million increase in the provision for financial contingencies (Center) to replenish the US non-life insurance reserves. We believe that this provision was necessary and will be non-recurring. In view of the quality of the results at the end of the first nine months of 2003, the fall in the share price creates a buy opportunity.
Zurich Financial Services (ZFS) doubled its operating result in the 1st quarter of 2003 and its net profit rose strongly from USD 6 million to USD 114 million. At the operational level, results by division were as follows: non-life insurance USD 536 million (+240%), life insurance USD 256 million (+16%).
Writing down a loss of USD 3.4 billion in 2002 cleared away the excesses of the Hueppi years and helped to lay the Groundwork for a financially sound structure focussed solely on insurance. Stronger reserves and good operating performance hold out the promise of very positive future.
ZFS is trading with a markdown on its estimated shareholders’ equity for the end of 2002. The main risks to investors are: the success of the capital increase and the conditions under which it takes place, the success of restructuring and stock market performance. We regard these risks as substantial and believe that the share price will remain volatile in coming months. In a long-term perspective and with a view to diversification, we are altering our code for Zurich from "under review" to "Plus".
2001 was a disastrous year for ZFS in terms of profit and performance. However, the departure of Mr Hüppi will permit a strategy review and enable investor confidence to be restored. Trading at 1.2 times shareholders equity, this share looks attractive to us for investors who are willing to accept a high risk and volatility.
The 2001 profit of ZFS was in line with its preliminary announcement of 11 March: a net loss of $387 million calculated by IAS rules and a profit of $348 million on a standardized basis. The ZFS share is trading at less than 1.2 times equity which seems seriously underpriced. We are maintaining our «plus» code despite the uncertainties surround the level of provisions and the name of the new CEO. We regard this share as suitable only for investors who are willing to accept a high risk and volatility.
The preliminary result for 2001 was disappointing: a USD 348 million profit on a normalised basis against 700 – 900 million estimated by the ZFS management in December. The reasons put forward were higher than expected claim costs and a lower result on cancelled operations than had been anticipated. This reminded us of last year’s profit warnings. The share is therefore still a somewhat speculative proposition and we are keeping it under review (instead of our plus code) until the detailed result is announced on 21 March.
The normalized profit published by Zurich Financial Services (ZFS) is down 13% at USD 922 million, in line with expectations. The IAS-based published profit stands at USD 861 million, down 33%, primarily because of a steep fall in realized capital gains (-59%). The sale of Scudder and the IPO of the reinsurance business in the 4th quarter of 2001 would make the claims by ZFS of a renewed focus on its priority core business more credible.
Above all do not sell! A spate of unpleasant surprises seems to be dogging the ZFS group. Yesterday the stock lost 10% on account of two rumours: losses (write-offs) in private equity, and the sale to Deutsche Bank of Scudder for a price deemed to be too low. In our view the reaction of the market is exaggerated and we are positive as regards the stock at its levels. Our reservation stems from the opacity of management, which inclines us to maintain the stock at neutral until the results of 6 September.
I think that ZFS gave analysts a rough ride when it announced the profit warning in February. The group’s credibility had already taken a knock at the time since the group had ceaselessly confirmed that business was good. The discovery of serious weaknesses at operational level this morning has again dampened the market’s enthusiasm and I think it will take years for Mr Hüppi to regain the trust he has lost in recent months.In a market in steep decline (DJ Stoxx insurance -5.5%, with sharp movements affecting ING -6.3%, Axa -8%, Allianz -5.2%, Bâloise -7%, Aegon -5%) ZFS fell 17% (570). This fall mainly reflects the disappointment of analysts and investors in relation to the catastrophic information policy of the ZFS. The rating (neutral for the time being) of the Zurich is under review.
Zurich Financial Services (ZFS) surprised the market on 8 February with a profit warning. Instead of a 10% rise, the standardized profit for 2000 published in USD is set to be at a level below that of 1999. However, the group is expecting a 10% rise in profit per share expressed in CHF. This message greatly dampened the market’s enthusiasm, since throughout the past year the company persisted in confirming that business was good. Pending the detailed figures for 2000, the Zurich recommendation changes from buy to neutral.
Although the cycle in non-life insurance premiums seems to have peaked, improved quality of the insurance policies portfolios should enable a high level of profitability to be maintained. The ROE target of 16% announced on investors’ day seems to be within reach. Finally, the valuation is still attractive with a PER’08e at 8.6x against 9x for the sector.