Zurich Earnings: Strong Volumes and Good Start To the Year

Zurich reported a strong start to the year. In the first quarter of 2023 the business reported good top-line growth within its property and casualty division and that has been equally balanced between price increases and volume. Pricing has been among the strongest within its commercial insurance division and North America region. The life business has also demonstrated good top-line growth, but margins have been pressured here. That looks like it is the result of a differing business mix into investment contracts in Europe, the Middle East, and Africa and short-term life contracts such as protection in the Latin America region. However, investment contract net flows are also down by 31%, which is significant. A lot of this appears to be lower sales in Switzerland. EMEA is Zurich’s core life region. Farmers is broadly in line with the services and fee result, up by only 1% to $1.12 billion. That takes it to a little below our full-year expectations. Solvency remains strong with 258% Swiss solvency test, well above the 160% target capital level. We lower our fair value estimate to CHF 480 per share based on currency. We maintain our narrow moat rating.