Zurich(US:ZURVY)2022-05-12 15:07Financial Data and Key Metrics Changes - The company reported a strong start to the year with top-line growth of 8% on a reported basis and 12% on a like-for-like basis, driven by the strength of commercial insurance [4][5] - The solvency test ratio improved to 234% at the end of the quarter, up from 212% at the beginning of the year, benefiting from a rising yield environment [6][7] Business Line Data and Key Metrics Changes - The property casualty business experienced a top-line growth of 8% on a reported basis, with North America showing particularly strong growth with gross written premiums (GWP) up 17% [4][5] - The life business continued to perform well, with strong growth in new business volumes, although the new business margin was lower than the previous year due to mix effects [5] Market Data and Key Metrics Changes - Rate increases in the commercial insurance sector were reported at 9% for the quarter, with some stabilization expected to continue into April [4][5] - Farmers Exchanges, owned by policyholders, grew GWP by 29%, benefiting from the inclusion of the acquired MetLife P&C business [5] Company Strategy and Development Direction - The company aims to exceed all targets for 2022, which is the final year of the strategic cycle, focusing on maintaining strong growth across all business lines [4] - There is a preference for commercial lines over retail lines due to current market conditions, with a cautious approach to new risks [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining margins despite inflationary pressures, citing a favorable rate environment and strong underlying growth [5][10] - The retail market is viewed as more challenging, with expectations for it to become more attractive in the future as rates catch up with inflation [13][14] Other Important Information - The company is actively managing inflation risks, particularly in short-tail lines, and is focused on ensuring that underwriting processes reflect current exposure accurately [18][43] - There is ongoing attention to social inflation and its potential impact on claims, with management noting that there is currently no evidence of a significant change in outlook [52][53] Q&A Session Summary Question: Confidence in loss trends and inflation impact - Management confirmed confidence in written loss trends despite elevated inflation levels, citing internal numbers that have historically been more pessimistic than market outcomes [10][11] Question: Insights on inflation and solvency - Management discussed the relevance of inflation risks, particularly in short-tail lines, and noted that the solvency ratio remains strong with no immediate changes expected [18][20] Question: Retail market outlook - Management indicated that while the retail market is currently challenging, there is optimism for future growth as rates begin to respond to inflation [13][14] Question: Crop insurance risks - Management explained that crop insurance is heavily influenced by commodity prices and government involvement, with risks being actively managed [66][69] Question: Underwriting margin trends in Europe - Management acknowledged that the 2% rate increase in Europe is below inflation rates, but noted that it does not currently pressure margins due to favorable loss-cost experience [58][59] Question: Operational cost inflation in the U.S. - Management highlighted that operational cost inflation is a challenge, but the U.S. team has managed it effectively through targeted increases for high-demand skill groups [60]