Zurich Insurance's fiscal year 2025 profit hits a record $8.9 billion, increasing dividend payouts

Investing.com - Zurich Insurance Group AG announced on Thursday that its business operating profit for fiscal year 2025 reached a record $8.9 billion, up 14% from the same period last year, driven by significant improvements in its property and casualty underwriting performance and comprehensive growth across its three main business segments. The Swiss insurance company achieved its best annual performance.

Net profit attributable to shareholders increased from $5.8 billion in 2024 to $6.8 billion, a 17% rise, prompting the board to propose a dividend increase from CHF 28 to CHF 30 per share, a 7% increase. The dividend proposal is subject to approval at the annual shareholders’ meeting.

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The group’s core return on equity, a key profitability metric, reached 26.9%, surpassing its target of over 23% for 2025-2027.

Property and casualty operating profit grew 22% to $5.1 billion, driven by total underwriting premiums surpassing $50 billion for the first time, an 8% increase on a reported basis. The combined ratio (measuring claims and expenses as a percentage of premiums; below 100% indicates profitability) improved by 1.6 percentage points to 92.6%.

Natural disaster losses accounted for 1.2% of premiums, well below the group’s guidance range of 2.5% to 3.0%, and significantly lower than the 3.1% recorded in 2024.

Retail property and casualty operating profit surged from $980 million to $1.47 billion. The German auto combined ratio improved by 16.8 percentage points, Italy by 13.1 points, Spain by 12.3 points, and Switzerland by 8.6 points.

The Farmers Exchanges managed by Zurich’s Farmers division reported total underwriting premiums of $29.6 billion, a 4% increase, with a surplus ratio of 52.9%, above the target range of 34% to 38%.

According to S&P IQ data, losses from the Los Angeles wildfire were below the expected level based on Farmers Exchanges’ share of homeowners’ insurance premiums in California.

Life insurance operating profit increased from $2.24 billion to $2.29 billion, a 2% increase on a reported basis, and a 10% increase excluding last year’s $154 million non-recurring items.

Contractual service margins (a forward-looking indicator of future life insurance profitability) grew 18% to $13.76 billion, reaching an all-time high. Guaranteed total underwriting premiums increased by 5% year-over-year to $9.67 billion.

The Farmers segment reported record operating profit of $2.39 billion, up 4%. Farmers Management Services’ operating profit rose to $2.15 billion, with the total earned premium profit margin remaining steady at 7%.

Farmers Re’s operating profit grew 27% to $243 million. The participation rate in all-risk reinsurance renewal contracts remained at 5.75%, effective from December 31, 2025, down from 8.0% previously.

As of the end of 2025, Zurich estimates its Swiss solvency test ratio at 259%, well above the minimum threshold of 160%. Total cash repatriation reached $7.4 billion. Available financial resources increased from $36.4 billion to $43.2 billion.

Core earnings per share increased 13% from the 2024 baseline of $40.1 to $45.1, with a target of over $51.9 in 2027, implying a compound annual growth rate of over 9%.

For 2026, Zurich expects property and casualty insurance revenue to achieve mid-single-digit percentage growth, life insurance operating profit to grow at least mid-single-digit percentage, and Farmers Exchanges’ total underwriting premiums to grow at a mid- to high-single-digit rate.

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