Zurich Earnings: Strong Volumes and Good Start To the Year

Zurich Insurance ZURN has reported a business operating profit of $3.7 billion for the first six months of the year. While this is in line with what the company delivered in the first six months of 2022, this 14.6% business operating profit return on equity means the business is on track to deliver on its financial target of greater than or equal to 20% business operating profit after-tax return on equity for the full year. Net income delivered in these first six months has come in at $2.67 billion, which means that the business is on track to meet or exceed our $4.1 billion net income estimate for the full year. Zurich’s net income is equal to $16.96 in EPS and that implies $33.92 in EPS for the full year. And versus the $30.77 in EPS that Zurich delivered in EPS for full-year 2022 results, the company is on track to meet another one of its financial targets, which is to grow EPS by 8% per year. Our full-year EPS target is $27.44, so the business is on track to beat this. However, the results look a little light on the full-year $37.82 EPS consensus collected by Refinitiv. So far, the results suggest a full-year return on equity that is well above the 10% cost of capital that we apply to the business. We maintain our CHF 480 per-share fair value estimate and narrow moat rating.