(Bloomberg) -- Zurich Insurance Group AG’s operating profit beat estimates and announced a buyback program of up to 1.1 billion Swiss francs ($1.3 billion).

Profit rose to $7.4 billion in 2023, above analyst estimates, leading to the insurer’s highest ever return on equity at 23.1%, the company said in a statement on Thursday. The results were driven by growth in the commercial insurance business and by a record performance in the life business unit. 

“I expect this positive momentum to continue and to achieve earnings-per-share growth above 10% over the cycle,” Chief Executive Officer Mario Greco said in the release. 

Net income rose 10% compared to the previous year to $4.4 billion, slightly below analyst estimates. The firm’s life insurance new business premiums increased 26% and the dividend for 2023 will increase to 26 Swiss franc per share.  

What Bloomberg Intelligence Says:

“The 2023 result had a $625 million uplift from a timing difference in discount rates, which will reduce in 2024-25 and will need to be offset by investment income and underwriting performance” - Charles Graham and Kevin Ryan, senior industry analysts

Read the full REACT here

Zurich’s key property and casualty unit saw a slight increase in its operating profit of 7% to $3.9 billion Swiss francs, driven by the increase in insurance revenue and an improvement in investment results.

Viridium Deal

Last month, the Swiss firm’s plan to offload its $20-billion Zurich Life Legacy back book in Germany to Viridium Holding fell through after the insurance consolidator pulled out of the deal as a result of issues relating to Viridium’s ownership structure .

Read more: Viridium Withdraws From Zurich Insurance Portfolio Purchase

“We will explore options to solve the back book option in Germany,” Chief Financial Officer George Quinn said on a call with journalists on Thursday. “We will be vindicated in due course.”

Zurich had said in January it was committed to finding a solution for the portfolio, which administers around 700,000 life insurance policies in Germany, and would continue to explore options.

(Update with comments on Viridium deal, BI comment)

©2024 Bloomberg L.P.