Will Zurich Insurance thrive on the Credit Suisse crisis? | Finance | Finance

Meanwhile, there are still companies that pay attractive and regular dividends of over 5%, even during the COVID-19 pandemic, such as Zurich Insurance Group AG (ZURN). Excluding the Chinese market, Zurich Insurance is considered one of the five largest insurance companies in the world , spanning more than 200 countries with annual premium revenue of more than 50 billion USD.

Basic strength

Zurich Insurance Group AG is the largest insurance company in Switzerland with its business divided into the main segments: general insurance, life insurance, and farmers insurance.

The company achieved relatively high profit margins and return on equity of 14.3% and 18.5% respectively in 2022 and has remained stable over the years. This demonstrates Zurich Insurance's ability to generate effective and sustainable profits.

Although a European-based company, the majority of Zurich Insurance’s revenue comes from the US market at $43.3 billion, accounting for over 48%. The property insurance segment contributes the most to total revenue, reaching 39%, mainly commercial property insurance contracts for businesses such as factories and ports.

Because of this particular concentration of revenue, one of the biggest risks to Zurich Insurance's earnings is weather, especially hurricanes in the United States and North America, with an estimated impact of about 38% on capital according to the 2022 annual report.

However, Zurich Insurance has a team of climate experts with unique data analysis and modeling techniques, helping the company to mitigate foreseeable risks and better manage climate risks.

Notably, the life insurance and farmers insurance segments also had better profitability, although revenue was only 70% of the property insurance segment.

Segment	Property insurance	Life insurance	Farmer Insurance
Revenue	43.3	25.9	4.5
Net profit	3.6	2.0	1.9

*Equivalent conversion unit: billion USD

Overall, Zurich Insurance Group AG achieved a net profit margin of 10.6% in 2022. The company plans to propose a dividend at the annual general meeting on April 8, 2023. If the proposal is approved by a majority, the planned net dividend will be CHF 24 per share, less 35% Swiss withholding tax, due on April 14, 2023.

Wave trend

Credit Suisse CDS prices skyrocket compared to other banks' CDS

Amid the Credit Suisse debt default and the destruction of its Tier 1 bonds, insurance premiums surged to record highs this week, a sign of growing investor concern about the financial health of lenders after the collapse of two US banks sent shockwaves through global markets.

While Credit Suisse stocks and bonds have been floundering in recent days, the price of credit default swaps (CDS), a type of derivative that acts as insurance for buyers if a borrower defaults on loans, has soared.

Following the insurance sector's outperformance of the broader market, shares of Zurich Insurance Group AG (ZURN) rose 2.65% on Tuesday, continuing a second rally after an initial rout on Monday.

The convergence of the S3 levels (according to the Standard Pivot Points tool) with the 23.6% Fib retracement level of the most recent downtrend has created a relatively solid support base. The price line can completely recover in momentum with the safe speculative trend after the Credit Suisse crisis, especially after breaking above the 50% Fib level. The next targets that are likely to be established in the next sessions are the 61.8% Fib (428.6) and the 78.6% Fib (438.3).

Reference

https://www.bloomberg.com/news/articles/2023-03-20/european-stocks-fall-as-banking-fears-linger-after-swiss-deal

Source: https://diaoc.nld.com.vn/tai-chinh-bds/zurich-insurance-lieu-co-thang-hoa-nho-khung-hoang-credit-suisse-20230322164144531.htm