Zurich Insurance announced a 74 percent leap in full-year net profit on Thursday, boosted by a strong rebound in its core general insurance business.
Net profit for 2016 came in a $3.21 billion, narrowly missing analyst expectations of $3.32 billion as seen in a Reuters poll. The sharp year-on-year uplift was helped by weak comparables from the fourth quarter of 2015 which had seen winter storms and the explosion at the Chinese port of Tianjin debilitate its core business, contributing to a near half-billion dollar loss for the three month period.
Looking ahead, Chief Executive (CEO) Mario Greco told CNBC in Zurich on Thursday that he was cautiously optimistic.
"We see signs that finally the economies are improving in Europe and that the U.S. will continue being strong and hopefully what the new administration will grant us with will be further growth and further stimulus. So we are cautiously optimistic on 2017 and we see that finally the economies are moving for the better," he posited, on his first day of presenting annual results as the group's CEO since returning to his former employer in March 2016 after stepping down from the same position at Italian rival Generali.
Affirming that he was "very pleased" with the returns achieved in 2016 in a difficult climate characterized by persistently low interest rates, Greco said the group was still focused on improving its cost profile, not least as he anticipated the interest rate environment would improve only "slowly".
"We have a lot to improve still. We indicated $1.5 billion of cost reduction which is all about simplification and handling the business in a more direct and simpler way and we only achieved $300 of it, so there is more to go," he began before turning to consider the combined ratio, a measure of profitability reflecting daily operational performance.
"On combined ratio the 98.4 (percent) that we achieved at the end of 2016 is just the first step and we have to keep improving and every investor knows we will have a better combined ratio by 2019," he added.
A combined ratio below 100 indicates that the insurer gathered more in premiums than it paid out in claims, demonstrating a return to profitability by this measure which had spiked to 103.6 percent during 2015.
Last November, Zurich scrapped plans for further job cuts and Greco on Thursday confirmed that the insurer's focus on simplification and cost cutting did not necessitate taking an ax to staff numbers.
"Simplification doesn't require further job cuts. We live in economies that unfortunately do not create a lot of jobs ... Job cuts are not our target and we are not there to cut jobs," he stated.
Greco confirmed that the group remained on track to meet the targets he had set out last year to be achieved by 2019.
Zurich's full-year dividend was held constant at 17 Swiss francs ($17) with Greco sounding a confident note on the outlook for this metric and confirming the insurer had cash flow available to cover the payout.
"We said this year we will not be at 75 percent payout ratio and in fact we're not but we're very confident that our plan will allow us to reach 75 percent - and possibly improve on that - which will give possibly also hopes for changes in the dividend, for the better," he said.