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Hurricane-hit P&C unit weighs on Zurich FY'17 result

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Hurricane-hit P&C unit weighs on Zurich FY'17 result

Zurich Insurance Group AG reported consolidated full-year 2017 after-tax net income attributable to shareholders of $3.00 billion, down 6% from $3.21 billion a year earlier.

EPS amounted to $19.90, compared to $21.36 in 2016. Return on common shareholders' equity dropped year over year to 10.9% from 11.8%.

The group's business operating profit came in at $3.80 billion, down 15% from $4.50 billion in 2016. This was mainly due to higher levels of natural catastrophe losses over the year, measures related to the group's restructuring and a one-time item resulting from changes to capital gains relief in the U.K., the insurer noted.

Business operating profit at the property and casualty segment fell 37% on a yearly basis to $1.55 billion in 2017, impacted by hurricanes Harvey, Irma and Maria. The combined ratio for the property and casualty segment was 100.9% for 2017, compared to 98.1% a year earlier.

Life business operating profit rose to $1.26 billion from $1.13 billion in 2016. Business operating profit from Farmers dropped year over year to $1.69 billion from $1.72 billion.

Group gross written premiums declined on a yearly basis to $46.69 billion from $48.21 billion. Net earned premiums and policy fees amounted to $41.06 billion, compared to $42.62 billion in 2016.

The group's Zurich Economic Capital Model, or Z-ECM, which also forms the basis of the Swiss Solvency Test model, stood at 132% as of Dec. 31, 2017, up from 125% at the end of 2016. The figure is above the group's 100% to 120% target range, it noted.

Zurich said it was on track to reach its 2017-2019 targets, adding that it achieved cost savings of $700 million as of Dec. 31, 2017, toward its goal of $1.5 billion.

The group said its board of directors will propose a dividend of CHF18 per share, up 6% from the year-ago CHF17 per share.

Zurich also outlined plans to implement measures in line with its anti-dilution policy, including the cancellation of up to 1.74 million repurchased shares to reverse dilution from vestings of shares in recent years as part of the company's long-term compensation awards, and the purchase of shares on the market instead of issuing new shares for long-term compensation awards in future years. The group will repurchase shares of approximately $1 billion as part of the measures.