Articles
May 08, 2025
Zurich CFO: COVID experience will steel insurers for any tariff-fueled inflation
08 May, 2025 Zurich CFO: COVID experience will steel insurers for any tariff-fueled inflation By Ben Dyson Insurers will be prepared for any inflation caused by the US's imposition of trading tariffs thanks to their experience from the COVID-19 pandemic, according to Zurich Insurance Group AG's CFO Claudia Cordioli. "We all learned from the COVID experience and from the inflationary pressure that followed to be a bit quicker and a bit more flexible in reacting to inflationary pressures," Cordioli told analysts on a call for Zurich's first quarter 2025 trading update. "I think everyone in the market is a bit more alerted to this type of development." Sweeping trade tariffs imposed on imports to the US since President Donald Trump took office in January threaten to boost inflation in the US. Inflation can eat into property and casualty insurers' profit margins because it increases the cost of replacing and repairing vehicles and property, meaning higher claims costs for insurers. Insurers' main antidote to rising claims costs is charging more for coverage. When asked whether inflationary pressures in the US could affect profit margins in Zurich's US commercial business, Cordioli said: "Should there be an increase in US inflation due to the current trade discussions, I would expect the prices to adapt." For home business written by The Farmers Exchanges, a group of California-based reciprocal insurance exchanges that Zurich does not own but provides services to, policies typically reprice every year, and the majority or auto policies renews every six months, Cordioli said. "So there is opportunity to reprice... should inflationary pressure come through," she said, adding the same holds true for Zurich's commercial business in the US. The US is a big market for Zurich, which reports its results in US dollars. The insurer wrote $5.19 billion of property and casualty gross premium in North America as a whole in the first quarter of 2025 — just under 39% of Zurich's total property and casualty gross written premium of $13.32 billion for the quarter. Overall, Zurich is not expecting the current geopolitical turmoil to prevent the company hitting its short or near-term targets, according to Cordioli. "There's no indication for now that we would do anything differently or we will not be able to achieve our targets for the 3 years," Cordioli said, adding that there was also no sign so far that the company would miss its 2025 aims. "We will adjust in the short term if and when required. I'm very confident that the business will deliver." Zurich is targeting core return on equity of more than 23%, compound annual growth of 9% in earnings per share, and cumulative cash remittances of $19 billion for the three-year period to the end of 2027. Zurich, which does not report profit metrics for the first quarter, reported a 5% year-on-year increase in property and casualty gross premiums written in the first quarter of 2025, to $13.32 billion from $12.62 billion. Life gross written premiums were up 18% to $9.36 billion from $7.94 billion.
