"This is a satisfactory result, though one that benefits from a benign catastrophe claims environment," said Chief Financial Officer George Quinn. "When adjusting for foreign exchange movements our Group's operating profitability is broadly flat relative to the prior year period. There are clearly some areas where we need to make improvements, and we continue to focus on efficiencies across the Group as well as on our turnaround businesses. We will provide an update on the execution of our strategy at our Investor Day on May 21."
General Insurance BOP fell by USD 174 million to USD 706 million, 20% in U.S. dollar terms or by 16% in local currency terms, mainly reflecting one-off pension and currency gains in the prior year. The combined ratio deteriorated from 95.9% to 96.7%. Gross written premiums and policy fees fell 5% in U.S. dollar terms to USD 10.1 billion, but rose 5% on a local currency basis, reflecting the dollar's strength.
Global Life BOP was unchanged at USD 319 million in U.S. dollar terms, but rose 13% on a local currency basis. Gross written premiums, policy fees and insurance deposits increased by USD 350 million to USD 7.4 billion, or 5% in U.S. dollar terms and 21% in local currency.
Farmers BOP was down 6% at USD 391 million due to a slight increase in management expenses at Farmers Management Services, as well as a reduction in both investment income and the quota share reinsurance treaty participation at Farmers Re. Gross written premiums at the Farmers Exchanges, which are owned by their policyholders and managed by Farmers Group Inc., a wholly owned subsidiary of the Group, grew by about 2%, or 4% excluding 21st Century direct auto and business insurance sold through independent agents, continuing the positive trend of the past few quarters.
The Non-Core Businesses, which comprise run-off portfolios that are managed with the intention of proactively reducing risk and releasing capital, reported a business operating profit of USD 25 million, compared to a loss of USD 61 million in the prior year, mainly due to a one-off reserve strengthening in 2014.
In Other Operating Businesses, the holding and financing business operating loss narrowed by USD 26 million to USD 146 million, largely due to lower refinancing costs and one-off currency gains.
Group investments, which includes net investment income, realized net capital gains and losses and impairments, contributed USD 2.1 billion to the Group's total revenues for the three months ended March 31, 2015, a net return of 1.0% (not annualized). Total return on Group investments was 2.6% (not annualized), compared with 2.5% in the same period of 2014.
The Group's capital position remains strong, with solvency as determined under the Swiss Solvency Test (SST)5 of 196%, while the Z-ECM ratio stands at 122%, both as of January 1, 2015. The main drivers of the decline in the SST and Z-ECM ratios were the impact of net market movements and expectations for organic growth in 2015, with Z-ECM benefiting from enhancements to the way investment risks are modelled.
The 2014 dividend of CHF 17.00 per share approved by shareholders at the Annual General Meeting on April 1, 2015 will be recognized through shareholders' equity in the second quarter of 2015. Read the full story Zurich delivers BOP of USD 1.3 billion in first three months of 2015
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