Zurich Insurance's Profit Drops, Shares Rise -- Update

By John Letzing

ZURICH-- Zurich Insurance Group AG said restructuring charges and a decline in capital gains weighed down on its profit in the first half of the year as the Swiss insurer presses ahead with a turnaround effort under its recently installed chief executive.

The Zurich-based company said on Thursday that net profit fell 12% to $739 million in the three months to end-June from $840 million in the same period last year. Analysts had expected net profit of $673 million.

Shares of Zurich Insurance rose 3% in early trading.

Total business volumes, a measure of gross written premiums, policy fees and other items, rose 7% compared with the year-ago quarter, to $18.47 billion, Zurich Insurance said.

For the first half of the year, however, net capital gains fell more than 30% to $835 million compared with the same period last year. The company incurred $230 million in restructuring costs in the first half of 2016, Chief Financial Officer George Quinn said during a call with reporters.

The company said its total return on investments in the second quarter was 2%, compared with a negative return of 2.5% in the same quarter last year.

In March, former Assicurazioni Generali SpA Chief Executive Mario Greco assumed the chief executive role at Zurich Insurance after a difficult period for the Swiss insurer under Mr. Greco's predecessor, Martin Senn.

Mr. Greco, who earlier had been a Zurich Insurance executive, has pledged to restore "the credibility of the company."

During the call with reporters on Thursday, he reiterated his plans to lay out a broad, new strategy for the insurer in November. "Allow me to take my time," Mr. Greco said.

Zurich Insurance's largest business, general insurance, which the company has sought to revamp, posted a 1% fall in gross written premiums and policy fees in the first half of the year compared with the same period last year, to $18.5 billion, the company said Thursday.

The general insurance business reported a 3% gain in business operating profit in the first half, compared with the same period last year, while its combined ratio remained relatively flat at 98.4%. Zurich Insurance noted that the unit's figure compares favorably with the 103.6% reported for all of 2015.

The combined ratio is a measure of how much is paid on claims and costs for each dollar earned. A ratio of less than 100% means that an insurance company's underwriting business is profitable.

Write to John Letzing at john.letzing@wsj.com

(END) Dow Jones Newswires

August 11, 2016 03:45 ET (07:45 GMT)

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