Zurich Financial Services 1Q profits beat forecasts

05/20/06 - newratings.com

LONDON, May 20 (newratings.com) – Switzerland's largest insurer Zurich Financial Services AG (ZURN) Thursday posted a 1% rise in its first-quarter net profits on strength across its business segments.

The Zurich-based company said its net income for the three-month period rose to $785 million, from $779 million in the year-ago quarter. Zurich Financial Services' operating profits for the quarter rose to $1.34 billion in the first quarter, from $1.03 billion in the same period a year earlier. Despite adverse currency valuations and a $262 million legal settlement with US regulators related to insurance bid-rigging, the company achieved profit growth, aided by solid results across its three units. Zurich Financial Services' business operating profits rose 31% to $1.359 billion during the quarter, reflecting strength in the company’s underlying business.

The company’s results were ahead of the average analyst expectations. Zurich Financial Services said price hikes in its US non-life business boded well for the second quarter and that it aims to double its market value over the next three to five years. The company also expects to realize $500 million in cost savings from its restructuring programme.

Zurich Financial Services' chief executive James Schiro said the company would continue to write profitable business due to its continued focus on underwriting and financial discipline. An improvement in the company's life segment and new business profit margins reflect the success of the company's recent restructuring and the improved strategy, Schiro added.