Zurich falls on German GI writedown

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19 November 2012

Zurich says pricing discipline and a strong focus on portfolio management contributed to a rise in business operating profit for the nine months to September, although a writedown of its German general insurance business cut net profit by 16% to $US2.7 billion ($2.6 billion).

The general insurance combined ratio improved to 97.6% from 98.8% in the previous corresponding period, with fewer catastrophe losses.

General insurance gross written premium (GWP) and policy fees grew 1% to $US27.3 billion ($26.4 billion), although Zurich says they increased 6% in local currency terms. The division’s operating profit rose 5% to $US1.8 billion ($1.7 billion).

Global life GWP rose 9% to $US21.1 billion ($20.4 billion), up 17% in local currency terms, but operating profit fell 5% to $US959 million ($926.7 million) on an unfavourable currency translation and lower investment yields.

Operating profit from US general insurer Farmers fell 9% to $US998 million ($964 million), due to an underwriting loss by Farmers Re.

Zurich’s investment result fell 20% to $US6.1 billion ($5.9 billion) on currency movements and lower interest rates.