Zurich Insurance Group has reported a 7% drop in after-tax profit to $US1.07 billion ($1.09 billion) for the first quarter, after weak investment markets offset a strong underwriting performance.

Operating profit was steady at $US1.4 billion ($1.42 billion), with all core businesses performing well and maintaining focus on underwriting discipline and expense management, according to CEO Martin Senn.

“We continue to operate in a challenging economic environment with persisting low interest rates, against which we have posted strong, high-quality underlying profits,” he said.

Operating profit from general insurance fell 6% to $US807 million ($818.99 million), while gross written premium was $US10.69 billion ($10.85 billion), up 2% on the first quarter last year.

This reflects a focus on disciplined underwriting and expense management, Zurich says.

The underlying loss ratio improved by 1.5 points. The combined ratio declined to 94.9% from 94.6%, reflecting lower investment income and higher commissions.

Global Life increased operating profit by 6% to $US308 million ($312.58 million) and reported a 69% rise in new business value to $US332 million ($336.93 million).

Investment income fell 5% to $US1.39 billion ($1.41 billion).