Changes to a UK personal injury and accident claims formula have contributed to Zurich’s profit dropping 31% to $US607 million ($824 million) in the first quarter.

Zurich says the Government’s cut to the interest rate used in calculating claims – known as the Ogden reserving rate – had a $US289 million ($392 million) impact on business operating profit.

Excluding the industry-wide rate change, operating profit grew 14% to $US1.22 billion ($1.66 billion), while the combined operating ratio was little changed at 97.2%.

“Underwriting performance is improving and we have delivered another absolute reduction in expenses,” CFO George Quinn said.

“The stronger economic environment is also delivering a better than expected investment performance and, given the cautious position we took last year, could positively influence the rest of this year.”

Property and casualty operating profit grew 13% to $US630 million ($855 million), excluding Ogden, with strength in Europe and North America partly offset by a $US56 million ($76 million) Asia-Pacific decline, mainly due to Cyclone Debbie.

Gross written premium (GWP) fell 2% to $US8.92 billion ($12.11 billion) on a reported basis and was flat in local currency.

“In Asia-Pacific GWP was up 4% in local currency, driven by all countries but mainly Australia and Hong Kong,” Zurich said.

The acquisition of travel insurer Cover-More will contribute to results from the second quarter.