Zurich has recorded a 17% rise in operating profit to $US2.5 billion ($2.38 billion) for the six months to June 30.

The first quarter was considerably stronger than the second, when operating profit fell 12% to $US1.13 billion ($1.07 billion). European weakness was a problem, with the region’s operating profit slipping 29% for the half.

Zurich CEO Martin Senn says the company’s strategy of increasing returns from the growth markets of the Middle East, Latin America and the Asia-Pacific is bearing fruit, with the international division turning a $US141 million ($134.56 million) loss last year into a $US62 million ($59.16 million) profit.

“We have again achieved strong levels of profitability, a very good result in the challenging environment,” Mr Senn said.

“Profitability is driven by the disciplined approach to underwriting and our continued focus on the insurance products that enable us to maintain a resilient performance in mature markets.”

General insurance was a strong performer, with operating profit up 46% to $US1.63 billion ($1.55 billion), gross written premium growing 1% to $US19.15 billion ($18.27 billion), a combined ratio that was 4.4 percentage points better at 94.9% and average rate increases of 3.5%.

In the life business, operating profit fell 11% to $US651 million ($621.11 million), with gross incomes up 11% at $US14.71 billion ($14.03 billion). The profits drop was down to weakness in Europe, with new business and margins softer in the half.

The US-based Farmers group’s operating profit fell 18% to $US601 million ($573.4 million), due to a loss in its reinsurance business of $US110 million ($104.94 million).

The value of investments fell 2% to $US195.59 billion ($186.6 billion) and the net investment return was flat at 2.1%. Australian bonds made up 2% of the $US147 billion ($140.24 billion) bond portfolio.