On the surface a 12% fall in profits might not sound like good news for an insurance giant like Zurich – however, the fall places the company well ahead of analysts’ expectations.
Net income, announced today, slipped from $840 million to $739 million – however, this was ahead of the $646 million average that was expected by Bloomberg analysts. The combined ratio in the second quarter rose to 99% from 97.7% in the previous three months.
The fall was blamed on natural catastrophe losses and also an ongoing restructure at the company with chief executive officer Mario Greco looking to overhaul the firm. With record low interest rates, strict regulatory requirements and a wider slowdown in economic growth, the firm, like most European insurers, has struggled to increase its profitability. This has prompted Greco to make a number of changes in an effort to boost efficiency, selling assets and combining its general insurance unit with its global life unit.
In a statement, Greco outlined that some fall in profit was expected in the circumstances and that the company is on track.
“We have made significant progress over the last six months, with consistent improvement in our underlying performance in the second quarter in the context of an ongoing challenging market environment,” he said. “Our efficiency program is beginning to deliver results.”
The company is said to be continuing to examine its general insurance portfolio – and reiterated its plans for around $500 million in restructuring charges this year with the bulk of that figure coming during the second half of the year.
Fleet UK, Zurich mark partnership milestone
ArgoGlobal makes key overseas hire from Zurich