Switzerland's Zurich Insurance Group beat expectations today with a 78 per cent rise in first-quarter profit, helped by fewer large natural catastrophes than the year before, and said premiums were set to rise.
Europe's second-biggest insurer by market capitalisation recorded a net profit of $1.14 billion for the first three months of the year.
Zurich has been looking to boost business in emerging markets, clinching a deal with Santander to expand in Latin America and a distribution agreement with HSBC in the Middle East.
The strong rise in Zurich's profit occurred in part because profit last year was blighted by an unusually high number of natural catastrophes such as the tsunami in Japan. There were few big catastrophe payments and large claims this time around, and underwriting profitability also improved.
In general insurance, the firm's biggest segment, the combined ratio - a measure of underwriting profitability - improved to 94.6 per cent from 103.6 per cent a year earlier.
The better showing was due in part to lower payouts, but also because premium income rose 4 perc ent in dollar terms.
"We do continue to expect rate increases as we're improving the underlying loss ratio," chief financial officer Pierre Wauthier said, adding the rate increases were undertaken in part to compensate for higher claims and low investment income.
"You will always have the claims inflation and we're certainly determined to at least cover that."
Insurers hold large fixed income portfolios, and the ultra-loose monetary policies enacted by the world's major central banks have pushed down bond yields and made generating higher investment returns difficult for insurers.
Allianz, the biggest insurer in Europe, has highlighted the risks stemming from the euro zone debt crisis.
Zurich has virtually no direct exposure to Greek sovereign debt, and began trimming its bond holdings of other peripheral euro zone states last year.
As of March 31st the firm held 18 per cent of its government bond portfolio in US assets, 15 per cent in British and 13 per cent in German. It said 9 per cent was in Italian debt, 6 per cent in Spanish and 6 per cent in French debt.
Reuters
