Zurich Financial Services, the risk and asset management group, has reported a return to first-half profitability due to better claims and expense management in core businesses as well as firm prices in most non-life markets.
Unaudited net income at the Zurich-based group was $701m in the first six months of 2003 compared with a loss of $2bn for the same period in 2002. The result of the previous year included special provisions of $2.7bn.
Ratings agency Fitch applauded ZFS for the progress it had made on its plan to refocus its activities, strengthen its risk-based capital position and improve the performance of core operations.
Net investment income at ZFS increased by 12% to $3.6bn, while the total return on the company's portfolio of $177.6bn climbed to 3.3%, an improvement of 2.4 percentage points over the 2002 figure.
The underlying improvement in operations was also reflected in business operating profit, which rose by 56% to $1.3bn.
ZFS said non-life insurance premiums grew 29% to $19.3bn and its combined ratio was reduced by 20.9 percentage points to 98.8%
Net non-life and reinsurance reserves increased by $3.2bn from their 31 December 2002 level to $32.8bn.
However, ZFS was forced to strengthen reserves by $474m at its `Centre' unit, the group's insurance based risk financing specialist, as it sought to provide for certain discontinued lines of business.
Fitch said that while this was disappointing, the unit had stopped accepting most of the lines of business that had been impacted and that it was now focussing on writing finite risk property & casualty business.
