2.5% increase in loss ratio attributed to floods

Zurich has reported an increase in net income of 22.3% to $5.6bn.

The company's general insurance business saw gross written premiums and policy fees of $35.7bn up 4% on the previous year. It's combined ratio of slipped by 1.7% to 95.6%.

In a statement Zurich said it had experienced strong growth in its personal lines business and had continued to enhance its distribution capabilities.

Despite softening rate environments in the US and UK, the insurer said it had succeeded in improving its business operating profit 6.4%, aided by a retention rate of 90%.

Zurich said: "While overcoming extreme weather in Europe, General Insurance leveraged selective growth and continued application of 'The Zurich Way' to increase its business operating profit by $220m to $4bn."

The inusrer said that winter storm Kyrill and the UK floods had led to a 2.5% increase in loss ratios, while increased investments, changes in business mix and higher commission levels had added 1.3% to the expense ratio.

It said: "Reserve releases from earlier years had a favorable impact of 2.8 percentage points compared with 2006, leading to an overall combined ratio of 95.6%, an increase of 1.7 percentage points."

The company said that it expected the ongoing execution of transformational changes to its business and "conservative reserving practices" to have a positive impact on both the loss and expense ratios.

Zurich’s chief executive officer James Schiro commented: "We may be operating in a difficult market environment, but the strength of our balance sheet, the diversity of our risk portfolio and our ability to execute on our strategy delivered excellent results in 2007, and make us confident in our ability to continue driving success going forward."