Insurer reports 32% fall in net income for nine months.
Zurich Financial Services Group’s operating profit dropped 15% to $4.2bn (£2.8bn) for the nine months to 30 September 2008, while net income fell 32% to $2.8bn.
Operating profit for the general insurance business stood at $2.5m, down 7% from $2.7m in 2007. Zurich said the drop was largely driven by increased losses from large and mid-size claims and the impact of lower premium rates. Gross written premium and policy fees increased overall by 1%.
“Zurich’s announcements highlight the fact that the full effect of the US credit crisis is still being felt this side of the Atlantic,” said Catherine Stagg-Macey, senior analyst at Celent. “Both physical and metaphorical hurricanes have made their impact on its business.”
To boost its future profits, Zurich has implemented a savings programme that includes outsourcing its data centres. This should save $40m to $100m, according to Stagg-Macey.
“With a strong saving programme already underway, the bad exposure written off and, like most European insurers, a strong solvency ratio, things can only get better in the coming months,” she said.
Third-quarter profit showed improvement, with the company reporting a business operating profit of $636m and net income after tax of $154m. This was achieved, it said, despite extreme market conditions and catastrophe losses of $595m from hurricanes Gustav and Ike.
James Schiro chief executive of Zurich, said: “In the face of such turbulent times, I am pleased in our ability to deliver continued profits and maintain our high solvency ratio. These results illustrate the value of our disciplined approach to risk, the strength of our balance sheet and the resilience of our global book of business.
“Looking forward, we see an improving general insurance environment and continued opportunities across all our businesses, leaving us confident in our ability to generate consistent shareholder value.”