Growth prospects are being held back by company's tough stance on rates

Zurich’s first-quarter insurance profits dropped 30% after taking a $200m (£135m) hit from the Chile earthquake.

Profits fell from $889 in last year’s quarter to $621m in the same period this year. Combined operating ratio also deteriorated from 95.8% to 99%.

As well as Chile, the insurer suffered from some of the worst winter weather in Europe and part of the USA for many years during the first three months of 2010.

The interim report says that Zurich’s growth prospects were constrained by its tough stance on rates. UK and Ireland chief executive Stephen Lewis told Insurance Times at the beginning of the year that motor rates would rise by up to 20%.

However, resurgent investment returns helped the overall group performance – which includes the life business – to boost business operating profit 19%, from $1.06bn last year to $1.25bn for this quarter.

The group’s chief executive, Martin Senn, said: “Our GI business successfully maintained its focus on protecting profit margins, managing to absorb the significant impact from the Chilean earthquake as well as the top-line pressures driven by reduced economic activity among our customers.”

Chief financial officer Dieter Wemmer said: “After paying a highly attractive and competitive dividend of $2.2bn, our equity position continues at a strong level.”

Zurich did not break down its performance for the UK in the reports.

Last year, Zurich’s GI operating profit was $3.5bn, down 2% in dollars but up 1% in local currencies compared to 2008. Worldwide GI revenues were $34.2bn, a 4% decrease in local currencies. Combined ratio improved to 96.8%, compared to 98% in 2008.