Zurich Insurance posts 17% fall in first-half profits

Swiss insurer Zurich Insurance Group said on Thursday that net profits fell by 17 percent to $1.85 billion (1.39 billion euros) in the first half of the year on the back of weather-related disasters. Analysts polled by Swiss financial newswire AWP had expected the group's net income for the first six months of 2013 to be between $1.8-2.0 billion. From April to June, net profit was down 27 percent to $789 million compared to last year's second quarter, the insurer said in a statement. The group's first-half operating profit was down by 9 percent to $2.2 billion compared with the same period last year. Its combined ratio -- a measure of an insurers' profitability -- increased slightly to 95.6 percent from 94.8 percent in the first half of 2012. The insurer said it had achieved these results in a period "characterised by natural catastrophes and large weather-related events", such as widespread flooding in central Europe and tornadoes in the United States, including a deadly twister in Oklahoma in May. It said it would have to pay out $140 million for the European floods, while the bill for the Oklahoma tornado had been estimated at $52 million. Zurich Insurance was still feeling the challenges of a weak global economy, the group added. "The economic environment remains challenging with continued low interest rates exerting pressure on our investment income," chief executive officer Martin Senn said in the statement. He later told reporters that certain targets set by the group would be hard to reach, without elaborating, though he insisted that things were on track on the life insurance front and for cost-cutting. In its statement, Zurich Insurance said it was set to meet targets in its Global Life division. But it said General Insurance and Farmers "remain more challenging", though it underlined that the former division had posted growth across all markets except Europe. Late on Wednesday, Zurich Insurance had announced a shake up in its senior management, naming company insider Kristof Terryn as chief executive of its Global Life division with immediate effect. Terryn, a Belgian who joined Zurich Insurance in 2004, replaced American Kevin Hogan who, the group said, had decided to pursue new opportunities. Hogan had been with Zurich Insurance since 2008, and was named chief executive of its life insurance wing in 2010. Terryn currently heads the group's operations and is a member of its executive committee. In mid-morning trading on Switzerland's stock exchange, Zurich Insurance's shares had fallen 3.29 percent to 243 Swiss francs, while the overall SMI market index was down 0.59 percent. The group's results were in stark contrast with those of German rival Allianz and France's Axa group, whose figures were barely dented by the European floods.