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Zurich doubles profit in first half

ZFS is bracing itself for Hurricane Charley related claims Keystone Archive

Swiss insurer Zurich Financial Services (ZFS) has almost doubled net profit in the first six months to $1.448 billion (SFr1.8 billion) from $752 million in the same period last year.

Analysts said the result exceeded expectations and showed that Zurich was continuing to benefit from low claims and high premiums.

Europe’s seventh-largest insurer said on Thursday its business operating profit had also risen – to $1.948 billion from $1.326 billion in the first half of 2003.

“These figures were actually very good, much better than expectations,” a Zurich trader commented.

“Zurich’s recovery continues,” said CEO James Schiro in a statement. “Success is coming from the sharp focus on core businesses, financial discipline and sound underwriting.”

Schiro said low claims and the absence of major catastrophes in the past 18 months had helped the group strengthen its balance sheet.

Hurricane claims

But the large corporate risk insurer is now facing a rash of claims following the devastation wrought by Hurricane Charley in parts of Florida last week.

“We reckon with losses of about $150 million net of reinsurance,” he said.

Other Swiss reinsurers are also expecting to pay out against hurricane-related claims, but say these payouts will not be as much as feared.

Swiss Re – the world’s second-largest reinsurer – said it was anticipating claims to come in at less than $200 million. And on Wednesday, its smaller rival Converium said it faced losses of less than $25 million.

The ZFS first-half results come hard on the heels of the company’s 2003 results. Issued in July, the annual results showed the company had completed its turnaround following a drastic streamlining and divestment programme.

Last year ZFS achieved a net profit of $2.1 billion after registering a $3.4-billion loss the previous year.

swissinfo with agencies

Net income in the first half was $1.448 billion, up from $752 million in 2003.
It represents a 93% increase over the previous year.
Business operating profit was $1.948 billion, up 47%.

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SWI - a branch of Swiss Broadcasting Corporation SRG SSR