Zurich Insurance Group AG, Switzerland’s biggest insurer, said third-quarter profit rose 64 percent, beating analyst estimates, after a write-off related to its German business hurt earnings a year earlier.
Net income rose to $1.1 billion from $672 million a year ago, the Zurich-based company said in a statement on Nov. 14. That’s above the $993.5 million average estimate of eight analysts surveyed by Bloomberg. General insurance, the biggest unit, saw operating profit jump 68 percent to $755 million in the quarter.
The insurer has been seeking ways to restore investor confidence following a surprise write-off at its German general insurance unit of about $550 million. Chief Executive Officer Martin Senn reiterated today that no “undue pressure” was put on Chief Financial Officer Pierre Wauthier, who committed suicide in August, prompting Chairman Josef Ackermann to resign and raising doubts about the company’s financial health.
“Today’s results are a small step in the direction of restoring confidence,” said Stefan Schuermann, a Zurich-based analyst with Vontobel who has a hold rating on the stock. “The result is fairly solid,” driven by general insurance, he said.
The insurer’s shares rose 2.8 percent to 259.20 francs at 9:40 a.m. in Zurich, bringing annual gains to 6.5 percent. That’s trailing the 24 percent gain in the Bloomberg Europe 500 Insurance Index, which tracks 30 companies.
Zurich Insurance appointed Tom de Swaan as chairman following Ackermann’s departure, while the position of CFO was filled on an interim basis by Vibhu Sharma. Senn told reporters today the search for a new CFO is “ongoing.”
Zurich restated earnings at the end of last year after a review of the German business, and earlier this year was forced set aside an additional $130 million in costs at the unit. The company said it won’t achieve some of the targets it set itself for the three years through 2013.
Third-quarter operating profit increased to $1.28 billion from $998 million a year earlier, according to the statement. The solvency ratio under the Swiss Solvency Test, which requires insurers to provide a mark-to-market valuation of assets and liabilities taking into account their investments, rose to 206 percent from 185 percent at the end of last year.
“Against the backdrop of a fragile global economic recovery and persisting low interest rates, we remained focused on our strategy, growing our business in emerging markets while delivering a resilient performance in mature markets,” Senn said. The company remains “committed to paying an attractive, sustainable dividend,” he told reporters.
Zurich is scheduled to give an update on its current three- year targets on Dec. 5. Those targets include improving the combined ratio, a measure of profitability, by as much as 4 percentage points in general insurance relative to competitors including Germany’s Allianz SE by the end of 2013, and increasing the market share of its Farmers business.
–Editors: Simone Meier, Keith Campbell
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