Zurich Insurance Group AG said second-quarter profit fell 12 percent on higher restructuring charges and claims from natural catastrophes as Chief Executive Officer Mario Greco overhauls the company’s biggest unit.
Net income declined to $739 million from $840 million a year earlier, Zurich said in a statement on Thursday. That beat the $646 million average of eight analysts’ estimates compiled by Bloomberg.
Zurich, like other European insurers, has struggled to become more profitable because of slow economic growth, stricter regulatory requirements and record-low interest rates that hurt investment income. Greco is trying to make the company more efficient by cutting jobs, selling assets and combining the biggest units, global life and general insurance.
Zurich has declined 6 percent in Zurich trading this year, while the Bloomberg Europe 500 Insurance Index has lost 18 percent.
“We have made significant progress over the last six months, with consistent improvement in our underlying performance in the second quarter in the context of an ongoing challenging market environment,” Greco said in the statement. “Our efficiency program is beginning to deliver results.”
Lower capital gains, increased restructuring charges related to the overhaul and higher taxes contributed a decline in first-half profit, the company said. Net income fell 22 percent to $1.61 billion in the six-month period.
Zurich said it would continue to review its general insurance portfolio. The company reiterated an earlier estimate of $500 million of restructuring charges this year, with most of it coming in the second half.
The combined ratio in the second quarter rose to 99 percent from 97.7 percent in the previous three months. A measure above 100 means that the company is paying out more for claims and costs than it earns through premiums. Natural catastrophes including Canadian wildfires, European floods and hail storms in Texas had an impact of about $200 million on the quarterly results.
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