-- Net profit rises 78% to $1.14 billion, above forecasts
-- General insurance doing well, life insurance hurt by low interest rates
-- Volumes in some European countries declining
-- Expansion in Latin America, Asia helps drive volumes
(Adds detail in paragraphs 3, 5 and 7.)
By Anita Greil
Of DOW JONES NEWSWIRES
ZURICH -(Dow Jones)- Zurich Insurance Group AG (ZURN.VX) joined the growing ranks of insurers reporting solid first-quarter earnings Thursday and said it was starting to reap benefits from its expansion in growth markets in Latin America and Asia.
The Swiss insurance company said net profit rose 78% to $1.14 billion in the three months ended March 31 from $640 million a year earlier. Business operating profit, the figure the company prefers to gauge its performance, rose 61% to $1.38 billion from $854 million in the first quarter of 2011, while premiums and fees at its largest division, general insurance, of $10.47 billion were up 4% from a year earlier.
Net profit for the group increased on the back of a strong result at its general insurance division, which offset declining profit in life insurance, where lower interest rates hurt investment profitability.
Net profit was above analysts' estimates, while business operating profit was more or less in line.
"In Latin America, we already see the positive impact of the insurance businesses acquired from Santander," said Chief Executive Martin Senn in a statement.
Zurich last year expanded its presence in Latin America through a complex deal with Spain's Banco Santander SA (STD) and acquired an insurer in Malaysia. This new focus on emerging markets is starting to pay off, and helped offset declining volume in Europe, particularly in those countries hit most by the economic crisis.
Zurich Insurance is joining peers in reporting on a very strong first quarter, as the industry recovers from the many natural catastrophes that made 2011 one of the costliest ever for insurers.
As a result of the many natural catastrophes last year--which included the Japan tsunami and heavy floods in Australia and Thailand--insurers now appear to be able to ask for higher prices as demand for coverage is rising. Zurich said it increased prices for property & casualty insurance by 3% during the period.
With payouts to cover claims from big disasters falling sharply, the combined ratio--a measure of insurers' profitability--improved to 94.6% from 103.6%. A ratio below 100% suggests that an insurer is making a profit from underwriting contracts.
Zurich Financial shares closed at CHF217.80 Wednesday. The stock has gained more than 10% since the beginning of the year, better than the sector overall, which is up around 7% over the same period, as measured by the Stoxx 600 insurance index.
-By Anita Greil, Dow Jones Newswires; +41 43 443 8044 ; email@example.com
(END) Dow Jones Newswires
May 10, 2012 01:42 ET (05:42 GMT)
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