Regulatory settlement in U.S. affects Zurich’s bottom line

Zurich Financial Services Group’s 2006 Q1 net income of US$785 million represented an increase of about 1% over the same period last year, notwithstanding a US$262-million settlement with U.S regulators, the company announced.
Zurich General Insurance achieved a combined ratio of 95.1%, an improvement of 1.8% over 2005 Q1.
“Strong performances in our major markets produced a business operating profit of US$886 million, up 45%,” Zurich announced in a press release. “This result was driven by an underwriting profit of US$338 million, an increase of 61%, and investment income of US$749 million, an increase of 18%.”
These improvements were particularly noticeable in Global Corporate, North America Commercial and Europe General Insurance, the company announced. “In addition to the strong underwriting performance, the General Insurance result was further supported by growth in investment income from higher yields and higher invested assets. The first quarter result also benefited from a relatively low incidence of large losses and natural catastrophes.”
Gross written premiums increased by 1% in local currency, but showed a 4% fall in dollar equivalent terms, Zurich observed.
“The markets continue to be competitive, with premium rates stable in personal lines business in most cases but with some price declines in commercial lines of business, particularly casualty lines,” the company announced. “In U.S. property classes, prices increased especially in areas subject to natural catastrophes.
“This class of business is showing further significant price increases in the second quarter with other lines experiencing trends similar to the first quarter. We expect this general rate climate to persist through to the end of 2006.”