Tough for Zurich but profits firmly on track

SWISS insurance giant Zurich Financial, which operates the Allied Dunbar and Eagle Star brands in Britain, said insurance markets were becoming 'increasingly competitive' as it reported a fall in life insurance premiums.

Gross written premiums in life assurance fell 4.2% to $2.8bn (£1.52bn) for its first quarter ending 31 March compared with the end of December, while business operating profit from the division fell 12.4% to $170m.

Zurich said the decline in life insurance profits was due to expenses relating to the repositioning of the UK life business and a charge over the revaluation of UK life insurance liabilities.

Total net reserves fell to $42.7bn from $43.5bn. Overall group profits rose in line with market expectations, with net earnings up 21% to $779m (£446m) and operating profits 18% better at $1.03bn.

Conditions throughout its business - it has offices in more than 60 countries serving 38m customers - were hit by declining rates in some insurance markets and continued low investment returns.

The firm was also dealing with having to work under heightened regulatory scrutiny generally in a more litigious climate.

While gross premiums at its general insurance division rose 2.3% to $10.2bn, the business was hit by large claims compared with a benign quarterly period a year ago and a 'more conservative' approach to ensuring it can meet claims.