Large losses dent profits for Zurich Insurance
Swiss firm Zurich Insurance reported first half net profits of $2.1 billion (€1.9 billion) on Thursday, down three percent over the same period last year, following large losses in its general insurance business.
The report came a week after Zurich revealed its interest in buying British rival, Royal & Sun Alliance, news which sent RSA shares surging.
Zurich's business operating profits of $2.2 billion marked a 15 percent fall compared to the first half of 2014.
That figure was well below the expectations of analysts polled by the AWP financial news agency who had anticipated an operating profit of $2.5 billion.
The firm's shares were trading down 3.82 percent on Thursday at 287 Swiss francs a piece, as the Swiss stock exchange's main SMI index was down 0.2 percent.
"In terms of our key targets, we remain in a very strong position," chief executive Martin Senn said in a statement.
He noted the strong performance in the firm's Global Life and Farmers divisions, while noting that the General Insurance unit "was adversely affected by large losses".
Business operating profits in General Insurance, the largest unit at Zurich, fell by 31 percent compared to the first half of last year to $1.2 billion.
Significant losses in Britain and among the corporate division in North America were largely responsible for the profits fall, as were higher expenses and "high levels of catastrophe and weather related losses," the company said.
The Swiss insurance giant's July 28th confirmation that it was evaluating a possible offer for RSA earned praise from some analysts, who said such a takeover would offer Zurich a stronger foothold in northern Europe and Latin America.
On Thursday Senn said an RSA takeover "could bring significant benefits to us and to our investors in terms of the complementary fit."
Zurich Insurance indicated to investors in May that it had a capital surplus of some $3.0 billion that it planned to deploy, but on Thursday raised that target to $3.5 billion.
Media reports in Britain last week said Zurich had valued RSA at $8.7 billion.
"Any capital deployment would need to meet the same hurdles that we apply to any other investment," Senn said.