February 8, 2018 / 6:20 AM / 12 days ago

UPDATE 1-Zurich Insurance beats 2017 profit estimates, raises dividend

(Adds detail, CEO comment)

ZURICH, Feb 8 (Reuters) - Zurich Insurance reported better-than-expected earnings on Thursday as the insurer dealt with a raft of natural catastrophe losses and a sluggish investment environment.

The Swiss insurer said 2017 net profit fell 6 percent to $3.00 billion, beating the average analyst estimate of $2.72 billion in a Reuters poll.

Europe’s fifth-biggest insurer proposed a dividend of 18 Swiss francs per share, up from 17 francs a year earlier, the first time Zurich has raised its dividend in seven years.

“In a year of historic weather events, our focus and discipline delivered strong performance,” Chief Executive Mario Greco said in a statement. “These achievements made us resilient in the face of challenges and give us confidence as we look ahead to delivering our 2017 to 2019 targets.”

The high number of disasters weighed on Zurich’s general insurance combined ratio, which worsened to 100.9 percent from 98.4 percent in 2016. The combined ratio is a measure of profitability of the insurer’s underwriting business, with a level below 100 meaning the insurer takes in more in premiums than it pays out in claims.

Greco, who joined Zurich from Generali in 2016, has promised to improve the company’s fortunes by making it simpler and more efficient.

The business operating profit return on equity for the year was 9.2 percent, worse than the company target of more than 12 percent. Its capital ratio (Z-ECM) - a measure of its ability to pay all its policy holders if they made a claim - reached 132 percent compared to its target of a range of 100 to 120 percent.

The company said it was making good progress on its cost savings, and by end-2017 had reduced spending by $700 million towards a $1.5 billion target.

It said it expected to achieve $400 million in net cost savings in 2018 while incurring $500 million in restructuring costs. (Reporting by Brenna Hughes Neghaiwi and John Revill; Editing by Michael Shields)

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