* Q1 net profit falls 31 percent to $607 million
* Change in British injury claims rules hit results
* Shares dip but outperform sector
(Adds CFO comments, background, market reaction)
By Brenna Hughes Neghaiwi
ZURICH, May 11 Zurich Insurance expects
to deliver on its 2017-2019 targets after a strong start to the
year, despite a larger-than-expected fall in first quarter net
profit due to a change to British claims rules.
A more than 3 percent change to Britain's Ogden rate, a tool
for calculating personal injury and accident claims, dampened
Zurich's core property and casualty business in the quarter.
But Zurich said on Thursday its core general insurance unit
had made "significant progress" in underwriting profitability
and the $289 million hit to operating profit from the Ogden
change was below previous guidance.
"This is a good start to the year with strong performance
from all of our businesses," Chief Financial Officer George
Quinn said in a statement. "This ... puts us on solid footing to
deliver on our 2017-2019 financial targets."
German rival Allianz last week posted a 9.5 percent rise in
first-quarter operating profit and said it was optimistic
despite a very tough business environment.
Italian insurer Generali's net profit in the first
three months fell 9 percent due to lower capital gains and
higher taxes and impairments.
Zurich's management increased its cost-cutting goals in
November to generate net savings of $1.5 billion by 2019 versus
2015, while trimming its main profitability goal.
Quinn said the programme, which generated $400 million in
net savings through the end of the first quarter, was on track.
While analysts had questioned whether the target was too
ambitious, Quinn told reporters the savings goal was "absolutely
Shares in Zurich fell 0.4 percent, outperforming the
European insurance index, which was down 0.9 percent.
Excluding the change to the discount rate, business
operating profit rose 14 percent year-on-year to $1.218 billion,
although net profit dropped almost a third to $607 million
following the Ogden impact, missing market expectations.
Zurich's P&C combined ratio of 100.7 percent -- a level
below 100 indicates it took in more in premiums than it paid out
in claims -- missed analyst estimates for 99.9 percent in a
On a like-for-like basis excluding the British regulatory
change, the unit increased underwriting profitability as its
combined ratio fell to 97.2 percent.
Bernstein analysts called the results "a mixed bag", adding:
"There was a small beat on the operating result, a miss on net
income and a large beat on capital."
(Editing by Michael Shields and Alexander Smith)