August 9, 2018 / 5:09 AM / 9 months ago

UPDATE 3-Zurich Insurance eyes IT savings as H1 profit beats

* Achieved $900 mln of planned $1.5 bln cost savings

* H1 net profit $1.79 bln vs forecast $1.72 bln

* (Adds detail on savings, updates shares)

By Carolyn Cohn and Michael Shields

ZURICH/LONDON, Aug 9 (Reuters) - Zurich Insurance is looking to achieve cost savings targeted for the end of next year through lower IT expenses rather than disposals, its chief executive said on Thursday as it reported a forecast-beating 19 percent rise in first-half profit.

Insurers across the globe have been restructuring their businesses to cope with competitive and regulatory pressures and last year’s record losses from natural disasters.

Zurich, Europe’s fifth-largest insurer, has achieved $900 million of its planned cost savings of $1.5 billion by end-2019, it said on Thursday.

“Disposals are not really considered,” Zurich’s CEO Mario Greco told a media call, adding that the firm was looking to make savings from its end-2016 cost base.

The bulk of the remaining savings targets will be made through reductions in IT expenses, Greco added.

However, a Zurich spokesman did not rule out disposals as part of the insurer’s broader strategy to improve profitability.

Zurich has been expanding in Latin America, where it bought Australian insurer QBE’s Latam business for $409 million in February.

Greco said the insurer was “looking forward” to further growth, without specifying any acquisition plans.

“It’s a region that we like and we think we have the skills to manage it, our people there are doing an excellent job.”

Zurich’s first-half net profit rose to $1.79 billion, helped by strong performance in its property and casualty and life divisions and beating the average analyst estimate of $1.72 billion in a Reuters poll.

Zurich’s combined ratio, a measure of underwriting profitability, strengthened to 97.5 percent against the poll average of 97.7 percent.

The insurer said it was on track to deliver its 2017-2019 targets.

Barclays analysts said in a note that the market was “already giving credit for a full delivery” on the targets, reiterating their neutral weighting on the stock.

Zurich’s shares were trading at 302.5 Swiss francs at 0941 GMT, up 0.6 percent, beating a steady European insurance index . (Additional reporting by Paul Arnold in Zurich, Editing by John Revill and Emelia Sithole-Matarise and Kirsten Donovan)

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