Revamped motor helps boost Zurich UK profits 19%

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Swiss insurer Zurich’s UK general insurance business made an operating profit of $115m (£70.8m) in the first half of 2011,up 18.6% on the $97m it made in last year’s first half.

The division also posted a strong improvement in underwriting profitability to $22m (H1 2010: $4m). The UK general insurance combined ratio for the first half of 2011improved 1.3 percentage points to 98.4% (H1 2010: 99.7%).

The performance improvement follows Zurich’s efforts to improve the quality of its UK personal lines motor book following losses from rising bodily injury claims.

However, the improvement came at the expense of revenue: First-half gross written premiums and policy fees fell 2.6% to $1.41bn (H1 2010: $1.45bn).

In Europe, Zurich’s general insurance underwriting result increased by $312m to $416m. The company said corrective actions on motor personal lines in the UK, Italy and Russia “significantly improved” the result.

Zurich also attributed its improved Europe-wide underwriting performance to benign weather-related losses and higher prior-year reserve releases in addition to corrective underwriting.

Across Europe, Zurich put through general insurance price increases of 4%, with the highest increases in the UK, Italy and Spain.

Zurich’s general insurance business as a whole saw its operating profit drop 20% to $1.1bn (H1 2010: $1.4bn), largely due to global natural catastrophes in the first quarter.

During that period, the New Zealand and Japan earthquakes and weather events in Australia resulted in aggregate losses of $500m for Zurich.

In the second quarter, US weather events cost the company $200m, while New Zealand aftershocks cost it an additional $80m.

Zurich’s general insurance combined ratio increased 1.4 percentage points to 99.3% (98%).

Zurich’s H1 2011 UK general insurance results in $m (compared with H1 2010)