Zurich's first-half profits soar by 93%

Zurich Financial Services, the owner of Eagle Star and Allied Dunbar, revealed that profits almost doubled between January and June.

Zurich Financial Services, the owner of Eagle Star and Allied Dunbar, revealed that profits almost doubled between January and June.

They soared 93 per cent to $1.4bn (£765m) on the back of high premiums and more profitable underwriting in general insurance. But Europe's third-biggest insurer sounded a cautious note on its general insurance business, which accounts for four-fifths of income from premiums.

James J Schiro, the chief executive, said: "The pace of rate increases has slowed to single digits, particularly in the property market." He reassured investors that Zurich would not slash prices to chase market share at the expense of profitability.

Zurich also benefited from few claims and the absence of catastrophes in the first half of the year. But Hurricane Charley - which struck Florida last Friday - will inflict losses of $150m.

Deep cost cuts have been made at Zurich over the past two years. Last month, it unveiled plans to outsource 1,600 IT jobs across Britain, the US and continental Europe. Earlier this year, 450 jobs were axed in its UK life business as part of a drive to save $200m annually.

Zurich is among the few insurers still operating direct sales forces in Britain. But it is considering separating its Allied Dunbar and Eagle Star sales force into a separate company next year.

Separately, Swiss Re expects Hurricane Charley to whip up claims of only $200m. The storm bill does not change its profit forecasts for the year, the reinsurer told investors.