Zurich shares tumble after poor earnings
SHARES in Zurich Financial Services tumbled yesterday after Switzerland’s biggest insurer disappointed with its third quarter profits.
Zurich posted a third quarter net profit of $909m (£548m) that was five times higher than the same period a year earlier. The market had expected a result around $1.15bn but the overall result was pulled down by hedging losses.
Zurich’s hedgings are designed to protect its balance sheet in the event of a financial market slump but can lead to losses during a market rally as has occurred over the past six months.
Shares in the company fell as much as six per cent in Europe, their sharpest fall in six months, before closing 3.8 per cent lower.
Zurich said net investment gains in the third quarter were $1.93bn, up from $769m a year earlier.
Compared with the end of 2008, shareholder equity rose 29 per cent to $28.5bn, meaning the conservatively-run company held more than twice the minimal amount of capital required by regulators.
Chief financial officer Dieter Wemmer said the company also profited “from a flight to quality” in its life insurance business in Europe, where customers preferred saving plans from insurers rather than banks.
Gross written premiums increased by five per cent to $13.04bn from $12.4bn in the third quarter.