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Zurich profit up 21% in second quarter

Zurich profit up 21% in second quarter

(Reuters) — Zurich Insurance Group Ltd. posted a 21% rise in second-quarter profit and bulked up its capital strength, giving it firepower to raise its dividend or use extra cash for acquisitions.

Following two smaller acquisitions and two divestitures by Europe's fifth-biggest insurer, and talk of industry consolidation this year, Chief Executive Mario Greco again stressed that the group's strategy does not rely on deals.

"There are no gaps that we are trying to fill," Mr. Greco told journalists on a call on Thursday.

"We are very, very disciplined in deploying capital where we need or taking capital back when we can," Mr. Greco said. "We have no need from a strategic standpoint to acquire or sell businesses. We just do it when it appears convenient to us."

Zurich said its solvency measured under the Zurich Economic Capital Model stood at 134% as of end-June, well above the target range of between 100% and 120% and marking a 9% rise since the start of the year.

"The group's capitalization is now well above its own target level, but we note that the company was recently mentioned as a potential bidder for ANZ's life insurance and fund management operations, which could be worth more than $3 billion," Baader Helvea analyst Daniel Bischof wrote in a note.

Mr. Greco declined to comment on any potential deals. He said the combination of rising profits and strong capitalization let the group stick its goal to grow dividends over time, adding indications so far this year were positive.

In November, Mr. Greco upped the company's cost-cutting goals, aiming to generate net savings of $1.5 billion by 2019 compared with 2015, while trimming the group's main profitability goal to a more achievable level.

Zurich said on Thursday it had so far cut costs by $550 million and that efforts to reshape its underperforming general insurance unit were making strides.

It said pricing adjustments, falling costs and an improved underwriting performance had benefited the property and casualty business during the first half.

Shares rose 0.4%.

The Swiss insurer's net income for April through June rose to $896 million, beating even the highest estimate in a Reuters poll of analysts.




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