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Zurich Insurance eyes IT savings as first-half profit beats

Zurich Insurance eyes IT savings as first-half profit beats

(Reuters) — Zurich Insurance Group Ltd. is looking to achieve cost savings targeted for the end of next year through lower information technology expenses rather than disposals, its chief executive said Thursday as it reported a forecast-beating 19% rise in 2018 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 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, Mr. 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 Insurance Group Ltd.’s Latam business for $409 million in February.

Mr. 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/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% against the poll average of 97.7%.

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 ($304) at 0941 GMT, up 0.6%, beating a steady European insurance index.





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