Insurance giant Zurich has beaten forecasts with a 21 per cent rise in first-half net profit as it improved results in its life business and investment income rose.
But non-life operations disappointed when compared against recent strong results from rival Allianz, denting its shares, down 75 to 10100p
The group, which employs more than 1,200 people in Birmingham, posted a 16.5 per cent return on equity, indicating it is well on its way to meeting its 12 per cent fullyear target.
It has has just completed a multi-year restructuring that returned it to profitability
Chief executive Jim Schiro said: "The quality of our results has improved with all core businesses and group investments contributing to the bottom line."
First-half net profit came in at $1.8 billion (£1 billion), beating all estimates in a poll of 12 analysts, and up from $1.484 billion (£827 million) in the first six months of last year.
The group has two operations in Birmingham - Zurich UK Commercial in Edgbaston and Zurich Risk Services in Rubery. Between them they employ 1,215 people.
It's combined ratio - a key profitability gauge in non-life - deteriorated slightly to 96.9 per cent from 96.6 per cent in the year-ago period, the group said, mainly because of fire and flood claims in its global corporate business.
Michael Huttner, analyst at JP Morgan, said: "The weakness in the group results is in the core non-life business, which is a little bit disappointing. The strength is from the life operations, which no one considers to be a core business, so it's understandable why people are disappointed."
"The question mark now hanging over Zurich's full year earnings is: 'Is that the best the group can do? Or is there something we haven't been told that can boost earnings further'?"
Mr Schiro refrained from giving an outlook for the full year.
Zurich also said it would be on the look-out for any acquisitions to boost its size.
"With a strong balance sheet we have positioned ourselves for growth in the future and we will look at all options available and we will be opportunistic," Mr Schiro said.
Gross written premiums inched down two per cent to $ 25 . 954 billion (£14.464 billion) in a sign Zurich is not trying to win sales by cutting prices heavily as the pricing cycle starts a downturn, a trap the industry has often fallen into in the past.
"We're seeing resiliency in pricing. We're not seeing in most of the sector a decline in pricing. Yes, in some sectors, such as property particularly in the United States there is some softening," Mr Schiro.
Shares in Zurich, which has returned to profitability after several loss-making years at the start of the decade, have rallied 24 per cent so far this year.
But at 8.43 times expected 2005 earnings, Zurich is still trading at a discount to major competitors such as France's Axa and Italy's Generali, which have multiples of 12.43 and 21.39 respectively.