Zurich Insurance Group had a better-than-expected first quarter, even if profit fell by almost a third from a year earlier. The general insurance business improved its performance and the company expects that process to continue throughout the year.

Net income at Zurich Insurance Group declined 28 percent to $875 million, the company said in a statement today. Analysts on average expected profit to drop by a further $130 million.

«While it is still early in the process, these results show that the measures we put in place to improve the performance of our general insurance business are taking effect,» said Zurich CFO George Quinn. «Even adjusting for a benign catastrophe claims environment, there has been an underlying improvement and we expect to see this trend continue throughout the year.»

Steady Global Life Business

The business operating profit declined 16 percent to $1.09 billion compared with the first quarter of 2015. Analysts had expected operating profit to drop to 971 million. The business volume was down 6 percent to $17.6 billion.

The combined ration in general insurance stood at 97.7 percent, which compares with 103.6 percent for the full year 2015, a year when significant catastrophic events weighed on the group's results.

Business operating profit at global life was almost unchanged at $317 million, while it declined by 12 percent to $343 million at the Farmers unit.

Total Return Rises

The net result on group investments, which includes net investment income, contributed $1.7 billion to the total revenues in the first quarter, a net return of 0.9 percent, down slightly from 1 percent a year earlier. Total return on group investments was 2.7 percent, up from 2.6 percent a year earlier, mainly driven by a strong performance in the fixed income portfolio as a result of falling yields.

Shareholders' equity declined 1 percent to $30.9 billion. The Zurich-Economic Capital Model ratio was 110 percent at the end of the quarter, down from 121 percent at year end, well within the target range. The company said the decline occurred because of financial-market movements and the inclusion of Rural Community Insurance Services.

Welcome Boost to Greco

The better-than-expected result may lend support to the share, which has declined by almost 17 percent year-to-date, one of the Swiss exchange's worst performers.

Mario Greco has been in charge for just over a month after his predecessor Martin Senn departed in December following a difficult business year.