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Zurich Finan Servs (0JB0)

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Thursday 16 August, 2007

Zurich Finan Servs

Zurich report strong 6 months

Zurich Financial Services
16 August 2007

Zurich reports another strong operating performance for first six months 2007

    Zurich Financial Services
                 Mythenquai 2
                  8022 Zurich
   SWX Swiss Exchange/virt-x:
             Valor: 001107539

              Media Relations
    Phone +41 (0)44 625 21 00
      Fax +41 (0)44 625 26 41

           Investor Relations
    Phone +41 (0)44 625 22 99
      Fax +41 (0)44 625 36 18

Zurich, August 16, 2007 - Zurich Financial Services Group (Zurich) reported
today that continued strong operating performances in all business segments have
generated excellent results for the first half of 2007.

'These excellent results reflect our ability to successfully leverage a strong
balance sheet through disciplined underwriting, targeted growth and operational
efficiency, particularly given the current global financial environment,'
remarked Zurich's Chief Executive Officer James J. Schiro. 'Together with our
well-diversified book of business, these underlying strengths continue to
underpin the delivery of consistent shareholder value and top tier financial

Performance highlights include:

• Net income1 of USD 2.7 billion, an increase2 of 33%3. Annualized
  return on equity (ROE) of 22.3%

• Business operating profit (BOP) of USD 3.3 billion, an increase of
  12%. Annualized BOP ROE4 after tax of 20.1%

• General Insurance gross written premiums and policy fees of USD 19.0
  billion, up 3% or largely flat in local currency, and a combined ratio of 
  96.5%, a 2.0 percentage point increase primarily as a result of UK storms and 
  floods in June

• Global Life new business value up 51%, with new business margin (% of
  APE) of 24.1%5  and APE up 12% or 5% in local currency

• Farmers Management Services' management fees and other related
  revenues up 4% to USD 1.1 billion

• Shareholders' equity of USD 26.1 billion, an increase of 2% over year
  end after both paying the dividend and completing the share buyback

Underlying the dedicated focus on exploiting opportunities for profitable growth
is The Zurich Way, the Group's operational improvement program addressing all
core processes, including underwriting, claims, reserving, distribution
manage-ment, finance and talent management. As previously announced, the Group
has established a USD 700 million target of after tax benefits for 2007, and the
company is well on track to achieve its goal.

General Insurance: Business operating profit at the half year was up USD 51
million to USD 1.8 billion. This result includes a total charge of USD 566
million for claims payments related to winter storm Kyrill and the UK floods
during June 2007. These extreme weather conditions in Europe added 3.9
percentage points to the combined ratio, while operating performance was
favorably impacted by reserve releases for earlier years of USD 390 million. As
a consequence, the final six-month combined ratio increased 2.0 percentage
points to 96.5%.

Gross written premiums and policy fees recorded a 3% increase in dollar
equivalent terms, but were largely flat in local currency. Underlying these
results was a continued ability to exert underwriting discipline as recent
trends in market conditions, particularly among US casualty and UK property and
casualty lines, continued to affect rates.

In North America Commercial, the proactive management of business lines along
targeted market baskets and through enhanced segmentation techniques proved
successful in containing rate reductions and generating selective new profitable
growth opportunities. Europe General Insurance experienced top line growth both
on a local currency and dollar basis, supported by good volume growth in
Switzerland, Germany and Spain, but with rates offering a mixed picture by
geography and business lines. Though Global Corporate saw rate decreases,
largely US casualty driven, these were partially mitigated by successful
customer retention strategies, a highly focused targeting approach and
innovative product launches. Meanwhile International Businesses continued to
demonstrate strong top line growth despite persistent pressure on rates.

Global Life: The Global Life segment continued its focus on unit-linked and
protection markets and posted a strong business operating profit of USD 721
million, up 25%. New business value rose 51% to USD 319 million or 45% in local
currencies. All key regions contributed to this result, with overall growth in
new business annual premium equivalent (APE) of 12%, or 5% in local currencies,
and a higher new business margin of 24.1%. The improved new business value was
driven by strong APE growth in businesses such as the global expatriate business
plus local business in emerging markets and Ireland, while in Switzerland,
Germany and the US it was more as a result of increased margins.

New business growth accelerated over the year, from 2% in local currencies in
the first quarter to 9% in the second quarter. This reflects the implementation
of numerous initiatives. New business was exceptionally strong in emerging
markets, up 35% in local currencies, in Ireland, up 30%, and in the US, up 11%,
due to new product launches. Growth in Germany, Italy and Spain remains a
challenge, but recent new product launches plus further expansion plans in
emerging markets will contribute to growth in the second half of the year. The
Group remains confident of meeting its growth target for Global Life by the end
of the year.

Farmers Management Services: Farmers' management fees and other related revenues
grew by 4% to USD 1.1 billion as continued investments in product enhancements
and distribution platforms enabled the Farmers Exchanges, which Zurich manages
but does not own, to achieve premium growth of 5% in the first half of the year
despite flat market conditions.

With Farmers' business operating profit up 7% to USD 672 million, the operating
margin improved to 49.5% from 47.9% in the first quarter, while absorbing the
continuing impact of investments and expenses associated with growth-related
projects and initiatives.

Other Businesses: The Other Businesses segment achieved a business operating
profit of USD 478 million, up 57%. The segment's contribution to the Group's
overall profitability largely reflected higher profits from various run-off
businesses. Centre's profitability continues to be ahead of previously indicated
profitability levels.

Group investments:  The net investment result for Group investments of USD 4.8
billion is up 10%. The resulting investment return improved by 0.2 percentage
points to 2.6% (not annualized), supported by higher interest rates and the
growth in the average asset base to USD 187.8 billion. Net capital gains,
however, remained flat. These robust results despite volatile markets reflect
the Group's disciplined approach to managing its assets relative to liabilities
on a risk-adjusted basis. The Group has no material exposure to US sub prime
debt or CDO equity tranches in its investment portfolio and did not incur any
impairment on these for the half year.

1 Attributable to shareholders.

2 All comparisons refer to the first six months of 2006 unless stated otherwise.

3 The 2006 net income was after a charge for US regulatory settlement costs of
USD 262 million net of tax (USD 325 million pre taxes).

4 ROE calculated on common shareholders' equity. See the Financial Supplements
and the Group Financial Review on the Investor Relations page of our Web site for further information on shareholders' and common shareholders'

5 Calculated on the European Embedded Value basis.

Note to editors:

The results presentation can be followed live via webcast or conference call
starting at 09:30a.m. CET (08:30a.m. BST).

Conference call dial-in numbers

Europe                     +41 (0)91 610 5600

United Kingdom             +44 (0)20 7107 0611

USA                        +1 (1)866 291 4166

The link to the webcast, the presentation and additional financial information
are available on the company website

Zurich Financial Services Group (Zurich) is an insurance-based financial
services provider with a global network of subsidiaries and offices in North
America and Europe as well as in Asia Pacific, Latin America and other markets.
Founded in 1872, the Group is headquartered in Zurich, Switzerland. It employs
approximately 58,000 people serving customers in more than 170 countries.

Financial Highlights (unaudited)

The following table presents the summarized consolidated results of the Group
for the six months ended June 30, 2007 and 2006 and the financial position as of
June 30, 2007 and December 31, 2006, respectively. The 2006 amounts have been
restated for the implementation of a change in accounting policy in accordance
with IAS 19 Employee Benefits. Interim results are not necessarily indicative of
full-year results.

in USD millions, for the six months ended June 30, unless     2007   2006 1 Change in  Change
otherwise stated                                                               GC2     in LC
Business operating profit                                    3'278    2'923       12%
Net income attributable to shareholders                      2'684    2'011       33%

General Insurance gross written premiums and policy fees    19'026   18'454        3%       0%
Global Life gross written premiums, policy fees and         10'427   10'190        2%     (5%)
insurance deposits
Farmers Management Services management fees                  1'093    1'054        4%       4%

General Insurance business operating profit                  1'838    1'787        3%
General Insurance combined ratio (in %) 3                    96.5%    94.5% (2.0 pts)

Global Life business operating profit                          721      576       25%
Global Life new business value, after tax 4                    319      211       51%      45%
Global Life gross new business annual premium equivalent     1'323    1'184       12%       5%
(APE) 5

Farmers Management Services business operating profit          672      626        7%

Farmers Management Services gross operating margin (in %)6  49.5%    52.3% (2.8 pts)

Group investments average invested assets 7                187'751  182'245        3%       2%
Group investments results, net                               4'798    4'379       10%       4%
Group investments return (as % of average invested            2.6%     2.4%   0.2 pts

Shareholders' equity 8                                      26'077   25'587        2%       0%
Diluted earnings per share (in CHF)                          22.55    17.37       30%

Return on common shareholders' equity (ROE) 9                22.3%    20.6%   1.7 pts
Business operating profit (after tax) return on common       20.1%    20.4% (0.3 pts)
shareholders' equity 9

1 Restated as a result of the adoption of the SoRIE option under IAS 19 Employee

2 Positive / (negative) change.

3 The General Insurance combined ratio is calculated as the sum of net earned
premiums and policy fees less the net underwriting result, divided by net earned
premiums and policy fees.

4 Global Life new business value is the present value of the projected after tax
profit from life insurance contracts sold in the year.

5 APE is calculated as annual premiums plus 10% of single premiums.

6 Farmers Management Services gross operating margin is calculated as the sum of
Farmers' management fees less management expenses, divided by Farmers'
management fees.

7 Excluding cash collateral received for securities lending.

8 As of June 30, 2007 and December 31, 2006, respectively.

9 Returns for the six months ended June are annualized on a compound basis using
the results for the six months. ROE (based on net income attributable to common
shareholders) and business operating profit (after tax) return on common
shareholders' equity for the year ended December 31, 2006 were 20.4% and 19.4%,

Disclaimer and cautionary statement

Certain statements in this document are forward-looking statements, including,
but not limited to, statements that are predications of or indicate future
events, trends, plans or objectives. Forward-looking statements include
statements regarding our targeted profit improvement, return on equity targets,
expense reductions, pricing conditions, dividend policy and underwriting claims
improvements. Undue reliance should not be placed on such statements because, by
their nature, they are subject to known and unknown risks and uncertainties and
can be affected by other factors that could cause actual results and Zurich
Financial Services' plans and objectives to differ materially from those
expressed or implied in the forward looking statements (or from past results).
Factors such as (i) general economic conditions and competitive factors,
particularly in our key markets; (ii) performance of financial markets; (iii)
levels of interest rates and currency exchange rates; (iv) frequency, severity
and development of insured claims events; (v) mortality and morbidity
experience; (vi) policy renewal and lapse rates; and (vii) changes in laws and
regulations and in the policies of regulators may have a direct bearing on
Zurich Financial Services' results of operations and on whether Zurich Financial
Services will achieve its targets. Zurich Financial Services undertakes no
obligation to publicly update or revise any of these forward-looking statements,
whether to reflect new information, future events or circumstances or otherwise.

This communication is directed only at persons who (i) have professional
experience in matters relating to investments or (ii) are persons falling within
Article 49(2)(a) to (d) (high net worth companies, unincorporated associations,
etc) of The Financial Services and Markets Act 2000 (Financial Promotion) Order
2001 (as amended) or to whom it may otherwise lawfully be communicated (all such
persons together being referred to as relevant persons). This communication must
not be acted on or relied on by persons who are not relevant persons. Any
investment or investment activity to which this communication relates is
available only to relevant persons and will be engaged in only with relevant

It should be noted that past performance is not a guide to future performance.
Please also note that interim results are not indicative of the full year

Persons requiring advice should consult an independent adviser.

                      This information is provided by RNS
            The company news service from the London Stock Exchange