Zurich Financial 3Q profits plummet 90 percent

Swiss insurer Zurich Financial Services AG on Thursday reported a 90 percent drop in profit for the third quarter following write-downs of $1.1 billion due to the financial crisis and a costly hurricane season.

Net income attributable to shareholders fell to $154 million in the three months ended Sept. 30 from nearly $1.55 billion in the same period last year, the company said in a statement.

A one-off accounting gain of $357 million due to regulatory changes in German insurance law was not taken into account, it said.

Zurich blamed its write-downs on the collapse of financial services firms Lehman Brothers, Washington Mutual and Sigma Finance Corp. during the credit crunch. Insurance companies are among the biggest players on financial markets, and several of Zurich's competitors have suffered similar or worse losses as a result of the global turmoil.

Payouts due to hurricanes Gustav and Ike added another $595 million to the company's losses during the quarter.

Zurich's combined ratio overall increased by 1.9 percentage points to 98.7 during the first nine months of the year, slightly higher than analysts estimated. A figure below 100 indicates profitability in the insurance business.

The company said it is on track to cut costs by $800 million in 2008 and aims to save a further $900 million annually over the following three years.

"Looking forward, we see an improving general insurance environment and continued opportunities across all our businesses, leaving us confident in our ability to generate consistent shareholder value," said Chief Executive James Schiro.

Zurich shares closed down 0.3 percent at 215.30 Swiss francs ($179.52) in European morning trade.

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