Zurich shares tumble after poor earnings

SHARES in Zurich Financial Services tumbled yesterday after Switzerland&rsquo;s biggest insurer disappointed with its third quarter profits.<br /><br />Zurich posted a third quarter net profit of $909m (&pound;548m) that was five times higher than the same period a year earlier. The market had expected a result around $1.15bn but the overall result was pulled down by hedging losses.<br /><br />Zurich&rsquo;s hedgings are designed to protect its balance sheet in the event of a financial market slump but can lead to losses during a market rally as has occurred over the past six months.<br /><br />Shares in the company fell as much as six per cent in Europe, their sharpest fall in six months, before closing 3.8 per cent lower.<br /><br />Zurich said net investment gains in the third quarter were $1.93bn, up from $769m a year earlier.<br /><br />Compared with the end of 2008, shareholder equity rose 29 per cent to $28.5bn, meaning the conservatively-run company held more than twice the minimal amount of capital required by regulators.<br /><br />Chief financial officer Dieter Wemmer said the company also profited &ldquo;from a flight to quality&rdquo; in its life insurance business in Europe, where customers preferred saving plans from insurers rather than banks.<br /><br />Gross written premiums increased by five per cent to $13.04bn from $12.4bn in the third quarter.