RPT-WRAPUP 2-ING, Zurich weather turmoil with solid results

(Adds detail, CEO comments, updates shares)

By Reed Stevenson and Andrew Thompson

AMSTERDAM/ZURICH (Reuters) - European financial groups ING (ING.AS) and Zurich Financial Services (ZURN.VX) reported interim profits that met or exceeded expectations on Wednesday, helped by strong insurance businesses and limited investment writedowns.

But smaller insurers in Europe, more vulnerable to credit market turmoil and weakening economic conditions, reported sluggish profits.

ING's second-quarter net profit fell 25 percent to 1.92 billion euros ($2.86 billion), hurt by lower real estate, private equity valuations and investment returns. This was above the average forecast of 1.52 billion euros in a Reuters poll of 12 analysts and the highest forecast of 1.69 billion euros.

Zurich, which reported first-half figures, said it had net profit of $2.68 billion, in line with 12 analysts' average forecast of $2.62 billion.

Shares fell broadly, reflecting continued concern over insurance portfolios after last week's massive $5 billion net loss from U.S. insurance giant American International Group Inc (AIG.N) and a halving of quarterly net profit at Belgian-Dutch banking and insurance group Fortis (FOR.BR).

ING fared better, down 0.96 percent at 22.77 euros at 1234 GMT, while Zurich fell 2.35 percent. The DJ Stoxx European Insurance index .SXIP was down 2.7 percent.

Zurich and ING's results have proven to be more resilient through the credit crunch and subprime crisis than many of their peers. Zurich, Europe's fourth largest insurance group, has managed to weather difficult financial markets as well as competitive insurance markets, where prices are dropping.

Zurich's general insurance gross written premiums and policy fees rose 8 percent to $20.6 billion in the first half, while global life gross written premiums, policy fees and insurance deposits were little changed at $10.4 billion.

Amsterdam-based ING's sales of new life insurance policies rose 8.8 percent in the second quarter, excluding the impact of currencies.

ING has taken limited writedowns on subprime-related investments, triggered a year ago when large numbers of less creditworthy U.S. borrowers began to default on mortgages, but ING still has a comfortable cash cushion of potentially 3.9 billion euros to weather any further credit turmoil.

"Financial companies are facing unprecedented volatility," ING Chief Executive Michel Tilmant told reporters. "We will continue to manage risk and capital with discipline."

Zurich has said it has no material exposure to U.S. subprime debt or collateralised debt obligations (CDOs) and has incurred a $16 million impairment on mortgage-basked securities since December. CEO James Schiro is forging ahead with a programme at Zurich aimed at cutting $800 million in annual costs to 2010.

ING, which also has a large real estate portfolio, booked a 44-million-euro writedown after tax from its exposure to subprime, Alt-A and other asset classes and a negative revaluation of 260 million euros through shareholders' equity.

"ING has outperformed peers in recent months as it has shown to be fairly resilient to the subprime crisis," said Petercam analyst Ton Gietman.