* Zurich Q2 net profit rises 6 pct to $837 mln
* Says on track with profitability drive
* Expects to see savings from restructuring by end 2015
* Shares rise 3.4 percent, outperform sector
(Adds CEO, CFO, analyst, detail)
By Alice Baghdjian
ZURICH, Aug 7 Zurich Insurance Group
posted a rise in second-quarter net profit on Thursday and said
its business overhaul was on track, with job cuts largely
completed and more than half of restructuring costs booked.
Restructuring costs meant the insurer's net profit missed
forecasts, rising 6 percent against expectations for a 21
percent jump, but its shares rose more than 3 percent after the
results as the costs were seen as a one-off factor. The company
said it was on course to meet its targets for the next two
Zurich announced at the end of 2013 that it would revamp its
businesses, aiming to boost profitability by investing in high
margin units, selling underperforming lines and cutting jobs.
Around 670 positions have been cut, the Swiss insurer said.
In March, the company said it would cut about 800 jobs globally
to try to save around $250 million per year.
"These savings will start to flow through to our results by
the end of 2015," Chief Executive Martin Senn said on a call
with journalists. "This streamlining is largely completed."
Zurich is on track for its 2014 to 2016 targets, Senn said.
The insurer has already shed businesses seen to be
underperforming. Around $470 million of $520 million in costs
has been booked so far, finance chief George Quinn said.
Zurich said in July it would take a hit of about $300
million in the third quarter from selling its Russian retail
business to the OLMA Group.
The restructuring measures and strategy overhaul will take
time to bear fruit.
"While (the sale of the Russian unit) should support
profitability going forward, restructuring charges of some $600
million, expected by the third quarter, are weighing on the
results in the near term," said Dominik Studer, an analyst at J.
Around $120 million in restructuring costs was booked in the
second quarter, Vontobel analyst Stefan Schuermann said.
Lower natural catastrophe damage claims however helped the
Swiss insurer post a net profit of $837 million, lifting its
shares 3.2 percent higher by 0826 GMT to outperform the European
The firm was forecast to report quarterly net profit of $953
million, according to the average of six estimates in a Reuters
poll of banks and brokerages.
Zurich said its combined ratio, an insurance industry
measure of profitability that weighs payouts against premium
income, improved 3.4 points to 95.7 percent in the second
quarter, compared to a 94.9 percent poll estimate.
(Additional reporting by Paul Arnold; Editing by Miral Fahmy
and Susan Fenton)