* Year net income $3.88 bln, vs forecast $3.27 bln
* Combined ratio improves 0.5 point to 98.4 pct
* Dividend unchanged at 17 Swiss francs
* Shares up 0.8 percent
(Releads, adds shares, analyst comment)
ZURICH, Feb 14 Zurich Insurance beat
forecasts with a 3 percent rise in 2012 net profit after big
fourth-quarter investment gains offset charges taken against its
German business and Storm Sandy-related payouts.
Strong growth at recently acquired Latin American and
Malaysian businesses helped boost margins at the Swiss insurer
which reported full-year profit of $3.88 billion, compared with
a forecast for $3.27 billion in a Reuters poll.
"Realised (fourth-quarter) investment gains of $946 million
were much higher than expected. We estimated $30 million, in Q3
Zurich had $15 million - and that explains the bottom line
beat," Helvea analyst Daniel Bischof said on Thursday.
The Swiss-based insurer, whose 6.6 percent dividend yield is
already the highest among Switzerland's biggest companies, said
it would pay a dividend of 17 francs, unchanged from the payout
on 2011 profit.
"The integration of our acquired insurance businesses in
Latin America and Malaysia is progressing well and contributing
meaningfully to growth as evidenced in the strong contribution
to profitability from these areas," chief executive Martin Senn
Zurich's combined ratio, a measure of underwriting
profitability, was 98.4 percent, a 0.5 point improvement and
compared with a forecast for 99.4 percent.
Shares in Zurich, whose rivals include Aegon and
Axa, were 0.8 percent higher at 261 Swiss francs by
0950 GMT, ahead of a 0.4 percent advance in a European insurance
The group said its results were hit by above average levels
of catastrophe, large and weather-related losses, including
Storm Sandy, as well as charges in Germany.
In October, the company said it would take a $550 million
hit to third-quarter pretax profit after a review showed its
German arm had not set aside enough money to cover claims that
could be made years after policies expired.
The group said on Thursday that, as a result of the review
of its German business, it had raised claims provisions in the
fourth quarter by a total of around $130 million.
"A number of negative items, including Sandy and the
additional reserve strengthening in Germany led to the
uninspiring Q4 operating performance," said Bischof.
"Trading at around 1.2 times book value. We believe upside
potential is limited at this stage and we prefer some of the
cheaper non-life oriented names such as Bâloise and Allianz."
(Reporting by Martin de Sa'Pinto; Editing by Dan Lalor)