ZURICH, Switzerland -- Swiss insurance company Zurich Financial Services AG on Thursday reported a 1 percent increase in first-quarter net profit despite a heavy charge linked to bid-rigging settlements in the United States.

Net profit for the three months ending March 31 was $785 million, compared with $779 million in the same period of last year. The latest quarter's profit was reduced by a $262 million settlement charge linked to allegations that the company gained business from brokers through contingency and special compensation payments that might have hurt clients.

"Our first-quarter results continue the trend of consistent financial performance, reflecting the resilience of our diversified portfolio," said Chief Executive James Schiro. "We even achieved these positive results while making significant progress in settling important regulatory matters in the U.S."

Analysts said the net profit beat their predictions of $710 million and that all of the insurer's four divisions performed well.

"These are good figures," said Rene Locher, analyst at Kepler Equities. The overall "operational performance stands out."

Zurich Financial said overall business operating profit, which strips out one-off items and reflects the underlying life and non-life insurance activities, increased 31 percent to $1.36 billion.

Gross premiums fell 3 percent to $13.4 billion from $13.9 billion, reflecting Zurich Financial's strategy of underwriting selective business that promises sustainable returns.

In March, the company announced agreements with a number of attorneys-general and insurance commissioners in the United States.
ZURICH, Switzerland -- Swiss insurance company Zurich Financial Services AG on Thursday reported a 1 percent increase in first-quarter net profit despite a heavy charge linked to bid-rigging settlements in the United States.

Net profit for the three months ending March 31 was $785 million, compared with $779 million in the same period of last year. The latest quarter's profit was reduced by a $262 million settlement charge linked to allegations that the company gained business from brokers through contingency and special compensation payments that might have hurt clients.

These settlements included agreements to pay $240 million in restitution, $65 million in fines and $20 million in costs. The charge to the quarter net of tax relief was $262 million.

States involved included California, Florida, Hawaii, Maryland, Massachusetts, New York, Oregon, Pennsylvania, Texas and West Virginia.

Zurich was one of the insurance companies linked to an investigation of Marsh & McLennan Cos. Inc., the United States' largest insurance broker, which agreed in January 2005 to pay $850 million in restitution to settle a New York state investigation into bid-rigging, price-fixing and the use of hidden incentive fees.

Marsh & McLennan was accused of cheating corporate clients by rigging bids and collecting huge fees from major insurance companies for allocating business to insurance firms.

Zurich Financial shares rose 0.5 percent to 290.25 Swiss francs ($240.34) in morning trading.

Earlier in the day the company's shares were involved in a general drop in share prices on the Zurich exchange. Zurich Financial shares were stopped automatically when the price had dropped 5.1 percent to 265 francs ($219.43). Trading later resumed and the company's shares recovered.

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The Associated Press

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