Zurich Financial Services Group's nine-month net profit rose 25 percent, outstripping expectations, and the Swiss insurer announced a further round of cost savings.
Net profit was $4.16 billion despite claims from winter storm Kyrill and floods in the UK, helped by the release of prior-year loss reserves, Zurich said on Thursday.
"ZFS has met or beaten our expectations in most key operating lines. This, combined with ... its negligible exposure to credit risk issues, should be judged favourably by the market," Keefe, Bruyette and Woods said in a note.
Zurich shares were flat at 327 Swiss francs by 0902 GMT, compared with a 0.7 percent fall on the DJ Stoxx insurance index.
Zurich also announced further cost savings of $3.1 billion from 2007 to 2010, more than the $2 billion Zurich Way programme originally pencilled in for the 2007 to 2009 period.
"It shows that although the Zurich Way has been a quite long-running initiative, there are still plenty of operational efficiencies which the group has yet to harvest," said Deutsche Bank insurance analyst Spencer Horgan.
The company, which has made a string of modest acquisitions so far this year, remains on the look-out to buy rivals in markets in Central and Eastern Europe and in Asia.
Zurich also reassured on its subprime exposure.
"The Group continues to have no material exposure to U.S. subprime debt or CDO equity tranches in its investment portfolio," the company said in a statement.
Exposure to sub-prime was $317 million and to CDO's $450 million out of a $193 billion total investment portfolio, Zurich said. The group holds $27.6 billion in mortgage-backed and asset-backed securities, all in investment grade.
Zurich's main European rivals such as Allianz, AXA and Generali have all posted solid results recently, largely unscathed by the subprime woes that plagued banks in the third quarter.
Zurich's combined ratio of costs and claims as a percentage of premium income rose to 96.9 percent, indicating higher claims. The lower the ratio below 100 percent, the better the underwriting profitability.
Winter storm Kyrill and this summer's floods and storms in Britain caused total claims of $761 million, the company said, which were in part mitigated by prior-year reserve releases to the tune of $558 million.
According to Reuters data, Zurich trades at 8.3 times expected 2008 earnings, roughly in line with the 8.6 average forward multiple for the sector.
The net profit number was higher than the average forecast in a Reuters poll of 11 analysts for net profit to rise by 19 percent to $3.9 billion, from $3.7 billion a year ago.