Zurich Financial Services sent its shares to the top of the gainers list among recovering blue chip European stocks today by saying it will maintain its "attractive and sustainable" dividend policy.
The pledge came as the insurer, also one of the major institutional investors facing damage to portfolios from the market downturn of recent weeks, revealed second-quarter profit hit by catastrophes but ahead of expectations.
Net income rose 88 per cent to $1.33 billion, the Zurich-based insurer said
Underpinning profits for the period was premium growth in its general insurance business.
Investors were cheered by the reaffirmation from chief financial officer Dieter Wemmer, although he qualified his statement by saying he would decide on exactly how much to pay out at the end of the year.
Zurich last year paid out a dividend of 17 Swiss francs a share.
The result follows strong first half figures from British insurer Standard Life yesterday
Shares in Zurich were up 8.4 per ent in early trading, the top gainer on the FTSE Eurofirst 300 and the main Swiss bourse and outperforming a 2.6 per cent rise in the sector index.
Growth in General Insurance - Zurich's biggest segment - came from Latin America and Asia-Pacific. The firm also was able to push through rate increases in the United States and Europe, despite slow economic growth and market uncertainty.
Profit was also boosted by gains of $441 million on the sale of shares in New China Life Insurance, Zurich said.
Profits in the first quarter were hit by big catastrophe payouts, including the earthquake in Japan.
In the April to June period, Zurich saw a bill of $200 million from tornados and hail storms in the United States, as well as $80 million as a result of aftershocks from the New Zealand earthquake.
With the spectre of debt downgrades hanging over in the euro zone and the United States, insurers have been reassessing their portfolios.
Zurich said it will reduce its Italian bond holdings.
"The group continues its disciplined approach and closely monitors its investment in Eurozone peripheral government debt to ensure risk is well balanced and diversified."
The firm holds about $8 billion in Italian bonds and $5 billion in Spanish.
US debt constitutes its biggest bond holdings.
Reuters