Zurich Financial said that net income increased to $1.47 billion from $1.29 billion a year earlier, which surpassed the $1.25 billion median estimate of 11 analysts. The insurer said it would buy back up to 2.2 billion francs ($2 billion) of shares this year and plans to raise its dividend 36 percent to 15 francs a share.
The Zurich-based company said it may increase investments in credit markets that have become cheaper after the U.S. sub-prime crisis and make ``bolt-on'' acquisitions. Chief Executive Officer James J. Schiro plans to add $2.4 billion to profit over the next three years through better underwriting and cost savings.
"The buyback is a big statement of confidence from management,'' said Spencer Horgan, an analyst at Deutsche Bank in London with a "buy'' recommendation on the stock. "Price pressures are a bit of a concern.''
The insurer's property and casualty unit's combined ratio, a measure of profitability, improved to 92 percent in the three-month period from 92.2 percent a year earlier. A reading below 100 indicates the business was profitable.
"We're continuing to write our business at profitable levels in almost all areas,'' Schiro said. ``We're seeing some areas where premiums are leveling out.''
Business operating profit for the group increased to $1.73 billion from $1.61 billion, Zurich Financial also said. Operating profit at the insurer's biggest unit, general insurance, rose to $1.25 billion from $1.02 billion a year earlier and was little changed at its life insurance business at $353 million.