This week, James Schiro, chief executive officer at the Zurich, Switzerland-based insurer, said there are several positive factors that contributed to the company's first-half profit, including better claims-and-expense management in core businesses as well as "firm prices in most non-life markets."

Mr. Schiro also noted, "The record for the first six months of 2003 confirms that our action plan and our goal of restoring Zurich's profitability are on track."

Zurich also posted premium growth of 29 percent in its non-life insurance operations, to $19.3 billion, as well as a 20.9 percentage-point improvement in the combined ratio, to 98.8 percent.

On the expense side, the company said its net non-life and reinsurance reserves were boosted by $3.2 billion, to $32.8 billion so far this year, and $474 million was used to strengthen its ailing Centre unit in the United States--the unit recorded a loss of around $463 million for the first half.

"Certainly in terms of non-life, the company reported lowered expenses and quite a good combined ratio of 98.8 percent for the first half of 2003," commented Andrew Murray, a London-based analyst for Fitch Ratings in New York. "Also, this good combined ratio was not just from North American operations--the continental Europe and U.K. operations also did well," Mr. Murray said.

One concern Mr. Murray expressed is the likelihood that the company will need to further strengthen reserves in the latter-half of 2003: "We expect it will have to," he said.

But if there are additional reserve boosts before the end of the year, they will at least be offset by expected profits from ongoing streamlining process. This past May, the company announced it will sell off its U.S.-based Zurich Life to Bank One Corp. in Chicago for $500 million in cash. This transaction is expected to be completed before the end of next month.

Also, last June, the insurer said it will sell its U.K.-based Threadneedle Asset Management Holdings to American Express in New York for some $570 million to be paid on the deal's completion, sometime before the end of the year.

Zurich noted in its earnings report that the company continues to exit "peripheral markets and activities" that it considers non-core or not aligned with management's performance goals.

"And they haven't completed most of the major disposals they announced. So in terms of profits, they really haven't taken any realized gains yet on these disposals," Mr. Murray observed.

Mr. Murray added that Zurich is now expecting those profits to come through before the year's end. "And the company is now suggesting that if they have to increase reserves, then at least they got this expected profit coming from disposals. They said they possibly expect these two to match up," he noted.