Zurich warns prices may weaken after it posted a reduced general insurance operating profit in the third quarter.

CFO George Quinn says the business environment is growing tougher, interest rates remain low and general insurance pricing may be about to enter a “softer” phase.

Zurich’s net income fell 16% to $US928 million ($1.08 billion) in the third quarter, and overall operating profit dropped 6% to $US1.21 billion ($1.41 billion).

General insurance operating profit fell 4% to $US724 million ($843 million), mainly reflecting prior-year reserve releases, with the result partly offset by an improvement in the accident-year ex-cat combined operating ratio. Rates on overall renewals gained 2%.

“To summarise on our general insurance business, there are plenty of encouraging trends in these results but we have already started to evaluate the actions we will need to take given what is likely to be a tougher market environment in the next few years,” Mr Quinn said.

Premiums in international markets increased about 4% in local currency terms in the quarter.

“We are still expanding the business but our underlying growth rate has slowed, mainly due to some selective rewriting in [Latin America] and market softening in Australia,” he said.

Catastrophe events in the quarter included a $US90 million ($105 million) impact from Hurricane Odile in Mexico.

General insurance operating earnings for the nine months to September 30 grew 12% to $US2.4 billion ($2.79 billion) on an improved underwriting result.

Gross written premium for the period gained 1% to $US28.4 billion ($33.1 billion).