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Wildfires, extreme weather have not hit Zurich's crop insurance business

The recent spate of wildfires and extreme weather in North America and Europe has not hit Zurich Insurance Group AG's agricultural business, CFO George Quinn told analysts Aug. 9.

"We've still got several months of the year to go, but we don't have a major concern about crop having a bad year. In fact, we think it will have a positive contribution to the business," Quinn told analysts on a first-half earnings conference call.

Asked whether the insurer planned to make further acquisitions in 2018, given its strong capitalization and recent run of M&A, Quinn said Zurich would consider deals "if opportunities arise."

"We could fund more growth, it just has to produce the right return," he said.

Zurich agreed to buy Australian insurer QBE Insurance Group Ltd.'s Latin American insurance business in February for $409 million, and Australia & New Zealand Banking Group Ltd.'s life insurance business in December 2017. The benefits of the two deals to Zurich's profitability are "yet to come," Quinn said.

Quinn's comments came as the insurer reported first-half group business operating profit of $2.42 billion, up from the year-ago $2.17 billion. Business operating profit for the property and casualty division rose to $1.14 billion from $1.02 billion year over year, while in the life division, business operating profit was $760 million, up from the year-ago $650 million.

Business operating profit for the Farmers segment in the U.S. rose to $808 million in the first half, compared with $794 million in the same period last year.

The combined ratio for P&C stood at 97.5% at the end of the first half, compared with 99.5% a year previously.

The insurer, which is in the middle of a three-year restructuring program, has achieved costs savings of $900 million out of a target of $1.5 billion as of June 30.

CEO Mario Greco was brought on board in 2016 to cut back Zurich's high cost base. He told a media call earlier in the day that the remaining savings will come from IT, rather than off-loading businesses, Reuters reported.

A spokesman for the company, though, said sales were not out of the question as part of a general drive to improve profitability.