(Bloomberg) -- Zurich Insurance Group AG, Switzerland’s biggest insurer, said first-quarter profit fell 4% on lower earnings from general insurance and higher tax payments.

Net income declined to $1.22 billion from $1.28 billion a year earlier, the Zurich-based insurer said in a statement Thursday. That beat the $1.08 billion average estimate of five analysts surveyed by Bloomberg. Profit at the general insurance unit fell 20% to $706 million.

Europe’s insurers are seeking ways to bolster earnings as they grapple with a slump in interest rates on the debt they have purchased, spurred by the European Central Bank’s bond- buying program. Zurich, led by Chief Executive Officer Martin Senn, has cut 670 jobs and started selling underperforming businesses to help lower costs by $250 million annually by the end of this year.

“This is a satisfactory result, though one that benefits from a benign catastrophe claims environment,” Chief Financial Officer George Quinn said.

The general insurance unit, headed by Mike Kerner, is at the center of Zurich’s cost-cutting efforts. The unit has “much still to do” to turn around its operations and needed a “continued focus on expenses,” Zurich said in February. Kerner said in an interview in April that the company will shrink office space and ask staff to share desks.

“We still have much to do to improve our return on equity, particularly in terms of improving current year profitability in our general insurance business,” Quinn said.

Insurers invest the premiums they earn from their customers and buy securities such as bonds and stocks to boost profit. The earnings are also needed to meet obligations to retirees and life insurance holders.

Allianz SE, Europe’s biggest insurer, said yesterday that first-quarter profit climbed 11% to 1.82 billion euros, even as investors withdrew funds from its asset manager Pacific Investment Management Co. It also kept its target for operating profit at 10 billion euros to 10.8 billion euros this year compared with 10.4 billion euros last year.

Zurich shares lost 2.5% in Swiss trading this year valuing the company at 43 billion francs. That compares with a 10% gain in the Bloomberg Europe 500 Insurance Index.

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Zurich profit falls 4% on decline at general insurance unit

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