(Bloomberg) -- Zurich Insurance GroupAG rose to the highest in eight months on higher profit at itslargest unit, adding to signs that an overhaul at Switzerland’sbiggest insurer is starting to bear fruit.

General Insurance, Zurich’s biggest source ofpremium income, saw first-half profit rise 3 percent to $1.2billion, the company said in a statement on Thursday. Group netincome declined and all the company’s other units reported adecrease in earnings.

“One can see from quarter to quarter how the restructuring isprobably going to be successful, even though they said the mainpart of it would only take effect in the second half,” said DanielBischof, a Baader Helvea analyst with a buy rating on thestock.

Chief Executive Officer Mario Greco, who tookover in March, is trying to improve profitability by cutting jobs,selling assets, being pickier on what the company insures andcombining the biggest units, global life and general insurance.European insurers are struggling to boost earnings because of sloweconomic growth, stricter regulatory requirements and record-lowinterest rates that hurt investment income.

Group net income fell to $739 million from $840 million a yearearlier on restructuring charges and claims for natural disasters,beating the $646 million average of eight analysts’ estimatescompiled by Bloomberg. Zurich climbed as much as 4.1 percent inZurich trading, while the Bloomberg Europe 500 Insurance Index fellas much as 0.5 percent.

Costs, claims

“Measures taken in the non-life segment start to feed through onthe claims as well as the cost side," Vontobel analyst StefanSchuermann said in a note to investors. He has a hold rating on thestock.

Zurich said it would continue to review its general-insuranceportfolio. The acquisition of Rural Community InsuranceServices, one of the leading providers of crop insurance in theU.S., boosted profit at the unit by $7 million in the quarter.

The company reiterated an earlier estimate of $500 million ofrestructuring charges this year, with most of it coming in thesecond half. Zurich has been exiting business lines and sold units in Taiwan, Morocco and South Africathis year.

“We have made significant progress over the last six months,with consistent improvement in our underlying performance in thesecond quarter in the context of an ongoing challenging marketenvironment,” Greco said in the statement. “Our efficiency programis beginning to deliver results.”

Combined ratio

The combined ratio in the second quarter rose to 99 percent from97.7 percent in the previous three months. Analysts expected aratio of 101.4 percent in the quarter. A measure above 100 meansthat the company is paying out more for claims and costs than itearns through premiums. Natural catastrophes including Canadianwildfires, European floods and hail storms in Texas had an impactof about $200 million on the quarterly results.

Operating profit at the Global Life unit fell 1 percent to $667million in the first six months on higher claims in NorthAmerica.

Farmers, the unit that manages insurance services forFarmers Exchanges, posted an operating profit of $678 million,6 percent lower than a year earlier, driven by a loss at FarmersRe, the reinsurance unit.

“Encouraging improvement in the underlying performance of theP&C business,” said Charles Graham, a Bloomberg Intelligenceanalyst. “Nothing turns out to be a negative surprise, which isgood news for Zurich, but there is evidence that there is more workto be done in improving the performance of the Farmers unit, whichshould be a source of earnings stability.”

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