May 18 (Bloomberg) -- Zurich Financial Services AG, Switzerland's largest insurer, said first-quarter profit rose, helped by a reorganization in its U.K. life business.

Net income increased to $785 million, or 6.88 Swiss francs a share, from $779 million, or 6.19 francs, a year earlier, the Zurich-based company said today. Profit surpassed analysts' $726 million median estimate. Operating profit rose by almost one-third.

The shares dropped after the company said gross premiums, or premiums before reinsurance costs are subtracted, fell 3.3 percent to $13.43 billion. Zurich Financial is limiting its exposures in regions and in business lines ``where we expect prices and returns to fall short of our internal hurdles,'' Schiro said today.

The stock fell 4.25 francs, or 1.7 percent, to 284 francs at 9:45 a.m. in Zurich. The shares have risen 1.4 percent this year compared with a 0.8 percent drop for the 31-member Bloomberg Europe Insurance Index.

In the U.K., Zurich Financial last year brought its remaining life businesses together into one unit, where it spent $94 million to introduce a new distribution unit. The insurer also said Ireland ``had an exceptional result,'' buoyed by new business profit.

Pretax profit at the life business rose 62 percent to $275 million, matching analysts' expectations. Zurich Financial's combined ratio, which measures profitability in its general insurance business, was 95.1 percent compared with 96.9 percent a year earlier, ``reflecting improvement in both the expense and loss ratios,'' the company said in a statement.

The company's first-quarter results ``benefited from a relatively low incidence of large losses and natural catastrophes,'' Zurich Financial said.

Schiro told reporters in a conference call that the insurer continues to limit business in unprofitable areas following last year's record hurricanes that struck the U.S. Gulf Coast.

Schiro said April 20 at the annual shareholder meeting that the company may consider acquisitions. He said today that a major acquisition is ``not a strategy'' for the insurer.

Zurich Financial set aside $262 million after taxes in the first quarter to settle claims in 13 U.S. states. The settlement follows investigations into whether insurers including Zurich Financial's U.S. units inflated prices on commercial policies. The Zurich-based insurer neither admitted nor denied guilt.

The first-quarter results reflect ``the resilience of our diversified portfolio and the sustainability of our ongoing improvement efforts,'' Schiro said in the statement.

This is cache, read story here