ZURICH (Bloomberg) — Zurich Financial Services AG, Switzerland's largest insurer, said profit increased 2.9 percent in the first quarter, more than analysts estimated, as premium income at its biggest unit gained.

The company advanced as much as four percent in Swiss trading after reporting net income increased to $1.43 billion from $1.39 billion a year earlier. That beat the $1.3 billion median estimate of 10 analysts surveyed. Gross written premiums rose five percent to $14.1 billion, in line with analyst estimates.

Zurich, which earns more than half of its operating profit through property and casualty insurance, is sticking with its "bolt-on" acquisition strategy of the last 18 months as that division's income slows amid "difficult" financial markets. Chief executive officer James Schiro today reiterated a goal of $2.4 billion in cost savings and underwriting efficiencies through 2010 after cutting 400 US jobs last month.

"The numbers look brilliant because while the environment has been tough for everyone, here's a company bringing in a profit while rivals are reporting decreases," said Fabrizio Croce, an analyst at Landsbanki Kepler in Zurich who recommends buying the stock. "Zurich avoided the toxicity of the sub-prime market."

Warren Buffett's Berkshire Hathaway Inc., in contrast to Zurich Financial's results, said this month that first-quarter profit plunged 64 percent to its lowest since 2005 as falling rates cut insurance returns. Axa SA, Europe's second-biggest insurer, on May 7 reported quarterly life and savings sales fell 7.6 percent.

The company, founded in 1872, had $7 million in impairments on US mortgage-backed securities since the end of December, chief financial officer Dieter Wemmer said, including a $1 million write-down on US sub-prime holdings.

There were no property and casualty claims from China's quake this month though the insurer reported higher losses from fires and floods from a year ago, including two wineries in Australia that burned down.

The insurer's combined ratio, a measure of profitability, worsened to 94.6 percent from 93.3 percent a year earlier because of the higher loss claims though that topped analyst estimates of 96 percent. Below 100 indicates the business was profitable.

Large loss claims included US tornadoes, fires and March's winter storm Emma in Europe, which in total hurt the combined ratio by 1.5 percentage points more than last year, Wemmer said.