Zurich reports a strong operating performance in the first quarter 2006

The Group's operational improvement program, known as The Zurich Way, addresses all core processes, including underwriting, claims, distribution management and finance. As previously announced, the Group established a USD 500 million target for economic benefits from The Zurich Way initiatives in 2006, and the company is well on track to achieve this target.

General Insurance: Strong performances in our major markets produced a business operating profit of USD 886 million, up 45%. This result was driven by an underwriting profit of USD 338 million, an increase of 61%, and investment income of USD 749 million, an increase of 18%. The combined ratio improved by 1.8 percentage points to 95.1%, reflecting improvement in both the expense and loss ratios. These improvements were particularly noticeable in Global Corporate, North America Commercial and Europe General Insurance. In addition to the strong underwriting performance the General Insurance result was further supported by growth in investment income from higher yields and higher invested assets. The first quarter result also benefited from a relatively low incidence of large losses and natural catastrophes.

The gross written premiums increased by 1% in local currency but showed a 4% fall in dollar equivalent terms. The markets continue to be competitive with premium rates stable in personal lines business in most cases but with some price declines in commercial lines of business, particularly casualty lines. In US property classes, prices increased especially in areas subject to natural catastrophes. This class of business is showing further significant price increases in the second quarter with other lines experiencing trends similar to the first quarter. We expect this general rate climate to persist through to the end of 2006.

Global Life: The Global Life result continued the positive trend seen through 2005. Business operating profit was USD 275 million, up 62%, and showing improvement in all major markets as the actions undertaken over the last three years continue to produce results. Gross new premiums written (using the industry standard measure Annual Premium Equivalent - APE) showed an increase of 16% in local currencies, or an increase of 4% in dollar equivalent terms. This growth, in conjunction with a new business profit margin of 14.5%, drove the 89% increase in new business profit of USD 83 million.

These improvements were a result of the higher volumes and profitability of new business levels. In the UK, they reflect the continuing benefits being gained from the restructuring activity which, in addition to other one-off charges, adversely affected the result in the first quarter 2005, as we prepared to launch our multi-tied sales channel, Openwork. Ireland had an exceptional result in a buoyant market with strong growth in business operating profit, new business premium levels and particularly in new business profit.

Farmers Management Services: Farmers Management Services (FMS) continued to successfully manage the Farmers Exchanges, which Zurich manages but does not own, for growth and profitability. As part of the Group's growth initiatives, FMS increased its investment in marketing and in sales-related IT enhancements. Despite this investment, business operating profit grew by 2% to USD 313 million.

The Farmers Exchanges also continued to build surplus and are now well positioned for profitable growth going forward. In the first quarter, they achieved growth of 1.4% in a market environment where there was virtually no growth overall.

Other Businesses: The Other Businesses segment achieved a business operating profit of USD 105 million. Of this, USD 42 million arose from the business ceded by the Farmers Exchanges, a 30% reduction as a result of reduced cession in the first quarter of 2006. The other operations in this segment contributed USD 63 million with profits arising in the run off businesses, especially Centre.

Investment performance: The net investment result for Group investments of USD 2.2 billion was unchanged from 2005. The flat net investment income arose from higher yields, which were offset by negative currency impacts.

Regulatory and legal issues: In March, Zurich announced agreements with a number of attorneys general and insurance commissioners in the US. These settlements included agreements to pay USD 240 million in restitution, USD 65 million in fines and USD 20 million in costs. The charge to the quarter, net of tax relief was USD 262 million.

¹ Attributable to shareholders.

² All comparisons refer to the first three months of 2005 unless stated otherwise. Interim results are not indicative of full-year results.

³ ROE calculated on common shareholders' equity. See the Financial Supplements and the Group Financial Review on the Investor Relations page of our Web site www.zurich.com for further information on shareholders' and common shareholders' equity.

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Zurich Financial Services Group (Zurich) is an insurance-based financial services provider with a global network of subsidiaries and offices in North America and Europe as well as in Asia Pacific, Latin America and other markets. Founded in 1872, the Group is headquartered in Zurich, Switzerland. It employs approximately 55,000 people serving customers in more than 120 countries.

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Zurich Financial Services
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Financial Highlights (unaudited)

The following table presents the summarized consolidated results of the Group for the three months ended March 31, 2006 and 2005 and the financial position as of March 31, 2006 and as of December 31, 2005. Interim results are not necessarily indicative of full-year results.

¹ Returns for the periods ended March 31, 2006 and 2005 are annualized on a compound basis using the results for the three months ended March 31. Returns for the period ended December 31, 2005 are for the year ended December 31, 2005. ROE is based on net income attributable to common shareholders.