Mr Schiro admits that insurance premiums have been raised

The result was far better than analysts had expected. A Reuters poll of analysts had suggested profits would come in around the $500m mark.

This year has marked a sharp turnaround from last year's $3.4bn full-year loss.

But to do so, the insurer has had to endure some painful changes.

Hundreds of jobs have been cut in recent months and subsidiaries peripheral to the group's core business have been sold.

Rising prices

Zurich, which is the number three insurer in Europe when measured by income from insurance premiums, also admitted that it has raised insurance premiums.

"That's an industry phenomenon based on the very fundamental economics of supply and demand," Zurich chief executive James Schiro told BBC World Business Report.

In fact, the insurance industry is doing rather well at the moment, having recovered from last year's large losses on their stock market investment.

"You have to match your assets with your liability and ensure that you are generating an adequate return," said Mr Schiro.

Troubled unit

Some analysts were concerned about losses suffered by Zurich's subsidiary Centre which offers structured insurance deals to large companies and to other insurance companies.

"[Centre] should be closed or at least put into run-off," insisted Philippe Cornet at CAI Cheuvreux.

Centre suffered a first-half net loss of $344m, down from $354m profits during the same period last year.