Zurich Insurance Group AG, the biggest Swiss insurer, said the target for its general insurance business was “challenging” after natural catastrophe losses cut second-quarter profit by 27 percent.

Second-quarter net income dropped to $789 million from $1.09 billion a year ago, the Zurich-based company said in a statement Thursday. That missed the $823.8 million average estimate of five analysts surveyed by Bloomberg. The shares fell the most in three months.

Zurich Insurance said second-quarter operating profit declined 18 percent after floods in central Europe in May and June cost about $140 million, while tornadoes in the U.S. produced claims of $52 million. Low interest rates cut investment income and Chief Executive Officer Martin Senn said targets for the company’s general insurance unit and its Farmers business in the U.S. “remain more challenging” than those for other operations.

“Overall it was a difficult quarter for Zurich, and slightly disappointing because of the investment income in general insurance and the impact of catastrophes at Farmers Re,” said Daniel Bischof, a Zurich-based analyst with Helvea SA who has a neutral recommendation on the stock. “There is no threat to the dividend though, and there were strong price increases in general insurance, which could offset some of the negative news in that unit.”

The insurer pushed through price increases of 3 percent in personal lines, which includes home and car insurance, while the price of policies sold to businesses rose 5 percent in the second quarter. In Europe, some price increases resulted in a decline in gross written premiums, Chief Financial Officer Pierre Wauthier said during a conference call.

Allianz SE, Europe’s biggest insurer, shrugged off flood losses of about 330 million euros ($439 million) to report higher second-quarter profit last week as earnings increased at its non-life and asset management units.

Zurich Insurance’s combined ratio—spending on claims and costs as a percentage of premiums — worsened to 96.2 percent in the quarter from 95.1 percent in the year-earlier period. The company wants to improve the ratio by as much as 4 percentage points compared with its peers by the end of this year.

Zurich Insurance will give an update on its business targets at the end of the year, Senn said on a conference call, while declining to elaborate. The company’s Farmers unit saw its second-quarter operating loss narrow to $73 million, from $128 million a year earlier.

“We delivered these results in a period characterized by natural catastrophes and large weather-related events, including severe flooding in eastern and central Europe, tornadoes in Oklahoma as well an unusual number of mid-sized, weather-related events in the U.S., Canada and Europe,” Senn said in the statement. “The economic environment remains challenging with continued low interest rates exerting pressure on our investment income.”

The insurer reported a business operating profit after-tax return on equity of 8.8 percent in the quarter, down from 11.2 percent a year earlier. Zurich Insurance has a long-term target of 16 percent.

Investments lost 0.9 percent of their value in the second quarter as the insurer booked a $58 million of impairments on its equity and debt holdings.

–Editors: Dylan Griffiths, Edward Evans.