Zurich Financial Services AG, Europe's fourth-largest insurer, said it will take a $2.4 billion charge to integrate B.A.T Industries Plc's financial- services unit, $1 billion more than its previous estimate.

The higher charge will cover the cost of closing more operations, terminating contracts and unwinding joint ventures, Zurich said, adding it reflects rising asbestos claims.

``This is disappointing,'' said Lewis Phillips, an analyst at Fox-Pitt, Kelton. ``Zurich had assured us that there wouldn't be any nasty surprises.'' Shares in Zurich Allied AG, the Swiss parent, fell 25 francs to 930 francs ($633.47) on the Swiss Exchange. Allied Zurich Plc, the U.K. parent, fell 13 pence to 900p ($14.57) in London.

Insurers are finding it increasingly difficult to make money because of greater competition from banks, analysts said, adding their earnings are also threatened by rising claims.

Standard & Poor's, a ratings agency, said after today's announcement it may cut its ratings for Zurich this month. S&P's long-term counterparty credit and financial strength ratings are AA+, its second-highest rating.

Zurich, which paid $18.7 billion for B.A.T units including Los Angeles-based Farmers Group Inc., said the reorganization charge won't affect its 1998 dividend and added it expects annual savings of $500 million from the purchase of the B.A.T unit, $100 million more than previously announced. Also, it said 1998 profit before charges will ``clearly'' exceed its 15- percent growth target.

First-Half Profit

First-half profit rose 46.3 percent to 1.374 billion Swiss francs as
investment income soared. Zurich said it would have earned $1.416 billion compared with a pro-forma $2.142 billion for all of 1997 if the B.A.T unit were included.

Giving details of the reorganization charge, Zurich said it set aside an additional $200 million for ``restructuring and writedowns'' and an extra $800 million for non-life reserves to cover expected claims for asbestos-related illnesses and environmental pollution in the U.S. and the U.K.

``This is an extremely prudent exercise,'' said Andrew Pitt, an analyst at Salomon Smith Barney. ``I'm not concerned about the financial impact.''

A Zurich spokeswoman declined to comment on how many jobs the company plans to cut as it reorganizes, or on what additional measures it has taken to streamline the business.

This year Zurich Allied shares have fallen 8.6 percent, while Allied Zurich has risen 0.4 percent. The Bloomberg Europe Insurance Index has fallen 5.2 percent this year.

Zurich will announce its 1998 earnings April 30.