Zurich Insurance Group Ltd · SIX:ZURN

Zurich Insurance — Investor Presentation (August 2016)

33 slides from Zurich Insurance's investor presentation, August 2016

  1. Slide 1: Zurich Insurance Group Investor intro pack 2016

    Zurich Insurance Group Updated August 2016 Investor intro pack 2016

  2. Slide 2: Our proposition to investors

    GROUP Our proposition to investors We are a leading Corporate and Commercial insurer, with strong Retail positions in select 1 local markets We run a highly cash generative business, with focus on enhancing returns and improving 2 capital allocation We have a very strong and stable financial positio

  3. Slide 3: One of few genuinely global insurers

    GROUP One of few genuinely global insurers 1 1 KEY FACTS GWP PER SEGMENT BOP BY SEGMENT AND REGION4  USD 60bn total revenues  USD 382bn total group and unit linked 26% General Insurance (GI) investments 45% Global Life  USD 2.9bn business operating profit (BOP) Farmers5  USD 1.8bn net income att

  4. Slide 4: Genuinely global franchise with distinct capabilities

    GROUP Genuinely global franchise with distinct capabilities Top 10 general insurance insurer3 6% general insurance, 5% life insurance market share3 4% commercial lines market share1 #2 general insurance provider3 #3 life insurance provider3 5% US personal lines market share 3% general insurance mark

  5. Slide 5: Strong capital position and cash generation, actions underway to get back on track in 2016

    GROUP Strong capital position and cash generation, actions underway to get back on track in 2016 VERY STRONG FINANCIAL STRENGTH WEAKER GI RESULTS IN 2015 11.2% 11.6% 11.1% 11.3% 10.6% AA- / outlook ‘stable’ 9.1% 6.4% 8.4% 8.7% 8.5% 9.8% Aa3 / outlook ‘stable’ 4.3% 2.9% 1.8% 2.5% 2.6% 2.1% 1.5% FY-11

  6. Slide 6: Resilient Z-ECM ratio and strong cash remittances

    GROUP Resilient Z-ECM ratio and strong cash remittances FY-15 KEY RESULTS TARGET METRICS OVER STRATEGIC PERIOD FY-15 Target BOP BOPAT ROE1 6.4% 12 - 14% USD 2.9bn (-37%) FY-15 Target Z-ECM2 121% 100 – 120% NIAS Cumulative Cumulative Net cash 2014-163 2014-2016 USD 1.8bn (-53%) remittances > USD 10bn

  7. Slide 7: Clear and focused priorities for the next 12 months

    GROUP Clear and focused priorities for the next 12 months GROUP STRATEGY FY-15 KEY ACTIONS 2016 PRIORITIES Prioritizing  Acquisition of Rural Community  Further investments in technology, Insurance Services including in data and analytics investment in 1  Stepped up investments in data  Targeted

  8. Slide 8: General Insurance

    @ ZURICH General Insurance eoawe i H

  9. Slide 9: Leading corporate and commercial insurer, and one of the few genuinely global players

    GENERAL INSURANCE Leading corporate and commercial insurer, and one of the few genuinely global players PROFILE CUSTOMER SEGMENTS  Top three insurer to multi-nationals, with proven Personal differentiated capabilities and global scale 25%  Strong positions in many commercial insurance markets, not

  10. Slide 10: Steady LC growth in recent years

    GENERAL INSURANCE Steady LC growth in recent years GROSS WRITTEN PREMIUM (USDbn) RATE CHANGE (%) 35.6 36.4 36.3 0% 2.1 2.1 2.0 34.0 2% GC 4% 2.7 2.9 2.5 1.7 2.2 5% 1% 12.5 12.6 NAC 2% 12.7 11.0 5% 5% 2% EMEA 2% 3% 10.0 10.2 10.1 10.7 3% 5% IM 4% 4% 8.6 9.3 9.4 8.7 4% 2% -0.5 -0.5 -0.2 -0.2 2% Total

  11. Slide 11: Reduction in 2015 BOP driven by loss in Q3 and Q4, but recovery already visible in HY-16

    GENERAL INSURANCE Reduction in 2015 BOP driven by loss in Q3 and Q4, but recovery already visible in HY-16 COMBINED RATIO SPLIT (%)1 BOP SPLIT (USDm) 103.6% 2,979 1,205 98.0% 96.8% 98.4% 1,166 3.2% 3.5%0.9% 3.5% 89 57 75 2.3% 864 2,149 0 988 1,020 97.2% 95.6% 99.1% 96.3% 2,002 947 -112 -108 -95 -29

  12. Slide 12: Global Life

    @ ZURICH Global Life

  13. Slide 13: Lower risk life business, focused on protection and corporate life & pensions

    GLOBAL LIFE Lower risk life business, focused on protection and corporate life & pensions PROFILE CUSTOMER SEGMENTS  Consistent BOP contributor for the Group with focus on capital-light protection and unit-linked products Corporate  Strong partnership capabilities as illustrated by our 35% differe

  14. Slide 14: How we make money

    GLOBAL LIFE How we make money DRIVERS OF OUR IFRS PROFITABILITY (USDm) Revenues Policy charges and fees mainly Loadings & fees 3,106 837 3,943 designed to cover distribution costs Returns on our assets, plus share of Inv. margin 480 648 returns on policyholder assets 168 Revenues on mortality and ot

  15. Slide 15: Focus on translating new business growth into tangible measures of value

    GLOBAL LIFE Focus on translating new business growth into tangible measures of value NEW BUSINESS VALUE (USDm)1 GLOBAL LIFE BOP (USDm)1 +2% -5% 1,006 1,351 1,273 1,300 950 965 1,272 92 912 134 52 43 103 56 42 141 67 88 49 173 178 112 243 138 109 111 222 195 100 155 245 109 229 164 125 191 917 892 81

  16. Slide 16: Farmers

    fo" FARMERS INSURANCE Farmers

  17. Slide 17: A unique structure

    FARMERS A unique structure MAINLY A FEE BUSINESS TO ZURICH FARMERS’ UNIQUE STRUCTURE  The Farmers Exchanges are a group of US insurance companies, which are owned by Farmers Group, Inc. Farmers Exchanges1 their policyholders Services • Bear underwriting Provides risk and handle  Zurich owns Farmer

  18. Slide 18: Leading player in US personal lines insurance

    FARMERS Leading player in US personal lines insurance PROFILE US PERSONAL LINES MARKET  Farmers Exchanges is the #3 personal lines Auto Physical Damage Homeowners insurer in 29 ‘core’ states in the Western US 28%  Split of business is predominantly personal 31% lines, but also offer commercial lin

  19. Slide 19: Back to growth, capital remitted by Farmers Reinsurance Co.

    FARMERS Back to growth, capital remitted by Farmers Reinsurance Co.1 GWP GROWTH (%)2 COMBINED RATIO (%)2 SURPLUS3 (USDbn) 105.4% 38.5% 36.6% 36.6% 3.5% 101.9% 33.3% 6.1% 100.5% 99.4% 6.0% 2.4% 6.0% 5.2% 6.3 5.9 6.0 5.6 99.3% 5.0 5.4 94.5% 95.9% 4.6 5.5 0.0% 94.2% 1.0 1.0 0.9 0.5 -1.5% FY-124 FY-13 F

  20. Slide 20: Investment and Capital Management

    Investment and Capital Management

  21. Slide 21: ALM-focused strategy delivering consistent and sustainable excess returns

    INVESTMENT AND CAPITAL MANAGEMENT ALM-focused strategy delivering consistent and sustainable excess returns PROFILE CONSERVATIVE APROACH1 100% • ~70% of group investments are managed 80% 89.8% 71.6% by third parties 60% • ALM focused investment strategy 40% • Generally lower risk investment portfoli

  22. Slide 22: Managing our risks conservatively to AA financial strength

    INVESTMENT AND CAPITAL MANAGEMENT Managing our risks conservatively to AA financial strength GROUP SOLVENCY RBC BY RISK TYPE AND BUSINESS 9% Market risk 217% 4% Re-ins credit risk 3% 196% 189% 8% P&R risk2 52% Natural cat risk 22% Life insurance risk 127% 122% 121% Operational risk 2% Business risk

  23. Slide 23: Consistently strong solvency position

    INVESTMENT AND CAPITAL MANAGEMENT Consistently strong solvency position FY-15 SOLVENCY RATIO DEVELOPMENT & HISTORICAL VIEW Z-ECM 1% 0% -4% 6% 127% 126% 130% 119% 121% 122% 123% 121% 120% 114% -3% 110% 110% 103% 122% 121% 100% 90% 80% 70% FY-14 Business Ins. Risk2 Market Market Cap. FY-15 FY-10 FY-11

  24. Slide 24: Z-ECM and SST are more conservative than SII

    INVESTMENT AND CAPITAL MANAGEMENT Z-ECM and SST are more conservative than SII Primary differences – required capital Most onerous impact on ratio Z-ECM SST1 SII (PILLAR 1) VaR 99.95% (~AA) ES 99% (~BBB) VaR 99.5% (~BBB), Risk Measure usually < ES 99% • Market Risk (including • Market Risk Internal

  25. Slide 25: Z-ECM and SST are more conservative than SII

    INVESTMENT AND CAPITAL MANAGEMENT Z-ECM and SST are more conservative than SII Primary differences – yield curves and transitionals Most onerous impact on ratio Z-ECM SST1 SII (PILLAR 1) Base risk-free Swaps Swaps for USD, EUR, GBP Swaps Government bonds for CHF, other yield-curve Entry-point to Use

  26. Slide 26: Z-ECM and SST are more conservative than SII

    INVESTMENT AND CAPITAL MANAGEMENT Z-ECM and SST are more conservative than SII Primary differences – other key elements Most onerous impact on ratio Z-ECM SST1 SII (PILLAR 1) Senior debt Available Capital Liability Liability Tax Pre-tax Pre-tax Post-tax Management view Legal entity view Legal entity

  27. Slide 27: Target capital structure

    INVESTMENT AND CAPITAL MANAGEMENT Target capital structure OVERVIEW AND RATIONALE CURRENT AND TARGET STRUCTURE OF Z-ECM AFR (%) 100 100  Target capital structure minimizes 10 10 total cost of capital subject to maintaining our AA rating and 14 20 internal liquidity targets  Capacity to increase le

  28. Slide 28: Low 2015 Free Capital Generation reflects underperformance of General Insurance

    INVESTMENT AND CAPITAL MANAGEMENT Low 2015 Free Capital Generation reflects underperformance of General Insurance 2015 FREE CAPITAL GENERATION (USDbn) 1.1 1.0 1.7 0.8 0.1 0.8 0.5 -0.2 0.5 0.3 -0.2 0.3 0.8 General 0.9 0.9 0.9 Insurance, Farmers, Non-Core 0.1 -0.1 0.1 -0.1 0.1 -0.7 0.5 and OOB -0.7 -0

  29. Slide 29: Expect more than USD 10bn in remittances in the 2014-16 period

    INVESTMENT AND CAPITAL MANAGEMENT Expect more than USD 10bn in remittances in the 2014-16 period BOPAT (USDbn) OPERATING FCG (USDbn) CASH REMITTANCES (USDbn) 3.4 3.1 3.7 3.9 3.5 3.2 2.9 1.7 >2.4 2.4 2.4 2.3 2.5 1.8 2.5 1.7 2.4 0.5 0.9 0.8 0.9 1.0 1.1 1.0 0.6 0.5 0.5 0.6 1.5 0.9 1.0 1.1 0.9 1.2 1.0 1

  30. Slide 30: 2/3 of current market cap paid out in 8 years

    INVESTMENT AND CAPITAL MANAGEMENT 2/3 of current market cap paid out in 8 years CASH FOCUS CUMULATIVE PAID DIVIDEND (USDbn)  Strong balance sheet and solid 19.8 profitability underpin cash 17.3 returns 14.6 11.8  Strategic Target: Remit > USD 9.1 9bn in net cash to the holding company in 2014 - 20

  31. Slide 31: Disclaimer and cautionary statement

    Disclaimer and cautionary statement Certain statements in this document are forward-looking statements, including, but not limited to, statements that are predictions of or indicate future events, trends, plans or objectives of Zurich Insurance Group Ltd or the Zurich Insurance Group (the ‘Group’).

  32. Slide 32: For further information

    For further information CALL US VISIT OR FOLLOW US Investor Relations Richard Burden +41 44 628 96 40 Aaron Beharelle +41 44 625 25 50 André Meier +41 44 625 37 75 Gianni Vitale +41 44 625 48 26 Rating Agency Management Michèle Matlock +41 44 625 28 50  Investor Relations website  Financial result

  33. Slide 33: Calendar

    Calendar: - September 27-29, Bank of America Merrill Lynch conference, London - November 10, 2016, Results for the nine months to September 30, 2016 - November 17, 2016, Investor Day, London - February 9, 2017, Annual Results 2016 © Zurich Insurance Company Ltd

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