Zurich Insurance Group Ltd · SIX:ZURN

Zurich Insurance — Investor Day (November 2016)

91 slides from Zurich Insurance's investor day presentation, Nov 17, 2016

  1. Slide 1: Investor Day

    Investor Day November 17, 2016 London Zurich Insurance Group

  2. Slide 2: Agenda

    Agenda TIME TITLE SPEAKER 10.30 – 11.15 Group overview and strategy Mario Greco 11.15 – 12.00 Q&A session 12.00 – 13.15 Lunch break 13.15 – 14.00 Execution Kristof Terryn 14.00 – 14:45 Financial update George Quinn 14.45 – 15.15 Coffee break 15.15 – 16:00 Q&A session 16.00 – 16:15 Wrap-up Mario Grec

  3. Slide 3: Disclaimer

    Disclaimer 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’). Forward-looking statement

  4. Slide 4: Group overview and strategy

    Investor Day Group overview and strategy Mario Greco – Group Chief Executive Officer Zurich Insurance Group

  5. Slide 5: Key messages

    Key messages Globally diversified insurance group with earnings growth and significant expense reduction Group potential Opportunity Strengthen position as a global composite insurer and develop more focused retail proposition Shareholder Deliver sustainable earnings growth which will support an inc

  6. Slide 6: Thoughts after the first eight months on the job

    ZURICH’S POSITION Thoughts after the first eight months on the job Strengths Opportunities  Very diverse and balanced portfolio of products  Reduce Group expense base and services with global reach  Simplify Group structure  Powerful, internationally recognized brand  Improve accountability thr

  7. Slide 7: We are truly global and diversified

    ZURICH’S POSITION We are truly global and diversified GEOGRAPHIC SPLIT OF P&C GWP (2015)1 GROUP BOP SPLIT (2013-2015)2 2% 4% 0% 0% 1% 7% 5%2 6% 10% 8% 9% 6% 7% 5% 28% 25% 7% 7% 4% 6% 26% 42% 45% 94% 54% 92% 81% 66% 78% 72% 42% 30% 21% 10% RoW APAC LatAm North America Europe General Insurance Global

  8. Slide 8: We focus investment where we can build profitable businesses

    ZURICH’S POSITION We focus investment where we have or where we can build relevant and profitable businesses Zurich presence Global Corporate and distribution partners Disposals No presence Disposals1:  South Africa and Botswana  Morocco  Taiwan GI  Middle East GI  Netherlands GI Portfolios put

  9. Slide 9: We have a strong balance sheet with low investment risk

    ZURICH’S POSITION We have a strong balance sheet with low investment risk Z-ECM RATIO & FINANCIAL STRENGTH RATINGS ASSET ALLOCATION2 AND RBC BY TYPE 127% 122% 121% Fixed income 113% 3% 108% 107% 6% 4% Mortgages 1% 2% Real estate Equities Hedge funds, PE3 Cash FY-13 FY-14 FY-15 Q1-16 HY-16 9m-161 82%

  10. Slide 10: We have a strong customer franchise and brand

    ZURICH’S POSITION We have a strong customer franchise and brand THE ZURICH BRAND NUMBER OF INTERNATIONAL PROGRAMS (2015, ‘000s)1 7.6 Plus Winner: ‘Outstanding program leadership for mature programs’ 4.2 2.5 1.9 1.6  Zurich is seen as an ‘excellence’ and ‘high quality’ brand  GI and CLP2 employ nea

  11. Slide 11: Sustainable, profitable and growing life business

    ZURICH’S POSITION We have a sustainable, profitable and growing life business focused on capital-light products NEW BUSINESS (9m-16) NET RESERVES & LIABILITIES GLOBAL LIFE BOP (FY-15, USDbn)1 (RESTATED AT FY-14 FX) 684 3,539 7% 699.3 469.6 691.6 522.8 489.8 207.5 17% 19% 25% 18% 19% 2% 34% 37% 41% 1

  12. Slide 12: Farmers Exchanges are focused on growth

    ZURICH’S POSITION Farmers Exchanges are focused on growth FARMERS EXCHANGES GWP GROWTH1 EASTERN STATES EXPANSION GWP DIVERSIFIED LINES OF BUSINESS4 (USDm)3 5.5% 5.5% 5.5% 509 486 4.7% 3.8% 3.8% 28% 3.6% 3.6% 3.1% 256 2.3% 49% 113 13% 36 11% 4 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 2011 2012 2013 2014 2015 9m

  13. Slide 13: We have clear opportunities to improve

    ZURICH’S POSITION We have clear opportunities to improve Strengths Opportunities   Reduce Group expense base  Simplify Group structure   Improve accountability throughout the organization   Reinvigorate technical excellence   Bring more focus to the business   Better position retail prese

  14. Slide 14: Opportunity to improve efficiency and underwriting performance

    ZURICH’S POSITION We have a significant opportunity to improve efficiency and underwriting performance GI EXPENSE RATIO LIFE OPERATING EXPENSES GI LOSS RATIO (FY-15, % OF NEP) (FY-15, % OF OPERATING PROFIT)1 (FY-15, % OF NEP) 35% 59% 78% 32% 32% 32% 70% 72% 29% 66% 66% 27% 28% 26% 56% 57% 40% 33% 29

  15. Slide 15: Simpler, more accountable, business-focused organization

    ZURICH’S POSITION We have created a simpler, more accountable and more business-focused organization EXECUTIVE COMMITTEE Group Chief Executive Officer Mario Greco BUSINESS HEADS FUNCTIONAL HEADS Farmers Group, Inc. Latin America Investment Jeff Dailey Claudia Dill Urban Angehrn North America Asia Pa

  16. Slide 16: Reinvigorating technical excellence and reducing volatility

    ZURICH’S POSITION We are reinvigorating technical excellence and reducing volatility DISCIPLINED RE-UNDERWRITING PORTFOLIO RESHAPING ACTIONS REDUCED RISK PROFILE (EXAMPLE PORTFOLIO, 1/1 RENEWALS) (‘15 UNDERPERFORMING PORTFOLIOS’) (GI INSURANCE CAPITAL INTENSITY, %) -14% 150 Price adequacy 9m-15 140

  17. Slide 17: The first results are encouraging

    ZURICH’S POSITION The first results are encouraging GI LOSS RATIO (%) EXPENSE DEVELOPMENT (USDbn)3 GROUP BOPAT ROE (%) 71.8% 5.0 11.9% 4.8 11.1% 0.9% 67.2% 3.5% 66.4% 3.0% 2.3% 6.4% 67.3% 65.9% 65.2% 0.1% -1.1% -1.6% FY-14 FY-15 9m-16 9m-15 9m-16 FY-14 FY-15 9m-16 Tianjin loss AY LR (ex. cat.)2 Cata

  18. Slide 18: Our financial targets underline our aim to be an efficient insurer

    FINANCIAL TARGETS Our financial targets underline our aim to be an efficient, leading insurer ZURICH’S 2017-2019 FINANCIAL TARGETS BOPAT ROE1 in excess of 12% and increasing, despite higher equity base USD 1.5bn in net savings by 2019 compared to the 2015 baseline Cash remittances in excess of USD 9

  19. Slide 19: Insurance industry remains in a challenging environment

    MARKET CONTEXT The insurance industry remains in a challenging environment which we do not expect to improve quickly GDP GROWTH 10-YEAR GOVERNMENT BOND YIELD 8% 5% 6% 4% 4% 3% 2% 2% 0% 1% 2013 2015 2017 2019 -2% 0% 2013 2015 2017 2019 -4% -1% China Italy UK Germany Switzerland USA Germany Switzerlan

  20. Slide 20: Four clear objectives for commercial business

    COMMERCIAL We have four clear objectives for commercial business OBJECTIVE ACTIONS  Disciplined application of underwriting tools Reclaim technical excellence  Clear career track and targeted development  Clear and consistent risk appetite Improve ‘Go-to-Market’ approach  Create industry specifi

  21. Slide 21: Rebalance long-tail exposure while enabling agile specialties

    COMMERCIAL We have an opportunity to rebalance long-tail exposure over time, while enabling more agile specialties business DIRECT WRITTEN PREMIUM BY LOB TOTAL GENERAL INSURANCE COMBINED RATIOS (2015 US EXAMPLE, USDbn)1 (2010-2015)2 295 12 Accident & Health Specialties 17% 17% -12ppts Credit & Suret

  22. Slide 22: Strengthen our retail position in key markets

    RETAIL We aim to strengthen our retail position in key markets OBJECTIVE ACTIONS  Better manage customers in a focused, integrated way Focus on target customer segments  Strengthen digital capabilities across the value chain  Introduce and track customer KPIs  Continue growing distribution partn

  23. Slide 23: Strengthen customer focus, emulating Farmers Exchanges

    CUSTOMER We will strengthen our customer focus, emulating the successful experience of Farmers Exchanges1 FARMERS EXCHANGES NET PROMOTER SCORE2 FARMERS EXCHANGES POLICY RETENTION3 80.1% 80.0% 80.2% 45 79.9% 79.9% 79.9% 79.6% 79.1% 40 78.5% 77.7% 35 77.2% 30 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15

  24. Slide 24: USD 1.5bn net expense savings by end of 2019

    EXPENSES We expect to deliver USD 1.5bn in net expense savings by end of 2019, while continuing to invest in the business EXPENSE SAVINGS EXPECTATION (USDbn) 10.3 0.8 -1.5bn 8.8 0.8 9.5 8.0 2015 adjusted1 Inflation Savings 2016 Savings 2017-19 2019 Investment Expenses Savings © Zurich 1 2015 expense

  25. Slide 25: Continuing to reward our shareholders

    FINANCIAL TARGETS We are focused on continuing to reward our shareholders ZURICH’S DIVIDEND POLICY1 CUMULATIVE DIVIDENDS PAID (FOR YEAR ENDING, USDbn) 19.8 NIAS payout ratio of approx. 75% 2015 2014 2013 >50% of market Dividend increases based on 2012 capitalization paid out sustainable earnings gro

  26. Slide 26: Key messages

    Key messages Globally diversified insurance group with earnings growth and significant expense reduction Group potential Opportunity Strengthen position as a global composite insurer and develop more focused retail proposition Shareholder Deliver sustainable earnings growth which will support an inc

  27. Slide 27: Execution

    Investor Day Execution Kristof Terryn – Group Chief Operating Officer Zurich Insurance Group

  28. Slide 28: Key messages

    Key messages We drive value delivery to shareholders through combining technical skills, Operations operational services and transformation We aim for further efficiency enhancements, targeting USD 500-700m by end of 2019 Efficiency in Operations We focus on reducing complexity through organizationa

  29. Slide 29: New operations setup

    OPERATIONS Our new operations setup combines technical skills, operational services and transformation OPERATIONS ORGANIZATIONAL SETUP HOW WE DRIVE EXECUTION Enterprise Transformation  New Group COO role responsible for technical excellence, efficiency improvements and business transformation P&C U

  30. Slide 30: Operations drives customer outcomes and shareholder value

    OPERATIONS Operations drives customer outcomes and value delivery to shareholders EFFICIENCY AND TECHNICAL EXCELLENCE CUSTOMER EXPERIENCE OPERATIONAL EXCELLENCE  Increased efficiency through  Better risk selection and pricing  Smoother customer journeys process improvement,  Faster reaction to m

  31. Slide 31: Expense base has grown by 7% over four years

    EFFECTIVENESS & EFFICIENCY Over the past four years our expense base has grown by 7%, both within and above countries DIRECT EXPENSES1 (USDbn) +3%2 10.3 0.7 0.7 10.2 ABOVE 0.6 0.6 9.7 9.6 +7% 22% COUNTRIES 3.1 3.1 2.9 2.9 6.8 6.7 7.1 7.2 +2%2 2.3 2.3 2.4 2.5 IN 2012 2013 2014 2015 78% COUNTRIES Oper

  32. Slide 32: Operations contribution to expense reduction by 2019

    EFFECTIVENESS & EFFICIENCY We will significantly contribute to the additional expense base reduction by 2019 STATUS AND OUTLOOK PLANNED OPERATIONS NET SAVINGS BY 2019 (USDm)  2016 Group savings of USD ~300m 1,500 2019 savings 500 - 700  By 2019, target a total of USD 1.5bn net savings with a signi

  33. Slide 33: Standardize and streamline IT infrastructure

    EFFECTIVENESS & EFFICIENCY We will continue to standardize and streamline our IT infrastructure FROM TO RUN-RATE BENEFITS  USD 100-150m p.a. in expense savings by end of 2019  Capability and service uplift  Risk and complexity reduction  > 70 data centers in early 2015  8 strategic data centers

  34. Slide 34: IT network services transformation

    EFFECTIVENESS & EFFICIENCY Example: IT network services transformation to provide better services and achieve a significant expense reduction FROM TO RUN-RATE BENEFITS  USD 35m p.a. in expense savings from 2018 140+ 1  Enhanced service quality and stability Suppliers Supplier  140+ suppliers in 4

  35. Slide 35: Reduce complexity of IT application landscape

    EFFECTIVENESS & EFFICIENCY We will significantly reduce the complexity of our IT application landscape FROM TO RUN-RATE BENEFITS  USD 180-250m by end of 2019  Application landscape simplified with ~500 applications decommissioned  Fragmented and complex  Uniform landscape with increased technolo

  36. Slide 36: Germany end-to-end transformation

    EFFECTIVENESS & EFFICIENCY Example: Germany end-to-end transformation combines product, process and IT simplification FROM TO RUN-RATE BENEFITS  Productivity increase of 25%, USD ~80m by end of 2019 19 3  Straight through ratio for Quote & Buy from 6% to 75% IT systems IT systems  Legacy IT decom

  37. Slide 37: Optimize our shared services

    EFFECTIVENESS & EFFICIENCY We will optimize our shared services FROM TO RUN-RATE BENEFITS Shared services provisioning  USD 150-180m p.a. in reductions by end of 2019  Limited transparency on cost drivers  Service orientation, expense and  Fragmented processes and locations quality focus  Incon

  38. Slide 38: Office rationalization in New York

    EFFECTIVENESS & EFFICIENCY Example: Office rationalization in New York FROM TO RUN-RATE BENEFITS  USD 12m expense savings  > 30% total occupancy cost 27k 17k reduction per head  -24% square feet per head USD per head USD per head  2 buildings in  Manhattan front office and New York metro area N

  39. Slide 39: Standardization of Operations and IT backbone

    EFFECTIVENESS & EFFICIENCY Continued standardization of Operations and IT backbone will enable process improvements in middle and front offices Process improvement FROM TO  High level of business  Simplified enterprise IT capabilities and complexity architecture efficiency  Non-standardized proce

  40. Slide 40: Integration of Commercial Insurance benefits

    EFFECTIVENESS & EFFICIENCY Integration of Commercial Insurance will generate benefits of USD 150m p.a. from the end of 2017 FROM TO BENEFITS  Two market-facing  One face to the market  Reduced organizational Organization organizations and process complexity and processes  Unified underwriting se

  41. Slide 41: Risk engineering self-services for Commercial customers

    EFFECTIVENESS & EFFICIENCY Example: Distinctive risk engineering self-services for Commercial Insurance customers ZURICH RISK ADVISOR DIGITAL PLATFORM – SELF RISK ASSESSMENT MODULE  Core element of our Risk Engineering digitalization strategy  Enables customers to carry out on-site or remote self-

  42. Slide 42: Underwriting: better risk selection and faster reaction

    TECHNICAL EXCELLENCE In Underwriting we strive for better risk selection and faster reaction to market changes TODAY 2019 ASPIRATION  Lack of scalable straight-through processes  Retail lines straight-through processes fully in most countries operational in five major countries Processes  High ad

  43. Slide 43: Efforts to reclaim Underwriting excellence

    TECHNICAL EXCELLENCE Targeted efforts launched to reclaim Underwriting excellence KEY INITIATIVES 2017 2018 2019+  Automation of straight-through flow underwriting Processes  Adoption of cognitive computing  Rationalization and modularization of case pricing tools Systems  Consolidation and stan

  44. Slide 44: Risk Exposure Data Store strengthens accumulation controls

    TECHNICAL EXCELLENCE Example: Risk Exposure Data Store strengthens accumulation controls FROM TO BENEFITS  Identify and manage risk accumulations  Reduce unexpected losses  Improve risk pricing and capital allocation  Optimize reinsurance costs Net Retention (USD) # Risks  Fire  Flood  Region

  45. Slide 45: Predictive Analytics in crop insurance

    TECHNICAL EXCELLENCE Example: Predictive Analytics improves risk retention decisions in crop insurance FROM TO BENEFITS  Back-testing suggests 1-2 points of loss ratio improvement in crop  Improved fund designation  Better risk selection  Higher profit retention with lower risk  Volatile loss p

  46. Slide 46: Claims: adapting tools and capabilities

    TECHNICAL EXCELLENCE In Claims we are focused on adapting tools and capabilities to changing social and economic market trends TODAY 2019 ASPIRATION  Robotics in production mainly in UK, ZNA and  Increased digitalization and automation across Germany core markets Processes  ~20% of all claims bei

  47. Slide 47: Initiatives to improve customer experience in Claims

    TECHNICAL EXCELLENCE Focused set of initiatives to improve customer experience and functional effectiveness in Claims KEY INITIATIVES 2017 2018 2019  Deployment of digital customer self-service (apps, portals) Processes  Leveraging increased STP and one-and-done  Core Claims platform transformati

  48. Slide 48: Improving injury claims through cognitive automation

    TECHNICAL EXCELLENCE Example: Improving injury claims efficiency and efficacy through cognitive automation FROM TO RUN-RATE BENEFITS  USD 5m per year from 2017  39’000 hours per year of freed-up capacity 58 5 minutes seconds  58 minutes per medical report  5 seconds per medical report  Individu

  49. Slide 49: Life In-force Management BOP improvements

    TECHNICAL EXCELLENCE We are delivering sustainable BOP improvements through Life In-force Management TODAY RUN-RATE INCREMENTAL BOP (USDm)  Consistent, locally tailored approach rolled out to 10 businesses1  Over 120 discrete In-force management initiatives ~200-250  Run-rate BOP target achieved

  50. Slide 50: Key messages

    Key messages We drive value delivery to shareholders through combining technical skills, Operations operational services and transformation We aim for further efficiency enhancements, targeting USD 500-700m by end of 2019 Efficiency in Operations We focus on reducing complexity through organizationa

  51. Slide 51: Financial update

    Investor Day Financial update George Quinn – Group Chief Financial Officer Zurich Insurance Group

  52. Slide 52: Key messages

    Key messages Efficiency We will reduce absolute expense levels and increase efficiency We aim to improve our BOPAT ROE to a competitive level, in excess of 12% and increasing ROE over 2017-2019, despite higher equity base Volatility We will manage exposures and use reinsurance to reduce earnings vol

  53. Slide 53: Improved performance in 2016

    INTRODUCTION Improved performance in 2016 2014-2016 TARGETS 2014 to Target 9m-16 9m-16 Average Improvement in underlying performance; BOPAT ROE1 12-14% 11.9% 9.8% not yet achieving target return Z-ECM2 100-120% 113% 119% Capital remains comfortably in the target range Cumulative Cash remittances exp

  54. Slide 54: Our financial targets

    FINANCIAL TARGETS Our financial targets underline our aim to be an efficient, leading insurer ZURICH’S 2017-2019 FINANCIAL TARGETS BOPAT ROE1 in excess of 12% and increasing, despite higher equity base USD 1.5bn in net savings by 2019 compared to the 2015 baseline Cash remittances in excess of USD 9

  55. Slide 55: Underwriting and expense efficiency is key

    FINANCIAL TARGETS More than ever, underwriting and expense efficiency is key GOVERNMENT YIELDS AND INVESTMENT INCOME CONTRIBUTION TO P&C INSURERS PROFIT1 Investment Income as % of total profits Yield 200% 5.0% 180% 4.5% 160% 4.0% 140% 3.5% 120% 3.0% 100% 2.5% 80% 2.0% 60% 1.5% 40% 1.0% 20% 0.5% 0% 0

  56. Slide 56: Initiatives offset higher equity base and market pressures

    FINANCIAL TARGETS Our expense and underwriting initiatives offset higher equity base and market pressures ILLUSTRATIVE BOPAT ROE DEVELOPMENT 0-1% ~13% 0-0.5% 11.9% 12% 2.5-3.0% ~1% ~0.5-0.75% ~1.5-2% ~0.75% 0.5-1% ~1% Indicative P&C CR 95 - 96% 9m-16 Higher Lower Decline Life & Farmers Market Techni

  57. Slide 57: USD 1.5bn net expense savings by end of 2019

    EFFECTIVENESS & EFFICIENCY We expect to deliver USD 1.5bn in net expense savings by end of 2019, while continuing to invest in the business EXPENSE SAVINGS EXPECTATION (USDbn) 10.3 CONTINUING TO INVEST IN THE 0.8 BUSINESS -1.5bn  ~USD 800m of capital expenditures p.a. 8.8 0.8 9.5 WHILE SAVING  Abs

  58. Slide 58: Group center and Operations drive expense savings

    EFFECTIVENESS & EFFICIENCY Group center and Operations are expected to disproportionately drive the expense savings CURRENT BREAKDOWN OF EXPENSES (FY-15) EXPENSES BY AREA AND EXPECTED SAVINGS (FY-15) Travel Brand & Marketing USD 10.3bn USD 1.5bn 3% Group1 11% ~10-15% ~16% 4% 3rd Parties 10% Building

  59. Slide 59: On track to deliver USD 300m savings in 2016

    EFFECTIVENESS & EFFICIENCY We are well on track to deliver the USD 300m of expense savings in 2016 ADMINISTRATIVE AND OTHER OPERATING EXPENSE AND ULAE DEVELOPMENT (USDbn)1 -0.2 5.0 -0.2 4.8 0.0 9m-15 General Insurance OOB & Non Core Businesses 9m-16 & Global Life Unallocated Loss Adjustment Expenses

  60. Slide 60: Quarterly BOP volatility

    MANAGING VOLATILITY Quarterly BOP volatility is driven by the General Insurance and Farmers Re underwriting result QUARTERLY BOP SPLIT (USDm) 500 σ = 344m1  General Insurance and Farmers Re underwriting results Underwriting 0 drive BOP volatility -500  Underwriting actions and reinsurance in place

  61. Slide 61: Optimizing reinsurance to protect earnings

    MANAGING VOLATILITY We are optimizing reinsurance to protect our earnings and balance sheet NET ANNUAL AGGREGATE NAT CAT LOSS (USDbn) Return period Examples of actions in 2016 Planned actions in 2017 5.0  Global Property Per Risk  Consolidate treaty landscape 4.0 Aggregate treaty  Broaden per ris

  62. Slide 62: Reduced exposure to US natural catastrophes via Farmers Re

    MANAGING VOLATILITY Exposure to US natural catastrophes via Farmers Re has been reduced FARMERS RE GEP1 (USDbn) vs. COMBINED RATIO (%) 4.4 4.2 4.0 103.7% 104.8% 100.2% 98.3% 101.2% 3.4 (20%) 3.2 3.1 (18.5%) 2.3 (18.0%) 1.5 1.8 (10%) 1.5 (8%) 1.0 1.0 0.9 0.5 0.0 2012 2013 2014 2015 20162 Combined rat

  63. Slide 63: Our capital position is strong and stable

    CAPITAL STRENGTH Our capital position is strong and stable GROUP SOLVENCY Z-ECM RBC1 BY RISK TYPE AND BUSINESS (HY-16) Z-ECM1 (‘AA’-calibrated) Market risk 140% 2% Re-ins credit risk 126% 127% 10% 130% 119% 114% 122% 121% 4% 5% P&R risk3 120% 103% 113% Natural cat risk 110% 55% 100% 113% 21% Life in

  64. Slide 64: Managing capital with Z-ECM

    CAPITAL STRENGTH We manage capital with Zurich Economic Capital Model (Z-ECM) Z-ECM (‘AA’ calibrated) SST 140% Tolerate for a time depending on environment and future plans 120% Target range 160% 100% SST equivalent to ~ 100% Z-ECM ratio Tolerate for a time depending on environment 140% 90% Implemen

  65. Slide 65: SST relative to SII

    CAPITAL STRENGTH Our EU operations highlight the conservatism and market sensitivity of SST relative to SII DIFFERENCE BETWEEN EU OPERATIONS SST AND SII GROUP SST RATIO BASED ON PROPOSED INDUSTRY CHANGES2 -15ppts ~20% ~218% ~9% 189% -30ppts -55ppts SII ratio1 SST ratio1 FY-15 Removing Moving MVM FY-

  66. Slide 66: SST uses a more conservative risk free yield curve

    CAPITAL STRENGTH SST uses a more conservative risk free yield curve FORWARD RISK FREE YIELD CURVES FOR EURO (%)1 KEY DIFFERENCES 4.5 SII LLP2 SST LLP2 UFR2,3  Earlier last liquid point under SII 4.0 3.5  No volatility adjuster or matching adjustment in SST 3.0 2.5  Resulting in higher value of li

  67. Slide 67: Leverage remains moderate within rating agency ranges

    CAPITAL STRENGTH Our leverage remains moderate and within rating agency ranges CAPITAL STRUCTURE1 MOODY’S FINANCIAL LEVERAGE2 35% 10% 9% 10% 30% 14% 19% 27% 20% 26% 25% 25% 24% 24% 25% Moody’s ‘Aa’ requirement 20% 76% 71% 70% 15% 10% FY-15 9m-16 Target FY-11 FY-12 FY-13 FY-14 FY-15 9M-16 Senior debt

  68. Slide 68: Favorable refinancing conditions

    CAPITAL STRENGTH We will continue to take advantage of favorable refinancing conditions ESTIMATED AVERAGE DEBT COSTS1 6.1% 5.8% 5.6% 1.6 5.1% 1.3 4.7% 4.5% 4.3% 4.3% 1.0 3.1% 2.3% 0.7 1.4% 1.1% 0.9% 0.9% 0.9% 1.3% 0.3 FY-14 FY-15 FY-16e FY-17e FY-18e FY-19e FY-20e FY-21e Senior debt costs (%) Subord

  69. Slide 69: We pool our capital on large balance sheets

    DIVIDENDS AND REMITTANCES We pool our capital and our business is concentrated on large balance sheets POOLING OF CAPITAL NIAS BY BALANCE SHEET1 ‘AA’ Central capital buffer Group 30% Regulatory Risk Capital Risk Capital Risk Capital Risk Capital minimum + buffer Capitalization Local 70% Entity 1 Ent

  70. Slide 70: Timing differences in cash remittance

    DIVIDENDS AND REMITTANCES There may be timing differences in cash remittance ZURICH AMERICAN INSURANCE COMPANY (ZAIC) EXAMPLE (USDbn) 451% 457% 427%  Many regulators have restrictions on ordinary dividend -0.8 payouts, i.e. New York limits US payout to the lower of 1.0 8.0 0.6 -0.8 7.8 7.8 10% of s

  71. Slide 71: Life cash flows benefit from product strategy

    DIVIDENDS AND REMITTANCES Life cash flows increasingly benefit from product strategy LIFE CASH REMITTANCE USD 500m 2015 2016e 2017e 2018e 2019e Cash remitted Disposals and exceptionals1 Estimated underlying remittance  Despite lower yields we still expect life cash flow to inflect from 2016  Cash

  72. Slide 72: Strongly cash generative business with high remittance

    DIVIDENDS AND REMITTANCES We have a strongly cash generative business reflected in high cash remittance NET INCOME AND REMITTANCES 2012-20151 (USD) GI Global Life Farmers Non Core OOB Group NIAS Σ 2012-15 8.6bn 4.3bn 3.9bn 0.1bn -3.1bn 13.7bn Σ REMITTED 2012-15 8.0bn 3.0bn 4.4bn 1.1bn Ø PAYOUT 93% 7

  73. Slide 73: Growth and capital strength support high dividend payout

    DIVIDENDS AND REMITTANCES Modest growth and solid capital strength support a high dividend payout MODEST MARKET GROWTH1 ILLUSTRATIVE ROE TO DIVIDEND PAYOUT WALK (% OF ADJUSTED EQUITY) P&C real direct premium growth 6.3% 0-1% 1.7% 0.7% -4.0% 2016F 2017F >12% Life In-force real premium growth Payout o

  74. Slide 74: Continuing to reward our shareholders

    FINANCIAL TARGETS We are focused on continuing to reward our shareholders ZURICH’S DIVIDEND POLICY1 CUMULATIVE DIVIDENDS PAID (FOR YEAR ENDING, USDbn) 19.8 NIAS payout ratio of approx. 75% 2015 2014 2013 >50% of market Dividend increases based on 2012 capitalization paid out sustainable earnings gro

  75. Slide 75: Key messages

    Key messages Efficiency We will reduce absolute expense levels and increase efficiency We aim to improve our BOPAT ROE to a competitive level, in excess of 12% and increasing ROE over 2017-2019, despite higher equity base Volatility We will manage exposures and use reinsurance to reduce earnings vol

  76. Slide 76: Closing remarks

    Investor Day Closing remarks Mario Greco – Group Chief Executive Officer Zurich Insurance Group

  77. Slide 77: Key messages

    Key messages Globally diversified insurance group with earnings growth and significant expense reduction Group potential Opportunity Strengthen position as a global composite insurer and develop more focused retail proposition Shareholder Deliver sustainable earnings growth which will support an inc

  78. Slide 78: Biographies

    Biographies © Zurich November 17, 2016 Investor Day 78

  79. Slide 79: Mario Greco

    Skills and experience director and in 2000, he became the Mario Greco has broad experience company’s CEO. Mr. Greco was Educational background in the insurance industry, having appointed head of Allianz’s Life Mr. Greco holds a bachelor's degree in successfully served in senior executive Sustainabil

  80. Slide 80: Urban Angehrn

    Skills and experience Urban Angehrn joined the Executive Educational background Committee as Group Chief Investment Mr. Angehrn holds a Ph.D. in Officer in July 2015. Before taking his mathematics from Harvard University current position he served as Head of and a Master of Science in theoretical Al

  81. Slide 81: Jeff Dailey

    Skills and experience Exchange. In 2006, he became CEO of Jeff Dailey began his career in 1980 with Bristol West. Mr. Dailey joined Farmers in Educational background Mutual Service Insurance Company. He 2007 as President of Personal Lines for Mr. Dailey graduated from the also worked for Progressive

  82. Slide 82: Claudia Dill

    Skills and experience 1999 as Chief Financial Officer (CFO) for Claudia Dill has more than 25 years of Group Reinsurance. In 2003, she was Educational background experience in the banking and insurance appointed CFO for the European region Ms. Dill holds an MBA from the sectors and has held a range

  83. Slide 83: Mike Foley

    Skills and experience Mike Foley joined the financial Educational background management training program of Mr. Foley graduated with a Bachelor Armtek Corporation in 1984. After of Science from Fairfield University, graduating from Kellogg in 1989, in Fairfield, Connecticut in 1984 Mr. Foley joined

  84. Slide 84: Jack Howell

    Skills and experience Before Prudential, he held various Jack Howell has more than 20 years’ positions for AIG in the Philippines, Educational background experience in the financial services Hong Kong and New York, co-founded Mr. Howell holds an MBA from the sector, of which more than 10 have been a

  85. Slide 85: George Quinn

    Skills and experience George Quinn started his career at KPMG Educational background 1988 in London, where he held several Mr. Quinn holds a degree in positions working with the insurance and engineering from the University of reinsurance industry. He joined Swiss Re Strathclyde. He is also a member

  86. Slide 86: Cecilia Reyes

    Skills and experience the asset management operation. Cecilia Reyes has over 20 years’ Ms. Reyes joined Zurich in 2001 as Educational background experience in the international financial regional manager for Group Investments Cecilia Reyes holds a Ph.D. in finance markets. Ms. Reyes worked from 1990

  87. Slide 87: Gary Shaughnessy

    Skills and experience Gary Shaughnessy was appointed CEO EMEA (Europe, Middle East & Africa) in July 2016, after joining the Executive Committee in January 2016 as CEO Global Life. He has been CEO of Zurich UK Life since June 2012. In 2014 he assumed the additional role of Country Head for Zurich in

  88. Slide 88: James Shea

    Skills and experience director of AIG UK. In 2012 he was James Shea began his insurance career appointed president of Global Specialty Educational background at AIG in 1994 as a financial lines Lines and CEO Commercial Lines, Asia Mr. Shea holds a bachelor’s degree underwriter in New York. He joined

  89. Slide 89: Kristof Terryn

    Skills and experience Kristof Terryn began his career in 1993 Educational background in the banking industry, where he Mr. Terryn holds a law degree and worked in capital markets. In 1997, he a degree in economics from the joined McKinsey & Company where he University of Leuven, Belgium, as held var

  90. Slide 90: 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

  91. Slide 91: Calendar

    CALENDAR  February 9, 2017, Annual Results 2016  March 21-22, 2017, Morgan Stanley European Financials Conference 2017, London  March 29, 2017, Annual General Meeting 2017  May 11, 2017, Results for the three months ended March 31, 2017  May 30, 2017, DB Global Financials Conference 2017, New Y

Zurich Insurance Group — Investor Day (November 2016) on 6ix