Zurich Insurance Group Ltd · SIX:ZURN
Zurich Insurance — Zurich Financial Services — Investor Day (January 2006)
107 slides from Zurich Insurance's investor day presentation, Jan 17, 2006
Slide 1: Europe General Insurance Investors' Day
Europe General Insurance Investors’ Day Zurich, January 17, 2006
Slide 2: 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. Forward-looking statements include statements regarding our strategic dire
Slide 3: Key messages
Key messages • We are the 2nd largest player in our chosen European markets with considerable scale advantage • We are implementing Pan-European strategies and platforms to consolidate our competitive advantage throughout the value chain • Our strengths across all distribution channels and our skill
Slide 4: Topics and speakers
Topics and speakers • Zurich’s Pan-European approach – leveraging our competitive advantage Dieter Wemmer • Our way to pan-European platforms Theo Bouts • Transforming multi-channel distribution in Spain Julian Lopez • Exceeding market growth in Italy Francesco La Gioia • Segmenting markets – levera
Slide 5: Zurich's Pan-European approach – leveraging our competitive advantage
Zurich’s Pan-European approach – leveraging our competitive advantage Dieter Wemmer CEO Europe General Insurance
Slide 6: Agenda
Agenda f Zurich’s Europe General Insurance segment • Europe General Insurance performance • Building on Europe’s core strengths for profitable growth © Zurich Financial Services - Investors’ Day, January 17, 2006 6
Slide 7: Zurich Financial Services in Europe
Zurich Financial Services in Europe Global Life Insurance Europe General Insurance Global Corporate in Europe (EGI) in Europe 2004 GWP1: 2004 GWP: 2004 GWP: USD 17 billion USD 12 billion USD 4 billion • 4th largest European General Insurer • 2nd largest General Insurer in our chosen European markets
Slide 8: Our focus is on chosen markets
Our focus is on 8 chosen markets Market Market PL/CL share ranking1 1 split2 UK 7.6% #4 40/60 Germany 3.9% #7 60/40 Switzerland 17.5% #1 60/40 Italy 3.8% #8 80/20 Spain 5.2% #5 100/0 Austria 4.2% #6 60/40 Ireland 9.4% #5 50/50 Portugal 7.9% #5 50/50 1 As of year end 2004, based on GWP, including cor
Slide 9: Zurich has access to 66% of Europe's General Insurance market
Zurich has access to 66% of Europe’s General Insurance market Distribution of General Insurance premium volume 20041 IRE E CH A P I North America 46% Other Europe Zurich European 36% markets markets RoW Asia UK 5% 13% GWP World: USD 1,395 billion D GWP Europe: USD 504 billion 1 Source: sigma No2/200
Slide 10: A well diversified business mix
A well diversified business mix GWP by country in USD GWP by line of business in USD Rest of Europe Other 1.3bn UK 1.1bn 4.2bn Accident 0.6bn 9% Motor Spain 11% 1.1bn 5% 5.8bn 9% 34% Liability 1.7bn 14% 47% Italy 1.5bn 12% 25% 14% 20% Switzerland Property 1.8bn 3.1bn Germany 2.4bn Total 2004 gross w
Slide 11: Structure of Europe General Insurance – a fully integrated organization
Structure of Europe General Insurance – a fully integrated organization EGI Executive Team Dieter Wemmer CEO Claudia Dill Theo Bouts CFO COO Lutz Bauer Tim Carter CCO CUO I. Stuart E. Thometzek M. Hongler F. La Gioia J. Lopez CEO UK CEO Germany CEO Switzerland CEO Italy CEO Spain R. Rheel Functional
Slide 12: Agenda
Agenda • Zurich’s Europe General Insurance segment f Europe General Insurance performance • Leveraging Europe’s core strengths © Zurich Financial Services - Investors’ Day, January 17, 2006 12
Slide 13: Strong and improving overall performance in all customer segments
Strong and improving overall performance in all customer segments Personal Lines Commercial Lines Total in USD billions for the nine months ended Sep 30 2005 2004 2005 2004 2005 2004 Gross written premiums 5.8 5.5 4.0 4.1 9.8 9.6 Net earned premiums 5.4 5.0 3.5 3.6 8.9 8.6 Business operating profit
Slide 14: Our focus is on profitable growth…
Our focus is on profitable growth… GWP GWP growth: 5% - 10% in USD millions for the nine months ended Sep 30, 2005 GWP Growth1 0% - 5% -5% - 0% Italy 1,103 10% -10% - -5% Spain 902 9% Switzerland2 1,581 3% Germany 2,091 0% Rest of Europe 1,040 -1% UK 3,052 -6% Total 9,769 -1% 1 Versus prior year in
Slide 15: … and results in strong profitability
… and results in strong profitability BOP Combined 91% - 93% for the nine months ended Sep 30, 2005 BOP1 Growth2 BOP/NEP CoR ratio: 93% - 94% 94% - 95% UK 362 48% 12.6% 96.7% 95% - 97% Germany 167 -14% 10.2% 93.9% Switzerland 142 63% 11.5% 94.2% Italy 117 16% 10.6% 94.2% Spain 94 42% 13.0% 91.7% Res
Slide 16: Agenda
Agenda • Zurich’s Europe General Insurance segment • Europe General Insurance performance f Leveraging Europe’s core strengths © Zurich Financial Services - Investors’ Day, January 17, 2006 16
Slide 17: What we have achieved so far
What we have achieved so far • Refocused on 8 historically highly profitable, structurally attractive markets • Significantly improved combined ratio with expense ratio further reduced • Integrated European matrix organization established, allowing us to fully optimize the value chain and improve ma
Slide 18: Vision and key focus areas for EGI
Vision and key focus areas for EGI 2010 vision Key focus areas Market / customer environment • Leading European insurer with top- tier positions in chosen markets Operational performance Financial • Sophisticated way of doing business performance Distribution / • Cost leadership organic growth Talen
Slide 19: Responding to the challenges of our environment
Responding to the challenges of our environment Environment and trends Our response Relatively benign rate environment, but • Focus on profit rather than growth increased pressure on rates in commercial • Sophisticated segmentation, underwriting, lines fleet and personal lines motor risk selection,
Slide 20: Transforming multi-channel distribution to maximize access and customer insight…
Transforming multi-channel distribution to maximize access and customer insight… Tied agents Brokers • growing network by 1,200 • leveraging large brokers agents across Europe • enhancing point of sales • optimizing IT-connectivity effectiveness • more efficient and effective improved customer insig
Slide 21: … across all channels and markets
… across all channels and markets New business Gross Written Premiums1 Broker Agent Partnership Direct PL Other UK 400 58 27 485 D 131 138 28 86 22 405 2 CH 16 88 11 117 I 17 191 46 254 1 E 160 32 193 2 Other 89 78 13 182 Total 653 655 60 214 54 1,636 (+3.5%2) 40% 40% 20% 1 In USD millions, for the
Slide 22: Our way to Pan-European platforms
Our way to Pan-European platforms Theo Bouts COO Europe General Insurance
Slide 23: Agenda
Agenda f Zurich’s Pan-European platform and The Zurich Way – enhancing value creation • EGI’s cost advantage: much achieved and more to come • Benefits of EGI’s multi access opportunities © Zurich Financial Services - Investors’ Day, January 17, 2006 23
Slide 24: Zurich's profit improvement initiatives – a shift to underwriting and distribution
Zurich‘s profit improvement initiatives – a shift to underwriting and distribution in Europe • EGI contributed significantly to all 12% 15% profit improvement initiatives 7% • Well spread initiatives across all 35% 35% 59% countries reflecting their scale • The 2004 and 2005 main focus on Sales/Dist
Slide 25: The Pan-European platform: optimizing the value chain
The Pan-European platform: optimizing the value chain for competitive advantage Marketing, U/W, Operations, UK Customer Distribution Pricing Claims Finance IT Supplier Marketing, U/W, Operations, CH Customer Distribution Pricing Claims Finance IT Supplier Marketing, U/W, Operations, … Customer Distr
Slide 26: The Zurich Way and the Pan-European platform: why they drive profitable growth
The Zurich Way (TZW) and the Pan-European platform: why they drive profitable growth • Enhanced management control with less friction • Shortened innovation time allows faster responses to customer needs • TZW initiatives spread out equally within a tightly controlled framework • 8:1 – 8 country imp
Slide 27: The Zurich Way & the Pan-European platform: what we have already achieved
The Zurich Way & the Pan-European platform: what we have already achieved Claims Management1 Underwriting2 • Excellence in motor claims • Opportunities identified and 70 − personal injury case management, initiatives set up fraud defense and loss adjustment − Major focus on underwriting control are
Slide 28: On track for major operating improvement in 2006 and onwards
On track for major operating improvement in 2006 and onwards Leveraging distribution power by increasing sales force and productivity with The Zurich Way initiatives for Tied Agents and Sales Excellence Tied Agents (3 waves) Sales excellence • Sourcing • Focus on individual agent: improve • Managing
Slide 29: Further cost and quality advantages through European Shared Services
Further cost and quality advantages through European Shared Services (ESS) Marketing Communication Human Resources Human Resources Facility Management ESS Marketing Legal Legal Risk Risk Communication Facility Management Procurement Procurement Second Wave First Wave • 1 small European department in
Slide 30: Agenda
Agenda • Zurich’s Pan-European platform and The Zurich Way – enhancing value creation f EGI’s cost advantage: much achieved and more to come • Benefits of EGI’s multi access opportunities © Zurich Financial Services - Investors’ Day, January 17, 2006 30
Slide 31: Cost advantages in EGI from globalizing IT
Cost advantages in EGI from globalizing IT Initiatives Results of the last 3 years • Cost Reduction through common • Infrastructure costs down 28% European IT- platforms • Desktop costs down 19% • Economies of scale by centralizing • Development costs down 21% local data center activities into one •
Slide 32: Cost advantages of shared marketing and global branding campaign
Cost advantages of shared marketing and Zurich’s global branding campaign ESS marketing • Joint market and customer satisfaction research • Streamlining local marketing teams, strategy and blueprint • Brand and marketing as a main lever for profitable growth in personal lines and SMEs Global brandin
Slide 33: More cost advantages
More cost advantages Procurement • Consultant panel established • Legal expenses: Zurich Group, European and local panels established with terms and conditions in place • Office printers: 1 supplier for purchasing, storage and distribution for all print products, costs reduced by 25-30% • Traveling:
Slide 34: Significant expense ratio improvement
Significant expense ratio improvement 26% 24% Personal Total 22% Commercial 20% Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 © Zurich Financial Services - Investors’ Day, January 17, 2006 34
Slide 35: Pan-European reinsurance purchasing
Pan-European reinsurance purchasing – a centralized model with decentralized experts Virtual European reinsurance teams, Increased retention levels in management by line of business all lines of business • Country reinsurance experts with EGI retention levels business division responsibilities 20031
Slide 36: Agenda
Agenda • Zurich’s Pan-European platform and The Zurich Way – enhancing value creation • EGI’s cost advantage: much achieved and more to come f Benefits of EGI’s multi access opportunities © Zurich Financial Services - Investors’ Day, January 17, 2006 36
Slide 37: Multi access to customers creates more points of sale
Multi access to customers creates more points of sale Agents: a transformed franchise Brokers: leveraging successful models + 1,200 (12%) 10,000 Today 2008 target Direct: Number 2 in Europe Partnerships: the making of jewels… 2003 GWP (in USD millions) GC in Europe: EGI Worksite Large ”Employees“ em
Slide 38: The new Pan-European platform: accelerating profitable growth in non-mature channels…
The new Pan-European platform: accelerating profitable growth in non-mature channels… Broker Agent Partnership Direct PL Other New platform UK 400 58 27 • Room for further growth D 131 138 28 86 22 • Facilitates Direct and face-to-face CH 16 88 11 distribution • Special focus on I 17 191 46 small bu
Slide 39: … by ONE value proposition for Direct and Partnerships
… by ONE value proposition for Direct and Partnerships Local value chain Marketing, U/W, Operations, Claims Finance Distribution Pricing IT Pan-European value chain with ONE value proposition Local within European Marketing, U/W, Operations, framework Claims Finance Distribution Pricing IT Pan-Europ
Slide 40: Smaller units also benefit from operational excellence
Smaller units also benefit from operational excellence GWP and BOP in USD millions for the nine months ended Sep. 30 GWP BOP • Holding the line with pricing 2003 353 2003 40 • Expansion of Direct channel 2004 358 2004 118 • Streamline broker relation- ship management 2005 326 2005 48 • Low combined
Slide 41: Summary
Summary • Strong and sustainable performance • Effective structure in place with a high performing team • Well diversified by geography, business mix and distribution • Well positioned for strategic opportunities and our new platform allows us to maximize benefits • EGI’s operational excellence is e
Slide 42: Transforming multi-channel distribution in Spain
Transforming multi-channel distribution in Spain Julián López CEO Spain (as of 1 April 2006)
Slide 43: Agenda
Agenda f The Spanish General Insurance market • Performance highlights • The Zurich Way for Tied agents • Spain’s multi-channel approach for profitable growth © Zurich Financial Services - Investors’ Day, January 17, 2006 43
Slide 44: The Spanish General Insurance market
The Spanish General Insurance market Market split by Line of Business1 Top 10 insurers’ market share1 Other 1. Mapfre 19.1% 13% Motor 2. Allianz 7.8% Accident 51% 3% 3. Axa 6.4% Liability 4. Generali 5.3% 7% 5. Zurich 5.2% 6. Winterthur 4.3% 7. Catalania 4.3% 8. Mutua Madrileña 4.0% Property 26% 9.
Slide 45: The Spanish personal lines market: a market with growth potential
The Spanish personal lines market: a market with growth potential General Insurance market growth1 (in%) 20 15 Motor 16.1 14.4 14.0 13.3 10 12.2 Home 8.8 10.0 5 6.7 Shops 5.8 0 2002 2003 2004 General Insurance growth potential2 Zurich’s 2004 ranking GWP per capita 2004 in USD and market share1 1500
Slide 46: Agents dominated the market distribution in 2004
Agents dominated the market distribution in 20041 Business in force USD 13,983m USD 3,214m USD 635m 5% 7% 5% 16% 11% 24% 43% 51% 33% 57% 2% 28% 18% Motor Home Shops New Business USD 2,922m USD 422m USD 115m 5% 4% 6% 8% 15% 3% 41% 28% 50% 58% 32% 33% 17% 1 Source: ICEA Tied agents Ind. agents Banks D
Slide 47: Agenda
Agenda • The Spanish General Insurance market f Performance highlights • The Zurich Way for Tied agents • Spain’s multi-channel approach for profitable growth © Zurich Financial Services - Investors’ Day, January 17, 2006 47
Slide 48: Zurich Spain shows continuous improvement in all key performance indicators …
Zurich Spain shows continuous improvement in all key performance indicators … in USD millions 9 months for the year ended December 31 20021 20031 20042 20052 Gross written premiums and policy fees 746.6 968.3 1,102.1 901,9 Business operating profit 5.9 65.5 93.6 94.5 Loss ratio 78.6% 73.4% 69.1% 69.
Slide 49: … and now outperforms the market
… and now outperforms the market Underwriting performance1 in 1998 and 2004 Zurich Market Zurich Market 1998 1998 2004 2004 Loss ratio 79.7% 79.3% 69.2% 70.5% Expense ratio 30.7% 27.5% 22.2% 21.5% Combined ratio 110.4% 106.8% 91.4% 92.0% Ratio improvements1 2004 vs.1998 (in percentage points) Loss r
Slide 50: Agenda
Agenda • The Spanish General Insurance market • Performance highlights f The Zurich Way for Tied agents • Spain’s multi-channel approach for profitable growth © Zurich Financial Services - Investors’ Day, January 17, 2006 50
Slide 51: The Zurich Way for tied agents: managing the agency lifecycle
The Zurich Way for tied agents: managing the agency lifecycle for profitable growth… Sourcing & Succession Management recruiting planning • Formalized sourcing process • Formalized continuation • Single value proposition plans for retiring agents Agency Develop Agency Manage interface productivity c
Slide 52: …and how it drives efficiency within the Pan-European platform
…and how it drives efficiency within the Pan-European platform • Implementation of a common approach across Europe • Sharing expertise, ideas, best practices and key learning • Common monitoring, language, methodology, tools and metrics • Common European activities in sourcing, managing and successi
Slide 53: Agenda
Agenda • The Spanish General Insurance market • Performance highlights • The Zurich Way for Tied agents f Spain’s multi-channel approach for profitable growth © Zurich Financial Services - Investors’ Day, January 17, 2006 53
Slide 54: Above market growth through effective, profitable distribution channels
Above market growth through effective, profitable distribution channels • High quality in pre and post sale with intermediaries’ easy multi-access • Personalized offers based on customer knowledge • Technological connectivity as a differentiating factor: with client, intermediary and partner • Produ
Slide 55: Implementing The Zurich Way for Tied Agents in Spain
Implementing The Zurich Way for Tied Agents in Spain The transformation model Strategy Segmentation of the different levels of the value proposition IT connectivity, Sales and People service, training marketing Systems and productivity development tools tools “Sales Activity Planning Process” system
Slide 56: Implementing the model: more sophisticated sourcing…
Implementing the model: more sophisticated sourcing… Sourcing & Succession Management recruiting planning • Specialized sourcing teams with geographical positioning tools • New agent, new criteria/characteristics for approval • Sales speech, marketing material • Performance monitoring & control syst
Slide 57: … with smarter managing and succession planning…
… with smarter managing and succession planning… Sourcing & Succession Management recruiting planning Managing Succession • Adjust value proposition / segmentation: • Track agency demographics motivate agents to increase the • Formalised process for reacting relationship with Zurich to reach higher
Slide 58: … resulted in significant achievements so far
… resulted in significant achievements so far Higher productivity with less intermediaries CAGR 17% • The number of intermediaries decreased from 6,800 in 2001 to 4,101 as at year end 2005 (-40%) 6,800 4,101 • At the same time, new policies issued 2001 2002 2003 2004 2005E increased by 88% from 201,
Slide 59: Profitable growth through partnership distribution…
Profitable growth through partnership distribution… Pioneers with partnership distribution • Partner selection with mutual brand reinforcement • Full IT connectivity and integration into partnership systems Customer Post sale Zurich sale Partner sale Zurich call center Partnership Zurich call center
Slide 60: … with main focus on bank partners going forward
… with main focus on bank partners going forward • Standardized products with tailored services • Simple purchase processes with full front end integration • Direct IT connection, back office and post sale service • 3 years distribution agreement, remuneration based on volume and profitability Targe
Slide 61: Next steps to further enhance the benefits of our multi-distribution approach
Next steps to further enhance the benefits of our multi-distribution approach • Accelerate our non-motor growth while maintaining our strength in motor • Expand alternative channels with our partnership strategy • Improve customer insight • Increase focus on market and environment © Zurich Financial
Slide 62: Key take aways Spain
Key take aways Spain • Spain is a growth market • Zurich Spain has successfully implemented a profitable multi-channel strategy • The results of the intermediaries transformation and TZW Tied agents are positive and sustainable • We have been pioneers with partnerships and we target to grow this bus
Slide 63: Exceeding market growth in Italy
Exceeding market growth in Italy Francesco La Gioia CEO Italy
Slide 64: Agenda
Agenda f The Italian General Insurance market • Zurich Italy’s successful track record – a profitable growth story • Key growth drivers and competitive advantage − Market segmentation − Agents − Direct Business − Claims management © Zurich Financial Services - Investors’ Day, January 17, 2006 64
Slide 65: The Italian General Insurance market
The Italian General Insurance market Market split by Line of Business1 Top 10 insurers’ market share1 Other 7% TPL Motor TPL 1. Fonsai 20.0% 9% 53% 2. Generali 15.9% 3. Allianz 15.7% Property 4. Unipol 11.3% 13% 5. Toro 6.4% 6. Reale Mutua 5.0% 7. Cattolica 4.0% Accident 8. Zurich 3.8% 9% 9. Axa 3.4
Slide 66: Besides agents and brokers, Zurich Italy has a strong direct channel
Besides agents and brokers, Zurich Italy has a strong direct channel Total market distribution channels1,2 Zurich Italy’s distribution channels2 Banks 1% Other Other Direct 4% Direct 1% 2% 9% Brokers Brokers 8% 10% Agents Agents 85% 80% 1 Source: ANIA – Insurance Companies Association 2 As of year e
Slide 67: Agenda
Agenda • The Italian General Insurance market f Zurich Italy’s successful track record – a profitable growth story • Key growth drivers and competitive advantage − Market segmentation − Agents − Direct Business − Claims management © Zurich Financial Services - Investors’ Day, January 17, 2006 67
Slide 68: Zurich has consistently exceeded market growth while improving profitability
Zurich has consistently exceeded market growth while improving profitability Annual GWP growth1 (in %) 20 15 10 Zurich 5 Market 0 1997 1998 1999 2000 2001 2002 2003 2004 2005E Zurich’s market Zurich’s market Zurich’s market share: 2.5% share: 2.8% share: 3.8% 1 Based on local statutory numbers © Zur
Slide 69: Despite limited scale, Zurich Italy's performance improvement is remarkable
Despite limited scale, Zurich Italy’s performance improvement is remarkable Underwriting performance1 in 1998 and 2004 Zurich Market Zurich Market 1998 1998 2004 2004 Loss ratio 88.9% 87.1% 66.8% 70.5% Expense ratio 29.3% 24.2% 22.7% 22.8% Combined ratio 118.2% 111.3% 89.5% 93.3% Ratio improvements1
Slide 70: Agenda
Agenda • The Italian General Insurance market • Zurich Italy’s successful track record – a profitable growth story f Key growth drivers and competitive advantage through − Market segmentation − Agents − Direct Business − Underwriting and claims management © Zurich Financial Services - Investors’ Day
Slide 71: Leading innovation in Italy by using specific customer segmentation tools…
Leading innovation in Italy by using specific customer segmentation tools… Focus groups Market analysis Market dimension, Tied Agents trends and potential Brokers Competitors Employees Costumer needs Prospects Customers Distribution Legal Policy risk and profitability Target management resources Rei
Slide 72: … and providing a wide offer to our main target groups
… and providing a wide offer to our main target groups Non-motor business mix by core segments1 Senior citizens 17% Hotels, small companies and shops 16% Families 25% SMEs (utilities, public sector, manufacturing) 16% Not yet segmented 26% 1 As of 2004 © Zurich Financial Services - Investors’ Day, J
Slide 73: We have a sophisticated agent approach
We have a sophisticated agent approach The issue… ... and our response • Agents are not an • Segmentation of agents’ sales force homogeneous group providing different levels of training, underwriting authority, discount policy and supervisory support • Adequate and competitive • Commission incentive
Slide 74: A significant productivity improvement
A significant productivity improvement • 488 agencies, with significant increase of average portfolio: USD 1.7 million in 2001 to USD 3.4 million in 2004 • High product density of 2.78, up 5% versus 2001 Average number of Average number of customers per agency policies per agency 4,000 4,000 4,290 2
Slide 75: Direct Business – we are the fastest growing player in the last three years
Direct Business – we are the fastest growing player in the last three years • Zurich entered the market with Direct Business growth1 (in %) ‘Zuritel’ in 2000, shortly after the start of Direct business in the late 90s 60% Zurich • Only 7 players compete in the Italian 40% Direct market with Zurich a
Slide 76: Claims management – Italy's focus is fully consistent with The Zurich Way…
Claims management – Italy’s focus is fully consistent with The Zurich Way… • Efficient claims handling benefits both the customer and the company − simple claims need speedy handling (centralised claims unit) − complex claims need attention to detail and local touch (40 field offices) • Effective us
Slide 77: … resulting in measurable improvements and high customer satisfaction
… resulting in measurable improvements and high customer satisfaction Savings of fraud detection and Claims leakage (in % of GWP) recoveries (in USD millions) 40 2.0 30 72%1 1.5 USD 42.8 4.7m 20 1.0 1.31 22.7 10 0.5 0.84 4.0 17.3 0 0.0 2003 2005E 2003 2005E Fraud Recovery • Excellent claims manageme
Slide 78: Key take aways Italy
Key take aways Italy • The Italian market will remain attractive and continues to offer profitable growth opportunities • Zurich Italy has a strong track record • Agents are one of our main assets, within our multi-channel framework • The efficiency in claims management is vital to maintain our prom
Slide 79: Segmenting markets – leveraging insight for profitable growth in the UK
Segmenting markets – leveraging insight for profitable growth in the UK Ian Stuart CEO UK General Insurance
Slide 80: Agenda
Agenda f Our position in the UK General Insurance Market • Zurich UK Performance • Enhancing our Personal Lines market position • Key levers of success − Market strength in commercial and municipal lines − TZW Underwriting − Streamlining our operating model to low cost − Unique customer insight © Zu
Slide 81: Zurich is a significant player in the UK General Insurance Market
Zurich is a significant player in the UK General Insurance Market Top 5 General Insurers1 Top 5 by market segments1 Market Market Personal Lines share Company share 1 RBS 23.6% 1 Aviva 14.0% 2 Aviva 13.9% 2 RBS Insurance 13.7% 3 RSA 7.1% 3 Royal and Sun Alliance 8.9% 4 Zurich 5.0% 4 Zurich 7.6% 5 CI
Slide 82: Our business mix is aligned with our strategic intent
Our business mix is aligned with our strategic intent Commercial lines GWP Split1 Other 6% Property Public Liability Property Other 12% 42% 25% 28% Market Zurich Employers’ Public Liability Liability 18% 19% Motor 17% Employers’ Motor 22% Liability 11% Personal lines GWP Split1 Property Property 42%
Slide 83: Agenda
Agenda • Our position in the UK General Insurance Market f Zurich UK Performance • Enhancing our Personal Lines market position • Key levers of success − Market strength in commercial and municipal lines − TZW Underwriting − Streamlining our operating model to low cost − Unique customer insight © Zu
Slide 84: Performance - that is now market leading….
Performance - that is now market leading…. Combined ratios of Zurich and key competitors (local statutory) 140% 130% 120% 110% Axa 100% RBS Allianz RSA Aviva 90% Zurich 80% 1998 1999 2000 2001 2002 2003 2004 1 Source: E&Y research for ZFS using published data (e.g. FSA returns) © Zurich Financial Se
Slide 85: Excellent results for the first nine months 2005
Excellent results for the first nine months 2005 in USD millions for the nine months ended Sep 30 2005 2004 Change Gross written premiums and policy fees 3,052 3,208 -6%1 Net underwriting result 95 16 494% Business operating profit 362 245 48% Loss ratio 72.2% 75.5% 3.3pts Expense ratio 24.5% 23.9%
Slide 86: Agenda
Agenda • Our position in the UK General Insurance Market • Zurich UK Performance f Enhancing our Personal Lines market position • Key levers of success − Market strength in commercial and municipal lines − TZW Underwriting − Streamlining our operating model to low cost − Unique customer insight © Zu
Slide 87: Zurich's commitment to UK personal lines
Zurich’s commitment to UK personal lines Facts,… • A profitable portfolio with 2004 GWP of USD 1.6 billion or 40% of our total UK book • 2 million customers who rely on us • Strong relations with 3,000 independent brokers … performance1,… PL Motor, combined ratio 2004 PL Property, combined ratio 200
Slide 88: We are proactively responding to the challenges of our environment…
We are proactively responding to the challenges of our environment… Intensifying market competition Our response Increased marketing spend • Remain committed to all three channels - Leverage leading broker position - Exploit proven Partnership capabilities Finer margins in Partnerships - Grow Direct
Slide 89: … and pursue effectiveness along the value chain
… and pursue effectiveness along the value chain Marketing Professional Sales, service, Support Claims and Brand Expertise, u/w credit control functions management Objectives Differentiate Use intellectual Drive down costs Improve customer capital, keep u/w efficiency proposition discipline Actions
Slide 90: Agenda
Agenda • Our position in the UK General Insurance Market • Zurich UK Performance • Enhancing our Personal Lines market position f Key levers of success − Market strength in commercial and municipal lines − TZW Underwriting − Streamlining our operating model to low cost − Unique customer insight © Zu
Slide 91: Commercial and municipal lines: jewels of our market strength
Commercial and municipal lines: jewels of our market strength Commercial Lines (35% of our book) Municipal (25% of our book) • Commercial Lines Insurer of the Year 2005 • Ranked 1st or 2nd in all our target markets • Transforming from a generalist insurer to a • Establishing competitive advantage mu
Slide 92: Delivering on TZW Underwriting
Delivering on TZW Underwriting Pre 2001: 2001: 2002 – 2004: 2005 onwards: what did we find? First steps harvesting first fruits more to come • CUE1 • New rating • Gaps in best practice • U/w leakage (5%- tools launched • Global rollout • Gaps in rating tools 10%) identified • Measured benefits TZW s
Slide 93: Streamlining our operating model to low cost
Streamlining our operating model to low cost Operating model Merger of Zurich Commercial and Municipal business units Personal lines One claims Positioned for management now organisation for growth in chosen fully integrated all UK business markets Shared Services platform and legal entity simplific
Slide 94: Customer insight in commercial lines – why are we better in a USD 2.5 billion book?
Customer insight in commercial lines – why are we better in a USD 2.5 billion book? 2004 GWP commercial lines Non segmented, USD 625m Local authorities, USD 525m 21% 25% 8% Construction, USD 200m Other segmented, USD 550m 22% 8% Property investors, USD 200m 16% Major customers, USD 400m Local author
Slide 95: The performance improvements due to customer insight are impressive and …
The performance improvements due to customer insight are impressive and … • Significant scale, expertise and flexibility in each market segment • Absolute focus on segments enables effective management of the market cycle • Customer insight targets resource and capital to benefit shareholder and cus
Slide 96: … and also recognized and applauded by the market
… and also recognized and applauded by the market Zurich UK – Commercial insurer of the year 2005 - The insurer of choice through technical expertise - Recognised by broker community as providing consistently high quality service and support - Provision of educational communications such as “Managin
Slide 97: Key take aways UK
Key take aways UK • Achieved market leading combined ratio in 2004 • Excellent results for the first nine months 2005 • Strong commitment to UK Personal Lines • Commercial & Municipal lines remain jewels to our market strength • Excellence in underwriting drives profitability • Success built on cust
Slide 98: Playing in mature markets – a snapshot of Germany and Switzerland
Playing in mature markets – a snapshot of Germany and Switzerland Dieter Wemmer CEO Europe General Insurance
Slide 99: Germany at a glance
Germany at a glance GWP per line of business New business by distribution channel Other 5% Other 14% Affinity 7% Accident 6% Broker 32% Direct 21% Liability 15% Motor 48% Agents 35% Property 17% in USD millions 2005 2004 Change for the nine months ended Sep 30 Gross written premiums and policy fees
Slide 100: Switzerland at a glance
Switzerland at a glance GWP per line of business New business by distribution channel Other 2% Other 14% Direct 9% Accident 12% Broker 14% Liability 8% Motor 53% Agents 75% Property 13% in USD millions 2005 2004 Change for the nine months ended Sep 30 Gross written premiums and policy fees 1,581 1,5
Slide 101: Driving our multi-channel approach in Germany and Switzerland
Driving our multi-channel approach in Germany and Switzerland Tied agents Brokers - grow agent - grow agent - increase efficiency and effectiveness of network by more network by 14% broker channel management than 10% - increase of sales - rework and grow by productivity “Bonnfinanz” - increase point
Slide 102: Cost discipline secures bottom line and will be maintained
Cost discipline secures bottom line and will be maintained Expense ratio development (in%) Germany Switzerland2 26.4 26.0 26.0 24.8 24.8 25.0 24.5 25.0 23.9 23.5 24.0 23.5 24.0 23.2 23.0 23.0 22.0 22.0 1 1 2002 2003 2004 2005 2002 2003 2004 2005 1 For the nine months ended September 30 2 2004 expens
Slide 103: Operational excellence supports the competitive position of our products
Operational excellence supports the competitive position of our products Example: How we closely monitor our tariff position Frequency of ranking per customer segment/cluster • Our new 2005 motor tariff is 1,600 market leading in terms of segmentation 1,200 • Tariff reduction is refinanced Zurich by
Slide 104: Key take aways Germany and Switzerland
Key take aways Germany and Switzerland • Excellent distribution channel mix • Strong underwriting performance • Well established and sophisticated operating tools in place • Very strong market position • Significant cost improvements • Powerful agent network and promising partnerships © Zurich Finan
Slide 105: Closing remarks
Closing remarks Dieter Wemmer CEO Europe General Insurance
Slide 106: Key messages
Key messages • We are the 2nd largest player in our chosen European markets with considerable scale advantage • We are implementing Pan-European strategies and platforms to consolidate our competitive advantage throughout the value chain • Our strengths across all distribution channels and our skill
Slide 107: ZURICH
@ ZURICH OWA
Zurich Financial Services — Investor Day (January 2006) on 6ix