Zurich Insurance Group Ltd · SIX:ZURN
Zurich Insurance — Investor Day (May 2008)
80 slides from Zurich Insurance's investor day presentation, May 23, 2008
Slide 1: Global Life - Strategy Update
Global Life - Strategy Update Investors' Day Zurich, May 23, 2008
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 predications of or indicate future events, trends, plans or objectives. Forward-looking statements include statements regarding our targeted prof
Slide 3: Agenda - Global Life Strategy
Agenda - Global Life Strategy Global Life Strategy Mario Greco Break Bancassurance Growth Jochen Schwarz International and Expatriates Growth Martin Davis Q&A © Zurich Financial Services - Global Life Strategy Update - May 23, 2008 3
Slide 4: Global Life is a key growth engine to deliver the Zurich Group strategy
Global Life is a key growth engine to deliver the Zurich Group strategy Global Farmers Life IB Focus on volume growth Global Life is a EGI growth engine in terms of volumes GC NAC Focus on margin enhancement Legend for GI BDs: IB International Businesses EGI Europe General Insurance GC Global Corpor
Slide 5: Global Life is already a significant contributor to Zurich's profits
Global Life is already a significant contributor to Zurich’s profits Business operating profit 2007 in USD millions 1,460 1,453 1,443 1,271 736 167 North America Europe Global Life Farmers Global International Commercial General Corporate Businesses Insurance © Zurich Financial Services - Global Lif
Slide 6: Significant improvement of financial metrics over the past 7 years
Significant improvement of financial metrics over the past 7 years New business APE New business margin1 2'947 24.7 4 in USD millions as % of APE 3,4 3 21.6 2'403 2'500 Up 20.6 2'3032,3 2'082 2'134 points 17.7 3,4 2'008 CAGR 11.4 7% 9.0 6.1 4.1 2001 2002 2003 2004 2005 2006 2007 2001 2002 2003 2004
Slide 7: Global Life – Global Life Strategy
Global Life – Global Life Strategy Mario Greco Chief Executive Officer Global Life Zurich, May 23, 2008
Slide 8: Agenda - Global Life Strategy
Agenda - Global Life Strategy Global Life – current positioning Our vision of the Life Insurance business Global Life’s new strategy Execution plans and next steps © Zurich Financial Services - Global Life Strategy Update - May 23, 2008 8
Slide 9: Global Life has important strengths in several local markets
Global Life has important strengths in several local markets Distinctive Leading positions Deutsche Bank in multiple bancassurance products in relationship IFA/Broker channel Strong position in Hong Kong through Over 8m tied agents and IFA/ household Brokers customer pool Recent Rapidly expanding ac
Slide 10: Global Life's first quarter results
Global Life’s first quarter results1 Highlights include Achieving 8%2 APE growth despite rough market conditions Maintaining new business margin at 22.2% Increasing new business value to USD 160 million, up from USD 146 million same period last year, for a 10% rise, or 2% in local currencies Achievi
Slide 11: Agenda - Global Life Strategy
Agenda - Global Life Strategy Global Life – current positioning Our vision of the Life Insurance business Global Life’s new strategy Execution plans and next steps © Zurich Financial Services - Global Life Strategy Update - May 23, 2008 11
Slide 12: Customer needs are becoming increasingly similar globally
Customer needs are becoming increasingly similar globally, and require ever-more similar solutions Global trends Growing population / middle classes with private planning needs • Similar global demographic trends Increasing pressure to ensure retirement plans cope with longer lives • Progressive eco
Slide 13: Distributors are also increasingly thinking and acting globally
Distributors are also increasingly thinking and acting globally Several factors… …lead to distributors thinking and acting more globally Need to serve customers that • Best practice business models are being become more global copied across borders • Emergence of global distribution Open Architectur
Slide 14: In Life Insurance, propositions' building blocks are commodities
In Life Insurance, propositions’ building blocks are commodities Building blocks of life insurance… …also provided by Asset • Asset managers management How then can life insurers Risk transfer • Insurers deliver true (biometric) value to their • Banks (financial) customers? Servicing and • 3rd party
Slide 15: We create value by packaging and tailoring building blocks
We create value by packaging and tailoring these building blocks into differentiated customer propositions Packaging and tailoring Examples Asset 1 Zurich Int. Solutions management • Fund choices appealing to NRI and NRC1 • International servicing Customer capabilities (esp. payout) proposition Risk
Slide 16: Distribution channels are key to success for Global Life
Distribution channels are key to success for Global Life Split of global life Split of Zurich Global Life industry APE1, in % APE 2007, in % Tied Agents / 43 23 Others2 Banks 28 20 77% of our business is through independent IFA/Brokers 29 57 channels 1 Individual life only, 2006; based on leading 19
Slide 17: Agenda - Global Life Strategy
Agenda - Global Life Strategy Global Life – current positioning Our vision of the Life Insurance business Global Life’s new strategy Execution plans and next steps © Zurich Financial Services - Global Life Strategy Update - May 23, 2008 17
Slide 18: Our strategic direction: from country and niche positions to a global life franchise
Our strategic direction: from a portfolio of country and niche positions to a global life franchise Three global distribution 1 channels to better serve local customer needs Zurich Global We target Life will USD 1.2bn change in 3 NBV by 2010, fundamental 2 Three global customer groups with double wa
Slide 19: We take a global approach to our key distribution channels and propositions
We take a global approach to our key distribution channels and propositions Global distribution Global propositions • A global channels approach to distribution will drive excellence Private Banking Clients in channel International / Expats Countries management • Selected Corporate Life Bancassuranc
Slide 20: This enables us to grow significantly beyond our existing plans
This enables us to grow significantly beyond our existing plans… Global Life New Business Value (NBV) in USD millions CAGR 1,200 18% We aspire to grow 850 our 2010 Plan by 729 USD 350m of NBV, while maintaining margin at above 20% Actual 2007 Previous 2010 New 2010 target target © Zurich Financial S
Slide 21: …also leading to a shift in our distribution mix
…also leading to a shift in our distribution mix Global Life APE 5.7 in USD billions 1.1 Bancassurance • Bancassurance, 2.0 IFA/Brokers International/Expats 2.9 and Corporate Life growing in 0.5 importance 0.9 Tied Agents 1.1 • Private Banking 0.2 Private Banks Clients as new source 0.6 Corporate Li
Slide 22: Global Life is executing detailed plans in each of the Pillars
Global Life is executing detailed plans in each of the 6 Pillars Global distribution channels Global propositions Private Banking Clients International / Expats Corporate Life Bancassurance Tied Agents IFA/Brokers © Zurich Financial Services - Global Life Strategy Update - May 23, 2008 22
Slide 23: Bancassurance – Further commitment, backed by new talent and financial resources
Bancassurance – Further commitment, backed APE aspiration USD by new talent and financial resources 2007 2010 1.1bn What’s our position? • Successful bancassurance relationship with The market opportunity Deutsche Bank • Global market • Providing proposition in niche markets as secondary USD ~50bn (
Slide 24: IFA/Brokers – Several major European markets have large broker channels
IFA/Brokers – Several major European APE aspiration USD markets have large broker channels 2007 2010 2.0bn European life market, 2006 Broker market, 20061 APE (selected countries), APE, in USD billions 100% = USD 74bn Broker UK 15.4 share Benelux 2.6 67% 33% Germany 1.9 France 1.4 Other Italy 1.1 ch
Slide 25: IFA/Brokers – We aim to grow in both existing and new markets
IFA/Brokers – We aim to grow in both APE aspiration USD existing and new markets 2007 2010 2.0bn Unlock potential growth in Enter new markets existing markets Î Identify gaps/barriers that prevent Î Central manufacturing hub (Dublin) higher market share Î Significantly upscale and upskill our Î Cent
Slide 26: Tied agents – Increased productivity targets in the Tied agent channel
Tied agents – Increased productivity targets APE aspiration USD in the Tied agent channel… 2007 2010 0.9bn Number of life policies sold per agent Farmers’ success 16 story • Farmers +45% successfully 11 improved tied agent productivity by introducing a new marketing and sales model New marketing and
Slide 27: …by leveraging best practice within the Group
…by leveraging best practice within APE aspiration USD the Group 2007 2010 0.9bn Pilot Farmers’ best practices in Switzerland Agent segmentation Support Blueprint from Switzerland pilot as starting point for global roll-out to • Germany • Emerging Markets (Hong Kong, Latin America, Mexico) • Italy •
Slide 28: Private Banking Clients – Our forthcoming proposition addresses a large, growing market
Private Banking Clients – Our forthcoming APE aspiration USD proposition addresses a large, growing market 2007 2010 0.2bn A distinctive proposition • Flexible wrapping facility with multiple balance sheets 10 million • Highly competent and timely sales support • Offer range of additional products (
Slide 29: Corporate Life – Size of the market is very significant
Corporate Life – Size of the market is very APE aspiration USD significant and we are well positioned to 0.6bn 2007 2010 capture our share • Corporate Life markets worldwide are huge with more than USD 50bn in 2006 • Zurich is number 2 worldwide Global Corporate provider of General Insurance product
Slide 30: We are building a distinctive approach to win in Corporate Life
We are building a distinctive approach to APE aspiration USD win in Corporate Life 2007 2010 0.6bn Proven International • Expand US Corporate Life expertise in propositions for capability from protection group life and multinational only to SME pensions to be companies • Enhance our risk pooling exp
Slide 31: International / Expatriates – We aim to outpace a rapidly growing market
International / Expatriates – We continue to APE aspiration USD aim to outpace a rapidly growing market 0.9bn 2007 2010 CAGR above 20% over the last 10 years, mainly built around Asian (Indian, Chinese) customers International / New customers Expatriates APE1 Out of every 10 new customers: in USD mi
Slide 32: Agenda - Global Life Strategy
Agenda - Global Life Strategy Global Life – current positioning Our vision of the Life Insurance business Global Life’s new strategy Execution plans and next steps © Zurich Financial Services - Global Life Strategy Update - May 23, 2008 32
Slide 33: We take a global approach to our key distribution channels and propositions
We take a global approach to our key distribution channels and propositions Global distribution channels Global propositions International / Expats Private Banking Countries Corporate Life Bancassurance Tied Agents IFA/Brokers Clients Enablers Proposition management Regional hubs and platforms Globa
Slide 34: A global approach to proposition management will make us more agile
A global approach to proposition management will make us more agile and responsive Our globally Hub-based proposition integrated development proposition management • Increased agility function will Single global prioritisation • Improved time to process bring us… market • Better responsiveness Truly
Slide 35: Drive platform convergence and create regional manufacturing hubs
Drive platform convergence and create regional manufacturing hubs UK Platform consolidation with the aim to • Create the possibility to manufacture a product once and sell in several territories US • Capture economies of skill and scope in global centers of competence for IT application/process supp
Slide 36: We are already executing the new strategy
We are already executing the new strategy Recruitment • All key positions identified and assigned • Search for new skills, as required, completed • New global compensation structure introduced New strategy • Robust communication plans ongoing will support our results Strategies and Processes already
Slide 37: Disciplined strategy execution
Disciplined strategy execution Maintain current New Business Margin > 20% Carefully control and reduce cost basis Self-finance organic growth Maintain current discipline to acquisitions Our target is profitable growth © Zurich Financial Services - Global Life Strategy Update - May 23, 2008 37
Slide 38: Our strategic direction: A truly global life franchise
Our strategic direction: A truly global life franchise New Business Value1 APE by Pillar APE by region in USD billions in USD billions 5.7 in USD billions 5.7 North 1.1 Bancassurance 0.2 America IFA/Brokers 1.2 2.0 2.9 Tied Agents 4.0 2.9 Europe 0.5 0.1 0.7 Private Banks 0.9 1.1 Corporate Life 0.2 2
Slide 39: Break
Break Ree on ZURICH
Slide 40: Global Life - Bancassurance Growth
Global Life - Bancassurance Growth Jochen Schwarz Global Head Bancassurance Zurich, May 23, 2008
Slide 41: We take a global approach to our key distribution channels and propositions
We take a global approach to our key distribution channels and propositions Global distribution channels Global propositions International / Expats Private Banking Countries Corporate Life Bancassurance Tied Agents IFA/Brokers Clients Enablers Proposition management Regional hubs and platforms Globa
Slide 42: Agenda – Bancassurance Growth
Agenda – Bancassurance Growth Current position and achievements Success stories and lessons learned Forward looking strategy and objectives © Zurich Financial Services - Global Life Strategy Update - May 23, 2008 42
Slide 43: Bancassurance has become an important channel globally
Bancassurance has become an important channel globally Life industry GWP 2006, in USD billions Western Europe France 106 32% Italy 51 (297) U.K. 38 Germany 21 Spain 20 Other 60 Global premiums Other channels Bancassurance 77% 23% Asia (1,702) Americas (508) 24% Japan 70 (144) US 57.858 South Korea 3
Slide 44: Over the last five years, Zurich has developed a significant presence in bank distribution
Over the last five years, Zurich has developed a significant presence in bank distribution . . . Zurich Global Life new business APE distributed by banks in USD millions 595 129 ZIS1 442 59 364 19 466 Bancassurance 383 345 24 7 17 2001 2003 2005 2007 1 Bank distribution of ZIS products (Internationa
Slide 45: …and has started to establish a footprint, working with banks around the world
. . . and has started to establish a footprint, working with banks around the world Partnerships of over USD 10m APE © Zurich Financial Services - Global Life Strategy Update - May 23, 2008 45
Slide 46: Agenda – Bancassurance Growth
Agenda – Bancassurance Growth Current position and achievements Success stories and lessons learned Forward looking strategy and objectives © Zurich Financial Services - Global Life Strategy Update - May 23, 2008 46
Slide 47: Our integrated partnership with Deutsche Bank in Germany generates outstanding results
Our integrated partnership with Deutsche Bank in Germany generates outstanding results German market APE Zurich’s APE with DB1 EUR billions EUR millions +0% Growth +6% • Our approach against 8.9 to a truly 7.4 6.6 7.6 252 227 240 market trend 172 integrated partnership improves the CAGR 2001 2003 20
Slide 48: Our partnership model is based on a truly integrated and replicable approach
Our partnership model is based on a truly integrated and replicable approach Structure Zurich – Life Zurich – Sales & Marketing Services Factory (∼ 100 FTE) Bank Field Call Center Training branch Support and field Customers Zurich – based General Quotation Product/ Sales agents Insurance systems, So
Slide 49: Excellence in execution allows us to generate real revenues quickly – Example 1
Excellence in execution allows us to generate real revenues for our partners quickly – Example 1 Rapid integration of partners • Zurich can Week rapidly integrate and 1 2 3 4 5 6 launch sales with new partners • Our execution Berliner bank Proposition Integration First Zurich capabilities and agreed
Slide 50: Excellence in execution allows us to generate real revenues quickly – Example 2
Excellence in execution allows us to generate real revenues for our partners quickly – Example 2 Quick launch of innovative products captures large market share • Zurich can Month launch new products with minimal time 1 2 3 4 to market • Our execution capabilities Agree to Update quote Products sold
Slide 51: We provide focused propositions across markets to grow with international banks
We provide focused propositions across markets to grow with international banks EXAMPLE: ZIS The key elements of our value …have driven the rapid expansion of proposition to banks… bancassurance within ZIS Expatriate customer insights ZIS Bancassurance APE, in asset allocation and risk in USD millio
Slide 52: We have made capital investments selectively to access distinctive opportunities
We have made capital investments selectively to access truly distinctive opportunities • Signed deal to acquire DWS Vita in Italy in December 2007 – targeted to double existing Italian bancassurance business • Long-term exclusive agreement with DB’s Finanza & Our powerful Futuro (~1000 financial adv
Slide 53: Agenda – Bancassurance Growth
Agenda – Bancassurance Growth Current position and achievements Success stories and lessons learned Forward looking strategy and objectives © Zurich Financial Services - Global Life Strategy Update - May 23, 2008 53
Slide 54: Going forward, Global Life will offer three propositions tailored to bancassurance
Going forward, Global Life will offer three propositions, tailored to the bancassurance opportunity international • Integrated Global / propositions most 9 8 9 relevant to large banks • Large banks also require partners to Type of bank domestic fill specific product Large 9 8 9 gaps (e.g., expats) •
Slide 55: Our objective is to more than double in 3 years
Our objective is to build on our historically high growth to more than double in 3 years Zurich Global Life, Bancassurance APE 1,100 in USD millions CAGR +33% 466 383 345 7 2001 2003 2005 2007 2010 © Zurich Financial Services - Global Life Strategy Update - May 23, 2008 55
Slide 56: Why do we think this objective is achievable?
Why do we think this objective is achievable? 1 2 3 Tangible market Proven capabilities Superior value proposition opportunity • Banks increasingly • Strong ability to sell • Commitment to win- focused on core through banks win successful business • Consistent delivery on partnerships • Banks need o
Slide 57: We are well positioned to capture our growth target in Bancassurance
We are well positioned to capture our growth target in Bancassurance Global Life APE 5.7 in USD billions 1.1 Bancassurance • There is a large bancassurance market and opportunity • Zurich has proven 2.0 IFA/Brokers capabilities in 2.9 bancassurance 0.5 • We have a superior value 0.9 Tied Agents 1.1
Slide 58: Global Life – International and Expatriates Growth
Global Life – International and Expatriates Growth Martin Davis Chief Executive Officer, Global Life Emerging Markets Zurich, May 23, 2008
Slide 59: We take a global approach to our key distribution channels and propositions
We take a global approach to our key distribution channels and propositions Global distribution channels Global propositions International / Expats Private Banking Countries Corporate Life Bancassurance Tied Agents IFA/Brokers Clients Enablers Proposition management Regional hubs and platforms Globa
Slide 60: Agenda – International and Expatriates Growth
Agenda – International and Expatriates Growth Structure and strategy Zurich International Solutions • Market position • Customers and markets • Operating model Example: the Middle East emerging markets story © Zurich Financial Services - Global Life Strategy Update - May 23, 2008 60
Slide 61: Global Life Emerging Markets – we have a global footprint
Global Life Emerging Markets – we have a global footprint Zurich International Solutions (ZIS) Asia Latin America Middle East South Africa © Zurich Financial Services - Global Life Insurance / jaegerj / 3/8/2005 61
Slide 62: Emerging markets represent an increasing share of Global Life's APE
Emerging markets represent an increasing share of Global Life’s APE Split of Global Life APE in USD billions 5.7 2.9 2.0 Other 25% Emerging markets 23% 17% 2001 2007 2010 objectives © Zurich Financial Services - Global Life Insurance / jaegerj / 3/8/2005 62
Slide 63: Global Life Emerging Markets – a track record of execution and ambitious plans ahead
Global Life Emerging Markets – a track record of execution and ambitious plans ahead Q4 2008 1 New branches 20081 to open in Entry into Oman and Takaful Malaysia Jan 08 Opened market office in Nov 05 Taiwan Opened branch in Singapore Q3 20081 Licensed under Today Q2 20081 Florida HB105 Dublin licens
Slide 64: Agenda – International and Expatriates Growth
Agenda – International and Expatriates Growth Structure and strategy Zurich International Solutions • Market position • Customers and markets • Operating model Example: the Middle East emerging markets story © Zurich Financial Services - Global Life Strategy Update - May 23, 2008 64
Slide 65: Zurich International Solutions aims to outgrow the fast growing offshore market
Zurich International Solutions continues to aim to outgrow the fast growing offshore market Offshore life insurance market (excl. US) APE in USD billions CAGR 1.9 +24% 1.6 +17% 1.5 1.2 0.8 CAGR +37% +75% 24% 16% 12% 15% 16% 2003 2004 2005 2006 2007 ZIS market share Source: Association of Internation
Slide 66: Zurich International Solutions' customer base is consistently 70% Asian
Zurich International Solutions’ customer base is consistently 70% Asian Split of typical new 10 ZIS customers in the last 5 years Asian/Chinese Western ddd dd South Asian/Indian Middle Eastern dddd d © Zurich Financial Services - Global Life Insurance / jaegerj / 3/8/2005 66
Slide 67: We have developed a sophisticated segment based approach to our customers
We have now developed a sophisticated segment based approach to our customers • Age • Economic segment Life • Specialize on profitable, stage growing segments • Develop customized propositions • Add value to Systematic distributors segmentation model • Differentiate ourselves Natio- Distri- • Identi
Slide 68: Our core proposition is constant, but tailored to different customer needs
Our core proposition is constant, but tailored to meet different customer needs Vista for Middle East Customer insight/ segmentation Asians: NRIs: Unit-linked Aim to Aim to investments, invest work, multi- using save, currency, latest protect international tech- access niques Vista for Asia Vista fo
Slide 69: ZIS operates its own hub and spoke model
Today, ZIS operates its own hub and spoke model – in the future, it will also draw on all of our capabilities Products / GL central desks propositions ZIS hub Isle of Man ZIS hub Dubai Isle of Singa- Hong Switzer- UK Dublin Dubai Bahrain Qatar Man pore Kong land Channel centers of IFA training excel
Slide 70: ZIS only operates in markets where it is licensed
ZIS only operates in markets where it is licensed and ‘double protects’ customers through its global licenses… Isle of Man1 UK1 Switzerland1 Sweden Supervised by the Supervised by the (Group protection) Operates through IPA and FSC FSA and Jersey FSC Supervised by FOPI ZIL branch licence Dublin1 Sup
Slide 71: Support, administration and management in just 2 major hubs
. . . with all support, administration, central services and management in just 2 major hubs Zurich International Solutions operates 6 days a week, including all public holidays, 18 hours per day. Isle of Man 380 staff in Douglas Dubai 185 staff in DIFC © Zurich Financial Services - Global Life Insu
Slide 72: Agenda – International and Expatriates Growth
Agenda – International and Expatriates Growth Structure and strategy Zurich International Solutions • Market position • Customers and markets • Operating model Example: the Middle East emerging markets story © Zurich Financial Services - Global Life Strategy Update - May 23, 2008 72
Slide 73: Today, Zurich has offices in the Middle East, with plans for 4 more
Today, Zurich has 5 offices in the Middle East, with plans for 4 more Turkey Kuwait Egypt Bahrain Qatar Dubai, Abu Dhabi, Oman Sharjah Current markets Proposed target countries © Zurich Financial Services - Global Life Strategy Update - May 23, 2008 73
Slide 74: There are 3 stages to our growth strategy for the Region
There are 3 stages to our growth strategy for the Region Our growth 1 Grow existing businesses objectives Leverage the Global Life pillars, 2 particularly Bancassurance 3 Enter Islamic insurance – Takaful © Zurich Financial Services - Global Life Strategy Update - May 23, 2008 74
Slide 75: Takaful is a growing and substantial opportunity
Takaful is a growing and substantial opportunity Total Takaful market size 14 in USD billions 11 7 Other • Relatively low Malaysia 3 insurance Arab States 30% 60% penetration 2005 Moodys & Takaful HSBC today in Muslim DIFC Malaysia countries 2015 projections (<1% in Middle Muslim demographics Total
Slide 76: Our 2-phase approach to Takaful
Our 2-phase approach to Takaful Phase 2 Phase 1 Leverage our network to capture the global opportunity • Use DIFC as hub to enter other markets Build capabilities in Middle East • Expand focus to Asia and Europe • Create partnership with leading • Build on distribution capabilities to Islamic organi
Slide 77: Global Life emerging markets – Summary
Global Life emerging markets – Summary We have a track record of execution in emerging markets . . . . . . and ambitious plans for the future • Opened new and successful branches • We will use our expertise to enter in Singapore, Qatar and an office in and develop domestic markets in Taiwan in the l
Slide 78: Global Life – Global Life Strategy
Global Life – Global Life Strategy Mario Greco Chief Executive Officer Global Life Zurich, May 23, 2008
Slide 79: Our strategic direction: A truly global life franchise
Our strategic direction: A truly global life franchise New Business Value1 APE by Pillar APE by region in USD billions in USD billions 5.7 in USD billions 5.7 North 1.1 Bancassurance 0.2 America 2.0 IFA/Brokers 1.2 2.9 Tied Agents 4.0 2.9 Europe 0.5 0.1 0.7 Private Banks 0.9 1.1 Corporate Life 0.2 2
Slide 80: Q&A
Q&A Ree on ZURICH