Zurich Insurance Group Ltd · SIX:ZURN
Zurich Insurance — Zurich Financial Services — FY2001 Earnings Presentation
25 slides from Zurich Insurance's earnings presentation, Mar 21, 2002
Slide 1: Annual results 2001
Annual results 2001 Media presentation March 21, 2002 © Zurich Financial Services
Slide 2: Welcome, Results, Review, Q&A
• Welcome • Results – Günther Gose • Review – Rolf Hüppi • Q&A • Buffet lunch © Zurich Financial Services 2
Slide 3: Welcome, Results, Review, Q&A
• Welcome • Results – Günther Gose • Review – Rolf Hüppi • Q&A • Buffet lunch © Zurich Financial Services 3
Slide 4: Results overview
Results overview In USD million 2001 2000 Normalized net income pre Sep. 11th and disposed businesses1 1,049 2,008 Insurance losses from Sept. 11th - 706 -- Results from disposed businesses2 5 59 Normalized net income 348 2,067 Asset impairment charges3 -517 -41 Actual realized gains4 versus normali
Slide 5: IAS net income by segment
IAS net income by segment In USD million 1600 1'514 2001 1400 2000 1200 965 1000 800 621 501 559 600 400 200 102 51 101131 89 80 103 0 -29 -200 e g re t ce fe fe s en at er in nt Li Li n or rm -400 nk em ra Ce on rp su Ba Fa -460 ag N -600 Co in an Re -800 m et -1000 ss A -1200 -1'087 -1400 -1'312 -
Slide 6: Normalized income by segment
Normalized income by segment In USD million 1600 2001 1400 1'258 2000 1200 991 1000 800 723 537 531 600 400 133 89 135 200 105 60 63 80 0 -24 -200 te g fe e ce t fe s en er tr n ra Li Li n ki n rm em ra -400 o Ce n on -378 rp su Ba Fa ag N Co in -600 an Re m -800 et -767 ss -1000 A -1200 -1'121 -140
Slide 7: Strong premium growth achieved, but unacceptable combined ratio in Non-life
Strong premium growth achieved, but unacceptable combined ratio in Non-life Combined ratios In USD millions 2001 2000 % change1 Total GWP 23,345 19,290 +23% Other NEP 16,744 14,235 +20% RoW Loss ratio 84.2% 75.5% +8.7 pts Expense ratio 26.4% 28.0% -1.6 pts Cont. Eur. Combined ratio2 111.0% 104.2% +6
Slide 8: Deterioration in non-life underwriting result was due to adverse factors
Deterioration in non-life underwriting result was due to a number of adverse factors In USD millions Total Sept. 11th Other impact impact Decline in NL U/W result 1,231 284 Of which: NA Corporate 355 177 Prior year losses Continental Europe 174 -- Corporate business Other Covariance release (2000) 3
Slide 9: Strong business growth recorded in life, but with lower margins
Strong business growth recorded in life, but with lower margins New business margins In USD millions 2001 2000 % change1 in % GWP & deposits 17,871 16,296 +13% a l To t IAS net income 621 965 - 34% RoW Normalized income 723 991 - 27% New bus. prems. (APE) 2,008 1,915 +10% IS A UK 2000 New business m
Slide 10: Farmers Management Services recorded good underlying growth
Farmers Management Services recorded good underlying growth In USD millions 2001 2000 % chg. Management fees 1,690 1,589 +6.4% Gross operating income 854 792 +7.8% Operating margin1 50.5% 49.8% +0.7pts Investment result2 43 199 -78.4% IAS net income excl. investment result 474 436 +8.7% IAS reported
Slide 11: Centre and ZCM produced strong underlying results
Centre and ZCM produced strong underlying results 1 In USD millions 2001 2000 % change Centre IAS net income pre Sep. 11th 161 131 +23% IAS net income 101 131 -23% Normalized net income 63 133 -53% Banking & Capital Markets Net income 89 80 +11% Of which: ZCM 117 60 +95% 1) in local currencies © Zur
Slide 12: Reinsurance results were adversely affected by Sept. 11th
Reinsurance results were adversely affected by Sept.11th 2001 Converium1 Zurich Other Total in USD millions Conv. 2 Retained GWP 2,109 877 2,986 NEP 1,733 466 2,199 Losses -1,897 -222 -501 -2,620 of which: Sept. 11th -289 -171 0 -460 Other expenses -705 -68 -773 Investment result 159 29 188 IPO gain
Slide 13: Corporate: cost improvements more than offset by realized losses
Corporate: cost improvements more than offset by realized losses In USD millions 2001 2000 change Net U/W result1 -136 -204 68 Investment income 239 217 22 Realized gains -381 206 -587 Other income 374 326 48 Adm. & oper. Expenses -725 -991 266 Interest expense -716 -605 -111 Others 33 -36 69 Net IA
Slide 14: Equity was primarily affected by adverse financial markets and foreign exchange rates
Equity was primarily affected by adverse financial markets and foreign exchange rates in USD millions 2001 2000 change Pref. Securities 1,096 0 1,096 Common shares 626 626 0 Treasury stock -3 -2 -1 APIC & Ret.earnings 15,607 16,368 -761 Net unrealized gains 1,567 4,065 -2,498 Cumulative translation
Slide 15: But capitalization remains strong and leverage was reduced
But capitalization remains strong and leverage was reduced In USD millions 2001 2000 % change Total capital1 22'332 26'364 -15.3% Subordinated debt 1'500 1'531 -2.0% Senior debt 3'116 4'087 -23.8% Senior debt/total capital 14.0% 15.5% -1.5pts. Interest expense2 430 398 +8.0% Zurich Insurance Rating3
Slide 16: Divestitures will facilitate debt reduction and fund growth
Divestitures will facilitate debt reduction and fund growth • Zurich will achieve $5 bn of divestitures Consideration Net proceeds Capital gains – Converium 2 bn ~1 bn 0.3 bn – ZSI/DB (pending) 2 bn 0.7 bn 0.2 bn1 – Baloise 1 bn 1.0 bn 0.1 bn – Total 5 bn 2.7 bn 0.6 bn • Proceeds will be used to – R
Slide 17: Welcome, Results, Review, Q&A
• Welcome • Results – Günther Gose • Review – Rolf Hüppi • Q&A • Buffet lunch © Zurich Financial Services 17
Slide 18: 2001 was a disappointing year
2001 was a disappointing year For Zurich • Poor underwriting performance and net IAS loss • Several profit warnings • Poor share price performance For the industry • September 11th was the largest insurance loss in history • Negative equity returns worldwide • Prior year adverse loss developments ©
Slide 19: But Zurich made a lot of progress
But Zurich made a lot of progress • Strengthened positions in key markets • Divested $5 billion • Reduced debt by $1 billion • Reduced GHO costs and non life expense ratio • Expanded distribution through alliances • Enhanced service to customers • Reorganized management structure © Zurich Financial
Slide 20: Where Zurich is today
Where Zurich is today • Focused businesses on non-life, life and asset gathering • Top 5 market positions in – United States – United Kingdom – Continental Europe • Strategic Alliances in three key markets • Strong brand and multi-channel distribution network © Zurich Financial Services 20
Slide 21: Emphasis on execution
Emphasis on execution • Focus – Strengthen position in key markets – Divest where we do not have sustainable or competitive strength • Growth – Upturn in US and UK commercial non-life – Favorable long term trend in European life market • Efficiency – Review financial planning, risk assessment and co
Slide 22: Chairman and CEO roles
Chairman and CEO roles • Separation of Chairman and CEO roles • Nominations committee working on new CEO appointment • Decision taken by Board of Directors © Zurich Financial Services 22
Slide 23: Capital position
Capital position • Strong capital position at Y/E 2001 • MILES issue and ZSI/DB transaction will further strengthen capital adequacy in 2002 • Expected strong premium growth will require to increase our capacity to underwrite new business • Several options are available to facilitate this © Zurich F
Slide 24: Contradictory trends reduce visibility for 2002
Contradictory trends reduce visibility for 2002 • Strong cyclical growth in Non life driven by rate increases in commercial lines, partially offset by increased claims trends • Favorable long term trend in Life, but margins under pressure • A fragile economic recovery and volatile financial markets
Slide 25: Outlook for Zurich in 2002
Outlook for Zurich in 2002 Zurich has a portfolio of strong businesses and is well positioned to take advantage of favorable conditions in life and non life, but remains cautious in light of the current uncertain risk and economic environment © Zurich Financial Services 25
Zurich Financial Services — FY2001 Earnings Presentation on 6ix