Zurich Insurance Group Ltd · SIX:ZURN

Zurich Insurance — Zurich Financial Services — Sal Oppenheim Conference (November 2007)

44 slides from Zurich Insurance's conference presentation, Nov 21, 2007

  1. Slide 1: Zurich Financial Services - Group Strategy and Results Nine Months 2007

    Zurich Financial Services - Group Strategy and Results Nine Months 2007 Dieter Wemmer Chief Financial Officer Sal Oppenheim Conference Zurich, November 21, 2007

  2. 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

  3. Slide 3: Table of contents

    Table of contents Group strategy and results for the nine months 2007 - highlights General Insurance strategy Global Life strategy Farmers strategy Appendix: - General Insurance - Global Life © Zurich Financial Services 3

  4. Slide 4: Delivery of results the central theme at Zurich

    Delivery of results the central theme at Zurich Business Operating Profit BOPaT-ROE1 (in USD millions) 5,996 2 2 6,000 19.4% 18.9% 20% 4,880 5,000 3,947 15% 13.6% 2 4,000 12.6% 2 2,988 9.8% 3,000 2,316 10% 2,000 5% 1,000 0 0% 2003 2004 2005 2006 9M 07 2003 2004 2005 2006 9M 07 Shareholders’ equity D

  5. Slide 5: Zurich has ability to deliver stable earnings thanks to well diversified book

    Zurich has ability to deliver stable earnings thanks to well diversified book Business Operating Profit Business Operating Profit General Insurance1,3 split by segment1,2 Int’l Businesses 5% Global Corporate 18% Other Businesses Europe 8% General 45% North Insurance 32% America Farmers Commercial Mg

  6. Slide 6: Strategic transformation focus on Margin and Volume

    Strategic transformation focus on Margin and Volume Capital ROE Margin 16%1 Volume Operational Transformational Transformation Growth Enhanced service Platforms Customer delivery Scale Data quality Product Cost advantage Larger data set Expense base Distribution Customer insight 1 Business operating

  7. Slide 7: The Zurich Way – Target of USD 2.4 billion for 2008 to 2010

    The Zurich Way – Target of USD 2.4 billion for 2008 to 2010 Total planned benefits • We are well on track to achieve our 2008 to 2010: 2007 target. USD 2.4 billion • Developing our three year plan, we expect benefits of USD 2.4 billion USD from 2008 to 2010 800m USD USD USD • 14 TZW workstreams with

  8. Slide 8: Focus on volume growth

    Zurich applies a differentiated focus to unlock and grow business value Global IB Focus on volume growth Farmers Life EGI Legend for GI BDs: IB International GC Businesses EGI Europe General Insurance NAC GC Global Corporate NAC North America Commercial Focus on margin enhancement © Zurich Financial

  9. Slide 9: Financial highlights

    Financial highlights in USD millions 2007 20061 Change for the nine months ended September 30 Business operating profit 4,880 4,423 10% Net income attributable to shareholders 4,157 3,326 25% General Insurance combined ratio 96.9% 94.5% -2.4pts Global Life new business margin2 24.0% 19.2% 4.8pts Far

  10. Slide 10: Business operating profit by segment

    Business operating profit by segment in USD millions 2007 20061 Change for the nine months ended September 30 General Insurance 2,779 2,781 0% Global Life 1,090 853 28% Farmers Management Services 1,005 936 7% Other Businesses 585 438 34% Corporate Functions -577 -585 1% Total 4,880 4,423 10% 1 Thro

  11. Slide 11: Top line development by segment

    Top line development by segment in USD millions 2007 2006 Change Change for the nine months ended September 30 in LC1 Gross written premiums and policy fees General Insurance 27,323 26,295 4% 0% Global Life (incl. insurance deposits)2 15,366 14,772 4% -3% Other Businesses 1,824 1,734 5% 5% Annual Pr

  12. Slide 12: General Insurance – key performance indicators

    General Insurance – key performance indicators Business Operating Profit Combined ratio (%) Major in USD millions 2007 2006 Change Global CAT 2.0 95.1 for the nine months ended Sept. 30 Corporate 94.5 Global Corporate 576 529 9% 94.6 NA North America Commercial 1,087 856 27% Commercial 95.7 Europe E

  13. Slide 13: Global Life – key performance indicators

    Global Life – key performance indicators in USD millions 2007 2006 Change Change for the nine months ended September 30 in LC1 Annual Premium Equivalent (APE) 2,002 1,744 15% 8% New business value, after tax 480 334 44% 37% New business margin, after tax2 24.0% 19.2% 4.8pts Business operating profit

  14. Slide 14: Farmers Management Services – key performance indicators

    Farmers Management Services – key performance indicators in USD millions 2007 2006 Change for the nine months ended September 30 Management fees and other related revenues 1,679 1,589 6% Business operating profit 1,005 936 7% Gross operating margin 48.6% 51.8% -3.2pts © Zurich Financial Services 14

  15. Slide 15: Group Investments – Exposure to CDO and US sub-prime remains very small and high quality

    Group Investments – Exposure to CDO and US sub-prime remains very small and high quality CDO: USD 450m (0.23%) Group Investments ƒ 99% inv. grade, 1% unrated USD 193bn (100%) ƒ 71% AAA ƒ 79% backed by UK bank loans (CLO) and 21% by other types of collateral assets Debt ƒ Minimal impairments in 2007

  16. Slide 16: Q&A

    Q&A © Zurich Financial Services 16

  17. Slide 17: Table of contents

    Table of contents Group strategy and results for the nine months 2007 - highlights General Insurance strategy Global Life strategy Farmers strategy Appendix: - General Insurance - Global Life © Zurich Financial Services 17

  18. Slide 18: Significant performance improvement in General Insurance over the past 5 years

    Significant performance improvement in General Insurance over the past 5 years Business Operating Profit Combined Ratio In USD billions 3.8 111.4% CAGR 75% 101.6% BOP-ROE1 97.9% 100.8% 2.1 32% 1.9 Reduction 94.2% 1.2 4pts p.a. Nine Months 0.4 2007 GWP: USD 27.3bn 2002 2003 2004 2005 2006 2002 2003 2

  19. Slide 19: Zurich General Insurance operating model leverages global operations for local delivery

    Zurich General Insurance operating model leverages global operations for local delivery Group Value Added Global Talent Base General insurance Global global functions Global Risk Underwriting Engineering The Zurich Brand The Zurich Way Market facing business divisions Global Corporate North Europe I

  20. Slide 20: General Insurance Strategy

    General Insurance Strategy Grow revenue organically through superior execution of customer 1 relationship, product and distribution management capabilities Target specific acquisitions to further diversify, focusing on consumer, 2 small business and key emerging markets Sustain top tier performance

  21. Slide 21: Organic Growth: Global cross sell, Zurich Connect and Micro-segmentation

    1 Organic Growth: Global cross sell, Zurich Connect and Micro-segmentation Global Cross Sell: Infrastructure to generate additional sales between Business Units across General Insurance and Global Life USD 1bn GWP expected by 2010 Zurich Connect: New internet based distribution of General Insurance

  22. Slide 22: Table of contents

    Table of contents Group strategy and results for the nine months 2007 - highlights General Insurance strategy Global Life strategy Farmers strategy Appendix: - General Insurance - Global Life © Zurich Financial Services 22

  23. Slide 23: Significant improvement of financial metrics over the past years

    Significant improvement of financial metrics over the past 6 years New business APE New business margin in USD millions in % CAGR 2,403 Up 17.6 21.7%EEV 3% 2,368 points 2,303 * 17.7%EEV 2,134 11.4% Nine Months 2,082 9.0% 2,008 6.1% 2007 4.1% •APE USD 2,002m 2001 2002 2003 2004 2005 2006 2001 2002 20

  24. Slide 24: Strategic Roadmap: Cornerstones of the Global Life Strategy

    Strategic Roadmap: Cornerstones of the Global Life Strategy Five cornerstones of the Global Life Strategy Key thrusts Shift focus to volume Growing new business volume while maintaining 11 growth high margin Focus on multi-niche Identifying profitable niches and achieve 2 strategy leadership positio

  25. Slide 25: Volume growth – Plan for double digit growth rates p.a. fuelled by global opportunities

    1 Volume growth – Plan for double digit growth rates p.a. fuelled by global opportunities Global Life Strategy 11 Shift focus to volume growth • Switzerland unit-linked • Risk products through Focus on multi- • Ireland SSIA reinvestment brokers 2 niche strategy Leverage • Italy pension reform • New

  26. Slide 26: Volume growth – Where will the growth come from

    1 Volume growth – Where will the growth come from Global Life Strategy Shift focus to 11 volume growth Focus on multi- 2 niche strategy Leverage UK Germany Other Emerging 3 network Capital markets markets 4 management Talent 5 management UK product UL and FNWL niches protection Tied Agent Sales Exce

  27. Slide 27: Global Life Strategy

    Global Life Strategy We have turned our business around and now we are growing, with specific 1 initiatives in three growth waves Promising niches identified and aligned with distribution, and… 2 • Actively adding new niches to capture the growing markets • Active proposition management to maintain

  28. Slide 28: Table of contents

    Table of contents Group strategy and results for the nine months 2007 - highlights General Insurance strategy Global Life strategy Farmers strategy Appendix: - General Insurance - Global Life © Zurich Financial Services 28

  29. Slide 29: U.S. market overview

    U.S. market overview Total U.S. P&C market Top 10 U.S Personal Lines Insurers(1) Market Company share (%) Other State Farm Group 18.8 Commercial(2) PP Auto 29.1% 33.5% Allstate Insurance Group 11.5 Farmers Insurance Group 5.5 Progressive Insurance Group 5.4 Comm. Auto 6.2% Home Berkshire Hathaway In

  30. Slide 30: Farmers, unique structure insulates the management company from results volatility

    Farmers, unique structure insulates the management company from results volatility US P&C Industry Income1 Farmers Management Services Underlying Business Operating Profit in USD billions in USD millions 85 1,400 70 1,200 55 1,000 40 800 25 600 10 400 -5 200 -20 0 2004 2006 1994 1996 1992 1998 2000

  31. Slide 31: Farmers Exchanges – competitive performance

    Farmers Exchanges – competitive performance Growth vs. GAAP Combined Ratio1 - June 2007 Sept 2007 Q307 YTD Peer Averages4 2007 Industry Estimate NPW growth = -1.5% Growth NPW % Industry 3 Q307 Peer Average CR = 89.5% 6.0 97.3% Farmers 5.0 Exchanges2 4.0 3.0 2.0 1.0 0.0 State Farm Safeco 3 Industry -

  32. Slide 32: Already a market leader in core states…with plans to be a leading player nationally

    Already a market leader in core states…with plans to be a leading player nationally Farmers All Lines Market Share 0.5% market share (ECE1 states) 4.9% market share (Core states) Non-operating states Top 5 Top 10 Top 25 ECE1 Independent agent states 1 East Coast Expansion Source: AM Best 2005 © Zuri

  33. Slide 33: Farmers, aspiration is to achieve 21bn in GWP by 2010 maintaining current levels of profitability

    Farmers, aspiration is to achieve 21bn in GWP by 2010 maintaining current levels of profitability Growth initiative pipeline: • Achieve double digit growth by 2010 2007-2010 net incremental GWP • Maintain a 98% combined ratio • USD 7 billion increase in GWP in USD millions • USD 437 million in addit

  34. Slide 34: Farmers strategy is working

    Farmers strategy is working Customer • Recognized by JD Power’s 2006 Home Insurance survey for most improved customer satisfaction score • Planned acquisition of Bristol West to expand product portfolio Product and distribution footprint • Agency development continues at record levels with 1,951 new

  35. Slide 35: Growth targets

    Growth targets 5% CAGR GWP growth1 over the cycle, maintaining a pre tax General Insurance BOP ROE of greater than 25% Double digit APE growth taking the New Business Value to Global Life USD 850m by 2010 GWP of USD 21bn by 2010, not exceeding a combined ratio of Farmers 98% Passion, Speed and Growt

  36. Slide 36: Table of contents

    Table of contents Group strategy and results for the nine months 2007 - highlights General Insurance strategy Global Life strategy Farmers strategy Appendix: - General Insurance - Global Life © Zurich Financial Services 36

  37. Slide 37: Strategic focus on growth in International, EGI, Personal Lines, Direct and P&A business

    Strategic focus on growth in International, EGI, Personal Lines, Direct and P&A business GWP Breakdown 2006 Growth Focus IB Business Global 8% Division NAC Corporate 21% 35% • International Businesses 36% • Europe General Insurance EGI Sub-Segment Corporate Personal 21% 25% • Personal Commercial 54%

  38. Slide 38: Target Acquisitions: Zurich Expanding in Russian Emerging Market

    2 Target Acquisitions: Zurich Expanding in Russian Emerging Market • Market consolidation and more than 30% growth in Zurich personal lines Opportunity • Enlarged Russian operations through Nasta acquisition with increased regional presence • 2007 GWP USD 350m (no. 5-6 market position in Motor) • 3,

  39. Slide 39: Top Tier Performance: The Zurich Way will continue to leverage our global position

    3 Top Tier Performance: The Zurich Way will continue to leverage our global position Not applicable No TZW initiatives started GI TZW initiatives partially rolled out NAC EGI GC IB TZW init. rolled out, full value not yet captured First wave TZW init. fully rolled out, full value UW – Commercial and

  40. Slide 40: Table of contents

    Table of contents Group strategy and results for the nine months 2007 - highlights General Insurance strategy Global Life strategy Farmers strategy Appendix: - General Insurance - Global Life © Zurich Financial Services 40

  41. Slide 41: Multi-niche – Two-thirds of sales in unit-linked and protection

    2 Multi-niche – Two-thirds of sales in unit-linked and protection Global Life Strategy 11 Shift focus to Why unit-linked? volume growth Focus on multi- • Fee based business/low capital requirement/attractive returns 2 niche strategy Leverage • Flexible and attractive customer propositions 3 network

  42. Slide 42: Leverage network – Leverage our strength using the proven TZW methodology

    3 Leverage network – Leverage our strength using the proven TZW methodology Global Life Strategy 11 Shift focus to volume growth Tied agent • Sales excellence: 2600 agents retrained resulted in 20% productivity increase. 2 Focus on multi- niche strategy distribution Leverage • Leverage GI and Farmer

  43. Slide 43: Capital management – Further optimization of balance sheet

    4 Capital management – Further optimization of balance sheet Global Life Strategy 11 Shift focus to Capital • Vita – off balancing of group life business in Switzerland volume growth 2 Focus on multi- release and • Consolidation of UK operations niche strategy Leverage de-risking • ALM hedging/de-ri

  44. Slide 44: Talent management – Develop intellectual capital

    5 Talent management – Develop intellectual capital Global Life Strategy Shift focus to 11 volume growth 2 Focus on multi- Proposition niche strategy 3 Leverage Management network 4 Capital • A strategic workforce management 5 Talent management planning implemented – 2010 Talent Initiative Distributi

Zurich Financial Services — Sal Oppenheim Conference (November 2007) on 6ix