Zurich Insurance Group Ltd · SIX:ZURN
Zurich Insurance — Zurich Financial Services — Q1 2008 Earnings Presentation
38 slides from Zurich Insurance's earnings presentation, May 15, 2008
Slide 1: Results Reporting for the Three Months to March 31, 2008
Results Reporting for the Three Months to March 31, 2008 Analysts and Media Presentation Zurich, May 15, 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
Agenda • Introduction James J. Schiro • Results for the Three Months to Dieter Wemmer March 31, 2008 • Q&A © Zurich Financial Services - Results Reporting for the Three Months to March 31, 2008 - May 15, 2008 3
Slide 4: Introduction
Introduction James J. Schiro Chief Executive Officer Zurich, May 15, 2008
Slide 5: Financial highlights
Financial highlights in USD millions 2008 20071 Change for the three months to March 31 Business operating profit 1,764 1,741 1% Net income attributable to shareholders 1,427 1,390 3% General Insurance combined ratio 94.6% 93.3% 1.3pts Global Life new business margin2 22.2% 23.2% -1.0pts Farmers Mgm
Slide 6: Results for the Three Months to March 31, 2008
Results for the Three Months to March 31, 2008 Dieter Wemmer Chief Financial Officer Zurich, May 15, 2008
Slide 7: Business operating profit by segment
Business operating profit by segment in USD millions 2008 20071 Change for the three months to March 31 General Insurance 1,189 1,135 5% Global Life 337 317 6% Farmers Management Services 300 330 -9% Other Businesses 38 149 -74% Corporate Functions -100 -191 48% Total 1,764 1,741 1% 1 Throughout thi
Slide 8: Top line development by segment
Top line development by segment in USD millions 2008 2007 Change Change for the three months to March 31 in LC1 Gross written premiums and policy fees General Insurance 11,191 10,216 10% 2% Global Life (incl. insurance deposits)2 5,398 5,239 3% -5% Other Businesses 521 616 -15% -15% Annual Premium E
Slide 9: General Insurance – key performance indicators
General Insurance – key performance indicators Business Operating Profit Combined ratio (%) in USD millions 2008 2007 Change Global 97.5 for the three months to March 31 Corporate 92.8 Global Corporate 202 210 -4% 95.8 NA North America Commercial 338 386 -12% Commercial 91.9 Europe General Insurance
Slide 10: Comparison of General Insurance loss ratio allowing for major CAT and PYD
Comparison of General Insurance loss ratio allowing for major CAT and PYD 2008 2007 69.9% 70% 70% 69.4% -3.7% 66.4% 66.4% -7.3% 65% 65% 2.8% 3.8% -2.1% 0.0% USD USD USD USD USD USD 301m 0m -578m 198m -152m -263m 60% 60% Underlying Major Large Reported Underlying Major Large Reported 1 Loss Ratio PYD
Slide 11: Global Life – key performance indicators
Global Life – key performance indicators in USD millions 2008 2007 Change Change for the three months to March 31 in LC1 Annual Premium Equivalent (APE) 722 628 15% 8% New business value, after tax 160 146 10% 2% New business margin, after tax2 22.2% 23.2% -1.0pts Business operating profit 337 317 6
Slide 12: Global Life – emerging markets are growing strongly and profitably
Global Life – emerging markets are growing strongly and profitably in USD millions APE APE Growth NBM1 NBM1 for the three months to March 31 2008 2007 2008 2007 ZIS2 127 96 32% 21.7% 19.3% Hong Kong 20 28 -29% 22.9% 41.6% Latin America 19 16 21% 25.2% 13.2% Total Emerging markets 166 140 19% 22.3% 2
Slide 13: Farmers Management Services – key performance indicators
Farmers Management Services – key performance indicators in USD millions 2008 2007 Change for the three months to March 31 Management fees and other related revenues 589 542 9% Management and other related expenses -308 -282 9% Gross management result 281 260 8% Managed gross earned premium margin1
Slide 14: Farmers Exchanges – key performance indicators
Farmers Exchanges1 – key performance indicators in USD millions 2008 2007 Change for the three months to March 31 Gross written premiums 4,027 3,811 6% Net underwriting result -2 100 nm Combined ratio 99.7% 96.7% -3.0pts Adjusted combined ratio2 92.5% 89.6% -2.9pts Surplus ratio 40.1% 40.5% -0.4pts
Slide 15: Other Businesses and Corporate Functions – Business operating profit contribution
Other Businesses and Corporate Functions – Business operating profit contribution in USD millions 2008 2007 Change for the three months to March 31 Other Businesses: - Farmers Re 31 44 -30% - Centre -12 35 nm - Other 19 70 -73% Total Other Businesses 38 149 -74% Corporate Functions -100 -191 48% © Z
Slide 16: Investment performance of Group investments
Investment performance of Group investments in USD millions 2008 2007 Change for the three months to March 31 Net investment income 2,163 2,062 5% Net capital gains on investments and 10 305 -97% impairments of which attributable to shareholders 14 149 -91% Net investment result 2,173 2,368 -8% Net
Slide 17: Development of shareholders' equity
Development of shareholders’ equity in USD millions 31,000 1,427 319 769 30,000 94 29,378 28,804 141 28,945 29,000 28,000 27,000 26,000 25,000 24,000 Balance Dec Change in Restated Net Income Share Change in Other Balance as of 31, 2007 as accounting Balance as of attributable buyback net movements
Slide 18: Financial highlights
Financial highlights in USD millions 2008 20071 Change for the three months to March 31 Business operating profit 1,764 1,741 1% Net income attributable to shareholders 1,427 1,390 3% General Insurance combined ratio 94.6% 93.3% 1.3pts Global Life new business margin2 22.2% 23.2% -1.0pts Farmers Mgm
Slide 19: Q&A
Q&A © Zurich Financial Services - Results Reporting for the Three Months to March 31, 2008 - May 15, 2008 19
Slide 20: Appendix
Appendix © Zurich Financial Services - Results Reporting for the Three Months to March 31, 2008 - May 15, 2008 20
Slide 21: 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 have comfortably achieved our 2008 to 2010: 2007 target. USD 2.4 billion • We expect benefits of USD 2.4 billion from 2008 to 2010 USD 800m • 14 TZW workstreams with over 400 USD 700m initiatives, with increasing
Slide 22: The Zurich Way initiatives – 2008 target
The Zurich Way initiatives – 2008 target by function by business USD 800m division USD 800m USD 700m USD 700m Growth/ 32% Distribution Europe General 21% 35% Insurance 31% USD 500m USD 500m 16% 36% 17% Claims 18% North America 22% 34% Commercial 16% 28% 43% Global 34% U/W 20% 17% Corporate 36% 15% 1
Slide 23: Rate Change Monitor for personal and commercial lines
Rate Change Monitor1 for personal and commercial lines EGI by country by division Switzer- Rest of EGI Farmers UK Germany land Italy Spain Ireland Europe Total IB NAC GC Exchanges Personal Lines 6% 1% -1% -1% 6% -12% 1% 1% 1% n/a n/a 4% Commercial Lines -3% 1% 0% -2% 5% -11% 1% 0% 1% -4% -6% n/a 1 T
Slide 24: Business division BOP-ROE based on RBC-allocated IFRS equity
Business division BOP-ROE1 based on RBC-allocated IFRS equity 2008 2007 for the three months to March 31 General Insurance 29.3% 34.4% - Global Corporate 21.7% 26.5% - North America Commercial 22.6% 31.5% - Europe General Insurance 43.8% 44.7% - International Businesses 7.1% 10.8% - Group Reinsuranc
Slide 25: Global Life – new business indicators
Global Life – new business indicators in USD millions APE APE Change Change NBV2 NBV2 Change for the three months to March 31 2008 2007 in LC1 2008 2007 United States 24 29 -19% -19% 19 28 -31% United Kingdom 183 194 -6% -7% 16 20 -17% Germany 183 104 76% 54% 53 28 91% Switzerland 34 29 17% 1% 14 11
Slide 26: Farmers Exchanges – financial highlights: strong premium growth and surplus position
Farmers Exchanges1 – financial highlights: strong premium growth and surplus position 6'000 42.0% in USD millions 2008 2007 for the 3 months ended March 31 5'000 40.0% Gross written premiums 4,027 3,811 4'000 38.0% Net underwriting result -2 100 3'000 36.0% Net surplus growth 30 149 Ending surplus 5
Slide 27: Farmers Exchanges – gross written premiums by line of business
Farmers Exchanges – gross written premiums by line of business in USD millions 2008 2007 Change for the three months ended March 31 Auto 2,207 2,018 9% Homeowners 970 934 4% Commercial P&C 319 316 1% Workers’ Compensation1 95 103 -8% Specialty 403 401 1% Other 33 39 -15% Total 4,027 3,811 6% 1 The d
Slide 28: Farmers Exchanges – premium growth outperforming industry
Farmers Exchanges – premium growth outperforming industry GWP growth Industry Growth Rate1 2007 Estimate: -0.7% 6% 2008 Forecast: 0.3% 5.7% 5.4% 5.0% 5.1% 4.6% 4% 3.2% 3.3% 2.2% 2% 1.4% 0% 3 Half 9 Full 3 Half 9 Full 3 months year months year months year months year months 2006 2006 2006 2006 2007 2
Slide 29: Farmers Exchanges – combined ratio outperforms industry
Farmers Exchanges – combined ratio outperforms industry for the three months ended March 31 20081 20071 Change Auto 101.3% 100.8% -0.5pts Homeowners 100.3% 89.4% -10.9pts Commercial P&C 92.8% 97.5% 4.7pts Workers’ Compensation 89.6% 93.6% 4.0pts Specialty 99.7% 92.2% -7.5pts Total 99.7% 96.7% -3.0pt
Slide 30: Farmers Exchanges – development of the combined ratio
Farmers Exchanges – development of the combined ratio Quarterly combined ratio 115% 110% California wildfires 105% Rita California wildfires 100% Florida hurricanes Katrina 95% 90% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2002 2003 2004 2005 2006 2007 2008 © Zurich
Slide 31: Competitor Analysis - Overall
Competitor Analysis - Overall Growth vs. GAAP Combined ratio1 Growth NPW % Industry 3 Q108 YTD Peer Averages5 99.0% 8.0 NPW growth = -2.2% GEICO4 CR = 92.9 6.0 Farmers2 4.0 December 2007 2.0 Travelers Industry 3 March 2008 +0.3% 0.0 2008 Industry Estimate Hartford Allstate State Farm Q108 Peer Avera
Slide 32: Zurich's investment portfolio profits greatly from diversification and is balanced in terms of risk
Zurich’s investment portfolio profits greatly from diversification and is balanced in terms of risk Risk Allocation of Zurich’s investment portfolio as of March 31, 2008, in % Asset allocation (%) Risk diversification Risk exposure (%)1 and matching (%) 100 Hedge Funds / Private Equity 62 Hedge Real
Slide 33: Group Investments – Zurich's debt securities are of very high quality
Group Investments – Zurich’s debt securities are of very high quality (98.6% investment grade) As of March 31, 2008 Group Investments Debt securities USD 203bn USD 128bn credit rating: AAA 62.6% credit rating: AA Other Debt 98.6% 12.2% asset securities investment classes grade 37% 63% credit rating:
Slide 34: Group Investments – Zurich's debt securities are well balanced
Group Investments – Zurich’s debt securities are well balanced Group Investments - USD 203bn (100%) As of March 31, 2008 Government and supranational bonds: USD 48bn (23%) 100% inv. grade 77% AAA 5% AA 16% A 1% BBB Corporate bonds: USD 53bn (26%) 98% inv. grade Debt 35% AAA securities
Slide 35: Group Investments – Split of total MBS/ABS of USD 27bn
Group Investments – Split of total MBS/ABS of USD 27bn (13%) MBS/ABS: USD 27bn (13%) Group Investments 100% inv. grade USD 203bn (100%) 94% AAA includes: US MBS: USD 17bn (8.3%) 100% inv. grade 99% AAA Debt see further details on next slide securities US ABS1: USD 3.3bn (1.6%) 100% inv.
Slide 36: Group Investments – Split of US MBS of USD 17bn
Group Investments – Split of US MBS of USD 17bn (8.3%) Group Investments US-MBS: USD 17bn (8.3%) USD 203bn (100%) 100% inv. grade 99% AAA Debt of which: securities US “Agency” MBS: USD 9.4bn (4.6%) 63% 100% AAA USD 1.1bn backed by GNMA USD 8.3bn backed by FNMA and FHLMC Other asset US Comm
Slide 37: Group Investments – Exposure to US sub-prime remains very small
Group Investments – Exposure to US sub-prime remains very small (0.12%) and of high quality Group Investments US sub-prime: USD 252m (0.12%) USD 203bn (100%) 98% inv. grade 78% AAA Limited downgrades by rating agencies since December 07 USD 36m Debt Minimal impairments (Q1-08: USD 1m; securi
Slide 38: Group Investments – Exposure to CDO remains very small
Group Investments – Exposure to CDO remains very small (0.23%) and of high quality Group Investments CDO: USD 469m (0.23%) USD 203bn (100%) 100% inv. grade 74% AAA 85% backed by UK bank loans (CLO) and 15% by other types of collateral assets Debt Minimal impairments (Q1-08: USD 4m; securitie
Zurich Financial Services — Q1 2008 Earnings Presentation on 6ix