Zurich Insurance Group Ltd · SIX:ZURN
Zurich Insurance — Zurich Financial Services — FY2005 Earnings Presentation
29 slides from Zurich Insurance's earnings presentation, Feb 16, 2006
Slide 1: Annual Results Reporting 2005 Analysts' presentation
Annual Results Reporting 2005 Analysts’ presentation Zurich, February 16, 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 predications of or indicate future events, trends, plans or objectives. Forward- looking statements include statements regarding our targeted pro
Slide 3: Agenda
Agenda • Overview James J. Schiro • Annual results 2005 Patrick O’Sullivan • Closing remarks James J. Schiro • Q&A © Zurich Financial Services - Annual Results Reporting 2005, February 16, 2006 3
Slide 4: Overview
Overview James J. Schiro Chief Executive Officer February 16, 2006
Slide 5: Financial highlights
Financial highlights in USD millions 2005 20041 Change for the years ended December 31 Gross written premiums and policy fees 46,797 49,236 -5% Business operating profit 3,947 2,988 32% Net income attributable to shareholders 3,214 2,466 30% General Insurance combined ratio 100.8% 102.0% 1.2pts Life
Slide 6: Annual results 2005
Annual results 2005 Patrick O’Sullivan Group Finance Director February 16, 2006
Slide 7: Business operating profit by segment
Business operating profit by segment in USD millions 2005 2004 Change for the years ended December 31 General Insurance 1,914 1,241 54% Life Insurance 1,079 934 16% Farmers Management Services 1,221 1,109 10% Other Businesses 441 229 93% Corporate Functions -708 -525 -35% Total 3,947 2,988 32% © Zur
Slide 8: Gross written premiums and policy fees by segment
Gross written premiums and policy fees by segment in USD millions 2005 2004 Change for the years ended December 31 General Insurance 33,401 33,855 -1%1 Life Insurance 10,535 10,948 -4%2 Other Businesses 3,004 4,704 -36% Other segments and eliminations -143 -271 nm Total 46,797 49,236 -5% 1 After adj
Slide 9: General Insurance key performance indicators
General Insurance key performance indicators Business operating profit Combined ratio (%) in USD millions 2005 2004 Change 100.8 Total1 for the years ended December 31 102.0 Global Corporate 25 585 -96% 107.4 Global North America Commercial 223 -1,298 nm Corporate 93.9 Europe General Insurance 1,509
Slide 10: North America property catastrophe treaty
North America property catastrophe treaty 2005 property 2006 property CAT treaty1 CAT treaty1 Reinsurance Reinsurance Reinsurance Reinsurance cover cover cover cover 850m xs 400m 1,000m xs 250m 1,025m xs 175m 825m xs 175m Net retention Net retention Net retention USD 400m Net retention USD 175m USD
Slide 11: Development of reserves for Losses and Loss Adjustment Expenses (LAE)
Development of reserves for Losses and Loss Adjustment Expenses (LAE) in USD millions 2005 2004 Net reserves for losses and LAE, as of January 1 43,487 36,971 Net losses and LAE paid -17,200 -17,517 Net losses and LAE incurred - Current year 22,465 21,529 - Prior year 141 1,964 Other movements (FX,
Slide 12: Non-life ultimate loss ratios by accident year
Non-life ultimate loss ratios by accident year Cumulative incurred loss ratios1 2001 2002 2003 2004 2005 In the year 81.4% 70.6% 67.1% 68.3% 73.3% 1 year later 85.7% 72.0% 66.1% 64.2% 2 years later 85.8% 72.3% 65.4% 3 years later 87.4% 74.5% 4 years later 88.5% 1 In % of net earned premiums in that
Slide 13: Life Insurance key performance indicators
Life Insurance key performance indicators in USD millions 2005 2004 Change for the years ended December 31 Business operating profit 1,079 934 16% New business profit margin1 14.5% 11.4% 3.1pts Embedded value operating profit 1,344 1,117 20% Embedded value operating return, after tax2 10.9% 10.8% 0.
Slide 14: Life Insurance business operating profit
Life Insurance business operating profit in USD millions 2005 2004 Change for the years ended December 31 United States 236 203 16% United Kingdom1 184 275 -33% Germany 140 104 35% Switzerland 236 167 41% Italy 58 37 57% Spain 37 28 32% Ireland 33 21 57% Other European countries 17 28 -39% Internati
Slide 15: Life Insurance new business indicators
Life Insurance new business indicators Annual Premiums Equivalent and New Business Profit New business profit margin1 US 42.0 / in USD millions APE APE NBP NBP 61.0 / for the years ended Dec. 31 2005 2004 2005 2004 8.9 UK2 5.4 United States 111 120 47 74 16.6 Germany 12.0 United Kingdom2 1,017 891 9
Slide 16: Life Embedded Value result
Life Embedded Value result in USD millions 2005 2004 Change for the years ended Dec. 31 Opening Embedded Value 12,757 10,412 23% Operating profit expected from in-force and net assets 942 842 12% New business profit 333 273 22% Operating variance and operating assumption changes 69 2 nm Total operat
Slide 17: Business operating profit by segment
Business operating profit by segment in USD millions 2005 2004 Change for the years ended December 31 General Insurance 1,914 1,241 54% Life Insurance 1,079 934 16% Farmers Management Services 1,221 1,109 10% Other Businesses 441 229 93% of which: Farmers Re 196 224 -13% of which: Centre 222 47 372%
Slide 18: Investment performance of Group investments
Investment performance of Group investments in USD millions 2005 2004 Change for the years ended December 31 Net investment income 7,782 7,460 4% Net capital gains on investments and impairments 2,512 956 163% Net investment result 10,294 8,416 22% Movements in net unrealized gains on invest- ments
Slide 19: Closing remarks
Closing remarks James J. Schiro Chief Executive Officer February 16, 2006
Slide 20: Our Zurich Way initiatives target more than USD 1.5 billion net over 3 years
Our Zurich Way initiatives target more than USD 1.5 billion net over 3 years 100% = 100% = 100% = USD 500m USD 500m USD 500m 9% 9% Other 19% 18% • We comfortably 5% Distribution exceeded our 2005 29% target of USD 500m 23% 16% 16% Claims • More than 200 initiatives in 2006 36% 33% 29% U/W • Rigorous
Slide 21: Q&A
@ ZURICH O&A
Slide 22: Appendix
@ ZURICH Appendix
Slide 23: Catastrophe impact on the combined ratio by General Insurance market segment
Catastrophe impact on the combined ratio by General Insurance market segment for the year ended December 31, 2005 As reported CAT impact Global Corporate 107.4% 10.3% North America Commercial 106.3% 7.8% Europe General Insurance 93.8% 0.6% International Businesses 94.0% 0.7% Total 100.8%1 4.6% Total
Slide 24: Asbestos & Environmental reserves
Asbestos & Environmental reserves 2005 2004 Gross 3-year Gross 3-year 1 reserves survival ratio 1 reserves survival ratio Asbestos 2,957 20.4 2,964 22.1 of which: US 1,652 16.3 1,601 15.9 of which: UK 1,305 29.9 1,363 34.1 Environmental 462 6.8 500 6.7 Total 3,419 3,464 1 In USD millions © Zurich Fi
Slide 25: Life Insurance: IFRS net assets adjusted to bridge EV
Life Insurance: IFRS net assets adjusted to bridge EV in USD billions 2005 Tangible assets in IFRS equity 7.3 DAC and other intangibles 2.3 Goodwill 0.4 Life IFRS net assets 10.0 Adjustments: Reserves and investment valuation differences1 -1.3 Deduct DAC and other intangibles -2.3 Deduct goodwill2 -
Slide 26: Life Insurance: Shareholders' deferred acquisition costs and recoverability
Life Insurance: Shareholders’ deferred acquisition costs and recoverability in USD billions 2005 2004 DAC/DOC assets included in Life segment balance sheet 9.1 9.6 Present value of future profits1 and other intangibles 0.9 1.0 Deferred front-end fees -4.6 -4.9 Policyholder share of DAC/DOC and other
Slide 27: Farmers Exchanges financial highlights
Farmers Exchanges1 financial highlights in USD millions 2005 2004 for the years ended December 31 4,700 40% Gross written premiums 14,528 14,189 4,500 38% Net underwriting result 235 236 4,300 Net surplus change (YTD) 484 462 4,100 36% Ending Surplus 4,630 4,146 3,900 34% Surplus Ratio 37.2% 36.5% 3
Slide 28: Farmers Exchanges – combined ratio by line of business
Farmers Exchanges – combined ratio by line of business for the years ended December 31 2005 2004 Change Auto 97.7% 99.9% 2.2 pts Homeowners 82.7% 77.8% -4.9 pts Commercial P&C1 98.3% 99.0% 0.7 pts Workers’ Compensation 99.2% 99.7% 0.5 pts Specialty 103.6% 99.9% -3.7 pts Total 97.1% 96.8% -0.3 pts Ad
Slide 29: Farmers Exchanges – development of the combined ratio
Farmers Exchanges – development of the combined ratio Quarterly combined ratio 125% 120% 115% 110% California wildfires 105% Florida hurricanes Rita 100% Katrina 95% 90% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2001 2002 2003 2004 2005 © Zurich Financial Services - Annual Results
Zurich Financial Services — FY2005 Earnings Presentation on 6ix