Zurich Insurance Group Ltd · SIX:ZURN
Zurich Insurance — Zurich Financial Services — Merrill Lynch Conference 2005
16 slides from Zurich Insurance's conference presentation, Oct 6, 2005
Slide 1: Zurich Financial Services Looking ahead
Zurich Financial Services Looking ahead James J. Schiro Chief Executive Officer Merrill Lynch Conference London, October 6, 2005
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 predictions of or indicate future events, trends, plans or objectives. Forward-looking statements include statements regarding our strategic dire
Slide 3: Zurich has transformed to deliver critical business requirements
Zurich has transformed to deliver critical business requirements … From 2002 … … to today Cost • High expense base • Streamlined cost base Process • Disconnected processes • Clearly defined processes in General and Life Insurance Balance • Inconsistent reserving • Standardized methods with Sheet mor
Slide 4: Now focusing on continued profitability driven by The Zurich Way
... and is now focusing on continued profitability driven by The Zurich Way Profitable growth Operational excellence • Maintain underwriting Restored discipline while improving profitability • Write business to an distribution, new product underwriting profit offering, and service quality • Focus on
Slide 5: We reduced the cost base
We reduced the cost base … 2003 Global Profit Improvement Program • Exceeded USD 1bn target in 2003 • Doubled operating ROE between 2002 and 2004 Life Insurance expense ratio1 General Insurance expense ratio 20% 30% 18% 28% 16% 17.6% 26% 14% 24% 25.3% 24.8% 14.0% 12% 13.4%2 22% 22.3%2 10% 20% 2002 2
Slide 6: Delivered bottom-line impact through improved processes and capabilities
…and delivered bottom-line impact through improved processes and capabilities Incremental impact delivered 100% = 100% = 100% = USD 1 billion USD 540 million USD 500 million 20% 32% Zurich Way process improvements: 20% • Life, AM & other 73% • Tied Distribution 31% • Claims • Underwriting 60% 7% Pri
Slide 7: The Zurich Way is several years into a multi-year development of best practices
The Zurich Way is several years into a world- wide multi-year development of best practices Reserves 100% of reserves addressed Tied agent 100% of production addressed distribution Claims 90% of indemnity addressed Commercial lines 75% of premium addressed underwriting Personal lines 60% of premium
Slide 8: Our balance sheet is strong through conservative approach to reserving
Our balance sheet is strong through our more conservative approach to reserving Reserve strengthening (in USD millions) • Significant reserve strengthening in the past 3 years, mainly in the U.S. 3'000 2'818 • We aim for a strong balance 2'000 sheet and our new approach to 1'874 1'964 reserving is a
Slide 9: We have organized to face-off against our critical markets
We have organized to face-off against our critical markets… Zurich Financial Services Group General Insurance Global Life Farmers Business Global Corporate Management International Europe North Services Businesses General America Insurance Commercial © Zurich Financial Services - Merrill Lynch Confe
Slide 10: …and deepened our bench strength
…and deepened our bench strength • Emphasizing the right people in the right job • Top 200 executives independently assessed • More than half of Top 200 executives newly appointed or reassigned since 2002 • Incentive structure for Top 200 executives redesigned to reward for overall Group performance
Slide 11: Three years of performance improvements
Three years of performance improvements Business Operating Profit (in USD millions) Business Operating Profit (after tax) ROE 4'000 15% 3'000 12.5%1 2,9881 10% 2'000 9.8% 2'316 5% 1'000 1'175 5.1% 0 0% 2002 2003 2004 2002 2003 2004 General Insurance combined ratio Life Insurance new business profit
Slide 12: What's next?
What’s next? • Continued commitment to operational excellence by embedding The Zurich Way in all businesses • Continued focus on financial strength to achieve desired AA rating • Pursue profitable growth without compromising underwriting discipline across our three segments – Farmers, Life and Gener
Slide 13: Farmers is driving profitable growth through increased distribution effectiveness
Farmers is driving profitable growth through increased distribution effectiveness … EXAMPLE • More effective at attracting and installing new agents … Property 25% - 88% increase in new agent applicants between June 2005 over June 2002 - 157% increase in new agent appointments YTD June 2005 when com
Slide 14: New products and partnerships drive profitable growth in Life
… while new products and partnerships drive profitable growth in the Life business … EXAMPLE We are leaders in selected segments… … and have a clearly defined segment focus per market #2 IFA company #2 linked bonds Country Target #4 Pensions #1 Insurance ISAs #4 Protection #2 unit-linked UK Unit-lin
Slide 15: General Insurance will pull multiple levers across three target segments
… and General Insurance will pull multiple levers across its three target market segments EXAMPLE Europe Global Corporate #2 in chosen #2 globally markets Small Business #1 in US1 1 Including Zurich and Farmers © Zurich Financial Services - Merrill Lynch Conference, London, October 6, 2005 15
Slide 16: Conclusion
Conclusion • We have transformed the Group • We have the right market-centric We are confident that organization and … we can drive sustained • … we have placed the right people profit improvements in the right places over the next five years • Our balance sheet is strong © Zurich Financial Services
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