Zurich Insurance Group Ltd · SIX:ZURN
Zurich Insurance — Zurich Financial Services — FY2006 Earnings Presentation
33 slides from Zurich Insurance's earnings presentation, Feb 15, 2007
Slide 1: Annual Results Reporting 2006 Analysts' presentation
Annual Results Reporting 2006 Analysts’ presentation Zurich, February 15, 2007
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 • Annual results 2006 Patrick O’Sullivan • Q&A • Closing remarks James J. Schiro © Zurich Financial Services - Annual Results Reporting 2006 - February 15, 2007 3
Slide 4: Introduction
Introduction James J. Schiro Chief Executive Officer Zurich, February 15, 2007
Slide 5: Financial highlights
Financial highlights in USD millions 2006 2005 Change for the years ended December 31 Business operating profit 5,861 3,947 48% Net income attributable to shareholders 4,527 3,214 41% General Insurance combined ratio 94.2% 100.8% 6.6pts Global Life new business margin1 21.7% 17.7% 4.0pts Return on c
Slide 6: Annual results 2006
Annual results 2006 Patrick O’Sullivan Group Finance Director February 15, 2007
Slide 7: Business operating profit by segment
Business operating profit by segment in USD millions 2006 2005 Change for the years ended December 31 General Insurance 3,831 1,913 100% Global Life 1,162 1,079 8% Farmers Management Services 1,202 1,221 -2% Other Businesses 554 413 34% Corporate Functions -888 -679 -31% Total 5,861 3,947 48% © Zuri
Slide 8: Top line development by segment
Top line development by segment in USD millions 2006 2005 Change Change for the years ended December 31 in LC1 Gross written premiums and policy fees General Insurance 34,178 33,401 2% 2% Global Life (incl. insurance deposits)2 21,022 19,536 8% 7% Other Businesses 2,289 3,007 -24% -24% Annual Premiu
Slide 9: General Insurance – key performance indicators
General Insurance – key performance indicators Business Operating Profit Combined ratio (%) in USD millions 2006 2005 Change Global 94.6 for the years ended December 31 Corporate 109.2 Global Corporate 694 -60 nm NA 95.9 Commercial 105.3 North America Commercial 1,192 307 288% Europe 91.9 Europe Gen
Slide 10: Development of Reserves for Losses and LAE
Development of Reserves for Losses and Loss Adjustment Expenses (LAE) in USD millions 2006 2005 Net reserves for losses and LAE, as of January 1 46,194 43,487 Net losses and LAE paid -18,907 -17,200 Net losses and LAE incurred - Current year 21,447 22,465 - Prior years -218 141 Other movements (FX,
Slide 11: 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 2006 In the year 81.4% 70.6% 67.1% 68.3% 73.3% 69.6% 1 year later 85.7% 72.0% 66.1% 64.2% 68.1% 2 years later 85.8% 72.3% 65.4% 63.5% 3 years later 87.4% 74.5% 65.5% 4 years later 88.5% 74.7% 5 y
Slide 12: Global Life – key performance indicators
Global Life – key performance indicators in USD millions 2006 2005 Change Change for the years ended December 31 in LC1 Annual Premium Equivalent (APE) 2,368 2,303 3% 15% New business value, after tax 515 406 27% 38% New business margin, after tax2 21.7% 17.7% 4.0pts Embedded value operating profit
Slide 13: Global Life – new business indicators
Global Life – new business indicators in USD millions APE APE Change Change NBV2 NBV2 Change for the years ended Dec 31 2006 2005 In LC1 2006 2005 United States 113 111 2% 2% 59 71 -17% United Kingdom 767 790 -3% 8% 94 78 21% Germany 532 525 1% 16% 126 86 47% Switzerland 86 105 -18% -6% 33 6 450% Re
Slide 14: Global Life – South East Asia is growing strongly and profitably
Global Life – South East Asia is growing strongly and profitably in USD millions APE APE Growth NBM2 NBM2 for the years ended Dec 31 2006 2005 2006 2005 Zurich International Solutions1: - Hong Kong 97 58 - Singapore 12 - - Total 109 58 88% 33.0% 28.0% International Businesses: - Hong Kong 70 41 71%
Slide 15: Global Life Embedded Value result
Global Life Embedded Value result for the years ended December 31 2006 2006 2005 2005 USD m Return USD m Return Opening Embedded Value 11,680 12,545 Expected operating profit1,2 718 815 New business value2 515 406 Operating variance2 -6 336 Total operating profit2 1,227 10.6% 1,557 14.0% Economic va
Slide 16: Farmers Management Services – key performance indicators
Farmers Management Services – key performance indicators in USD millions 2006 2005 Change for the years ended December 31 Management fees and other related revenue 2,133 2,058 4% Business operating profit 1,202 1,221 -2% Gross operating margin 49.1% 51.9% -2.8pts Business operating profit and gross
Slide 17: Farmers Exchanges – key performance indicators
Farmers Exchanges1 – key performance indicators in USD millions 2006 2005 Change for the years ended December 31 Gross written premiums 15,003 14,528 3% Gross written premiums excl. Workers Comp 14,617 14,069 4% Net underwriting result 450 235 92% Combined ratio 95.9% 97.1% 1.2pts Adjusted combined
Slide 18: Other Businesses and Corporate Functions – Business operating profit contribution
Other Businesses and Corporate Functions – Business operating profit contribution in USD millions 2006 2005 Change for the years ended December 31 Other Businesses: Farmers Re 181 196 -8% Centre 246 222 11% Other 127 -5 nm Total Other Businesses 554 413 34% Corporate Functions -888 -679 -31% © Zuric
Slide 19: Investment performance of Group investments
Investment performance of Group investments in USD millions 2006 2005 Change for the years ended December 31 Net investment income 7,899 7,782 2% Net capital gains on investments and 1,536 2,512 -39% impairments of which attributable to shareholders 1,088 966 13% Net investment result 9,435 10,294 -
Slide 20: Capital management actions – total capital return increased by 181%
Capital management actions – total capital return increased by 181% and total payout ratio to 51% 38.71 100% Diluted earnings per share (in CHF) 27.11 181% 51% Share buyback (per share)1 8.65 28% 11.002 Payout to shareholders 7.003 2005 2006 1 Total share buyback of CHF 1.25 billion divided by issue
Slide 21: Q&A
Q&A © Zurich Financial Services - Annual Results Reporting 2006 - February 15, 2007 21
Slide 22: Closing remarks
Closing remarks James J. Schiro Chief Executive Officer Zurich, February 15, 2007
Slide 23: Appendix
Appendix © Zurich Financial Services - Annual Results Reporting 2006 - February 15, 2007 23
Slide 24: Update on The Zurich Way – revised target of USD 2 billion
Update on The Zurich Way – revised target of USD 2 billion for 2007 to 2009 Total planned benefits 2007 to 2009: • Developing our three year plan, we USD 2 billion expect benefits of USD 2 billion from USD 2007 to 2009. 700m • 12 major work-streams with over 300 USD USD initiatives 500m 500m • Expec
Slide 25: The Zurich Way initiatives – updated 2007 target
The Zurich Way initiatives – updated 2007 target by function USD 700m by business USD 700m division 21% Growth/ Distribution 31% Europe General USD 500m USD 500m USD 500m USD 500m Insurance 5% 18% 16% Claims 30% 34% 23% 16% 28% North America Commercial 25% 33% 43% U/W 20% 36% 5% 15% 13% Global Corpo
Slide 26: Asbestos and environmental reserves
Asbestos and environmental reserves 2006 2005 Gross 3-year Gross 3-year reserves survival reserves survival USD m ratio USD m ratio Asbestos 3,499 28.8 2,957 23.1 of which: US 1,570 15.4 1,652 16.3 of which: UK 1,929 39.71 1,305 31.61 Environmental 433 7.8 462 6.8 Total 3,932 3,419 1 3-year survival
Slide 27: Global Life - IFRS net assets adjusted to bridge EV
Global Life - IFRS net assets adjusted to bridge EV in USD billions 2006 Tangible assets in IFRS equity 8.3 DAC and other intangibles 2.9 Goodwill 0.5 Global Life IFRS net assets 11.7 Adjustments: Minorities -0.2 Reserves and investment valuation differences1 -0.9 Deduct DAC and other intangibles -2
Slide 28: Global Life – Shareholders' intangibles and recoverability
Global Life – Shareholders’ intangibles and recoverability in USD billions 2006 2005 DAC/DOC assets included in Global Life 10.9 9.1 Present value of future profits1 and other intangibles 1.0 0.9 Deferred front-end fees -5.3 -4.6 Policyholder share of DAC/DOC and other intangibles -2.4 -2.0 Tax dedu
Slide 29: Farmers Exchanges – financial highlights
Farmers Exchanges1 – financial highlights in USD millions 2006 2005 6'000 42.0% for the years ended Dec 31 5'000 40.0% Gross written premiums 15,003 14,528 4'000 38.0% Net underwriting result 450 235 3'000 36.0% Net organic surplus generated 752 484 2'000 34.0% Net surplus growth2 645 484 1'000 32.0
Slide 30: Farmers Exchanges – gross written premiums by line of business
Farmers Exchanges – gross written premiums by line of business in USD millions 2006 2005 Change for the years ended December 31 Auto 7,754 7,671 1% Homeowners 4,079 3,781 8% Commercial P&C 1,187 1,148 3% Workers’ Compensation 386 459 -16% Specialty 1,467 1,357 8% Other 130 112 16% Total 15,003 14,52
Slide 31: Farmers Exchanges – yearly policies in force growth on the rise
Farmers Exchanges – yearly policies in force (PIF) growth on the rise 800 657 600 (in thousands of policies) 457 400 293 200 0 -200 -233 -400 -308 -600 -590 -800 2001 2002 2003 2004 2005 2006 Policies in force (PIF) growth © Zurich Financial Services - Annual Results Reporting 2006 - February 15, 20
Slide 32: Farmers Exchanges – combined ratio by line of business
Farmers Exchanges – combined ratio by line of business in USD millions 20061 20051 Change for the years ended December 31 Auto 99.9% 97.7% -2.2pts Homeowners 88.1% 82.7% -5.4pts Commercial P&C2 94.3% 98.7% 4.4pts Workers’ Compensation 95.9% 99.2% 3.3pts Specialty 92.4% 103.6% 11.2pts Total 95.9% 97.
Slide 33: Farmers Exchanges – development of the combined ratio
Farmers Exchanges – development of the combined ratio Quarterly combined ratio 115% 110% California wildfires 105% Rita 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 2002 2003 2004 2005 2006 © Zurich Financial Services - Annual Results Reporting
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