Zurich Insurance Group Ltd · SIX:ZURN
Zurich Insurance — Zurich Financial Services — Q3 2003 Earnings Presentation
32 slides from Zurich Insurance's earnings presentation, Nov 19, 2003
Slide 1: 3rd Quarter 2003 Results Reporting
3rd Quarter 2003 Results Reporting Zurich, 19 November 2003
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: Financial highlights
Financial highlights Year-to-date Q3 in USD millions 2003 2002 Change Total GWP and policy fees 37,043 30,381 22% Net investment income 5,218 4,612 13% Net realized and unrealized gains 54 -968 nm Business operating profit 1,471 490 200% Net income 1,402 -2,792 nm Non-life combined ratio 98.2% 114.8
Slide 4: Business operating profit by business segment
Business operating profit by business segment Year-to-date Q3 in USD millions 2003 2002 Change Non-life 1,510 239 532% Life 591 139 325% Farmers Management Services 772 686 13% Other Businesses -958 22 nm Corporate Center -444 -596 26% Total 1,471 490 200% © Zurich - 19 November 2003 4
Slide 5: Net income excluding gains on disposal by business segment
Net income excluding gains on disposal by business segment Year-to-date Q3 in USD millions 2003 20021 Change Non-life 1,204 130 826% Life 459 152 202% Farmers Management Services 477 413 15% Other Businesses -778 -23 nm Corporate Center -258 -1,065 76% Net income, excluding gains on disposal 1,104 -
Slide 6: Non-life Insurance financial highlights
Non-life Insurance financial highlights Year-to-date Q3 Combined ratio (%)1 for the year-to-date Q3 in USD millions 2003 2002 Change GWP 27,806 22,043 26% 3 104.1 Total NEP 19,966 14,932 34% 98.2 Net underwriting result1 352 -610 nm 98.8 Business operating profit 1,510 239 532% NA Corp. 95.2 Net inc
Slide 7: Life Insurance financial highlights
Life Insurance financial highlights Year-to-date Q3 New business margins (%) for the year-to-date Q3 in USD millions 2003 2002 Change GWP, policy fees & deposits 14,987 13,717 9% 4 6.1 Business operating profit 591 139 325% Total 8.7 Net income1 459 152 202% 13.7 New bus. premiums (APE) 1,554 1,513
Slide 8: Farmers Management Services financial highlights
Farmers Management Services financial highlights Year-to-date Q3 in USD millions 2003 2002 Change Management fees & other related revenue 1,409 1,344 5% Management & other expenses 635 646 -2% Net investment result 60 33 82% Business operating profit 772 686 13% Net income1 477 413 15% Gross operati
Slide 9: Other Businesses financial highlights
Other Businesses financial highlights Year-to-date Q3 in USD millions 2003 2002 Change Business operating profit -958 22 nm of which: Centre -985 11 nm other 27 11 145% Net income1 -778 -23 nm of which: Centre -831 -34 nm other 53 11 382% 1 Excluding gains on disposals. 2002 is pre-provision © Zuric
Slide 10: Centre
Centre • New management completed the review of Centre‘s entire balance sheet in Q3 and as a result - provisions for adverse reserves development strengthened by USD 354 million, largely related to the P&C book of business, - a work-out provision of USD 134 million, and - other provisions of USD 96
Slide 11: Centre's total provisions and asset write-downs
Centre’s total provisions and asset write-downs in USD millions Half Year Q3 Q3 YTD Adverse reserves development -427 -354 -781 Work-out provision - -134 -134 Interest rate alignments -47 -50 -97 DAC write-down - -46 -46 Other asset write-down - -12 -12 Total provisions and asset write-down -474 -59
Slide 12: Centre's adverse development by Line of Business
Centre’s adverse development by Line of Business % of total Half Year Q3 YTD Credit enhancement 64% 19% 44% - Nursing Homes 28% 0% 15% - Cruise Ships 20% 0% 11% - Real Estate 10% 4% 7% - Other 6% 15% 11% Life & Health 11% 1% 6% Property & Casualty 25% 80% 50% - Lloyds 18% 33% 25% - Retroactive reins
Slide 13: Centre Summary
Centre Summary • New leadership with extensive asset backed and capital markets experience • Experienced work-out team of over 35 • Preserving value through active work-out and litigation management • High quality investment portfolio – 97% in bonds of which 93% is credit quality A or better • Entir
Slide 14: Shareholders' equity
Shareholders’ equity in USD millions 20'000 +1,402 18'000 -155 +329 -129 16'000 14'000 18,252 16,805 12'000 10'000 Balance at Change in net Translation Treasury stock Net income Balance at 1 Jan 2003 unreal. gains on adjustments transactions, 30 Sept 2003 investments dividends and nominal value redu
Slide 15: USD 1bn divestment program – progress year-to-date
USD 1bn divestment program – progress year-to-date Divested... Announced... • Rüd Blass • Zurich Life UK2 • India – asset management • Zurich France1 • Czech Republic • Zurich Belgium1, 3 • Threadneedle • Zurich Luxembourg1, 3 • Zurich Netherlands1 • Zurich Indonesia Life • Zurich Life US • Zurich P
Slide 16: Zurich Financial Services
@ ZURICH FINANCIAL SERVICES
Slide 17: 3rd Quarter 2003 Results Appendix
3rd Quarter 2003 Results APPENDIX
Slide 18: Financial highlights
Financial highlights Third quarter in USD millions 2003 2002 Change Total GWP and policy fees 10,947 9,654 13% Net investment income 1,651 1,435 15% Net realized and unrealized gains 476 -846 nm Business operating profit 206 -322 nm Net income 701 -763 nm © Zurich - 19 November 2003 18
Slide 19: Business operating profit by business segment
Business operating profit by business segment Third quarter in USD millions 2003 2002 Change Non-life 581 -10 nm Life 41 -229 nm Farmers Management Services 259 241 7% Other Businesses -480 -23 nm Corporate Center -195 -301 35% Total 206 -322 nm © Zurich - 19 November 2003 19
Slide 20: Net income by business segment
Net income by business segment Third quarter in USD millions 2003 20021 Change Non-life 445 -3 nm Life 329 -294 nm Farmers Management Services 164 144 14% Other Businesses -444 7 nm Corporate Center 207 -560 nm Total 701 -706 nm 1 2002 is pre-provision © Zurich - 19 November 2003 20
Slide 21: Foreign currency impact – Non-life Insurance
Foreign currency impact – Non-life Insurance Year-to-date Q3 2003 vs Year-to-date Q3 2002 Growth in FX Growth loc. curr. impact in USD Total GWP and policy fees 18% 8% 26% Net investment income 6% 10% 16% Net realized and unrealized gains 427% 26% 453% Total insurance benefits and losses 2% 9% 11% ©
Slide 22: Foreign currency impact – Life Insurance
Foreign currency impact – Life Insurance Year-to-date Q3 2003 vs Year-to-date Q3 2002 Growth in FX Growth loc. curr. impact in USD Total GWP, policy fees and deposits -3% 12% 9% Insurance deposits -11% 9% -2% Total GWP and policy fees 4% 15% 19% Net investment income 2% 15% 17% Net realized and unre
Slide 23: Centre's operating statement
Centre’s operating statement in USD millions Half Year Q3 Q3 YTD Net technical result (incl. adverse development) -674 -614 -1,288 - Total provisions and asset write-downs -474 -596 -1,070 - Other underwriting income -56 32 -24 - Other admin expenses -144 -50 -194 Net investment income 257 92 349 Bu
Slide 24: Centre's Property & Casualty book of business
Centre’s Property & Casualty book of business Number of transactions • Well diversified book by line of business and by geography by line of business • No. of transactions: 209 Other 9% Lloyds 19% • No. of watch-list trans.: 9 Homeowners 3% • All in-force transactions have been Products 4% reviewed
Slide 25: Centre's Credit Enhancement portfolio
Centre’s Credit Enhancement portfolio Remaining unreserved limit* of USD 4.2bn by line of business • Discontinued line of business • No. of transactions: 101 Other 19% Real Estate • No. of watch-list transactions: 18 49% • Q3 reserve strengthening of USD 67m Receivables • Underlying collateral value
Slide 26: Centre's life & health portfolio
Centre’s life & health portfolio Net exposure* of USD 702m by line of • Discontinued line of business business • No. of transactions: 13 • No. of watch-list trans.: 1 • Highly structured finite book of Health business 13% • Small additional reserve strengthening in Q3 of USD 4m Long term • Net expos
Slide 27: Corporate Center financial highlights
Corporate Center financial highlights Year-to-date Q3 in USD millions 2003 2002 Change Net underwriting income 50 -69 nm Total investment income / (loss) 377 -219 nm of which Bâloise -152 -469 68% Net admin & other operational expenses2 132 243 -46% Interest expense, incl. PH interest 534 535 0% Bus
Slide 28: Net income to business operating profit – third quarter
Net income to business operating profit – third quarter Third quarter in USD millions 2003 2002 IFRS Net Income 701 -763 Adjust for: Special provisions -17 76 Adjust for: Net gain on disposal of businesses -310 - Adjust for: Realized and unrealized capital (gains)/losses, -497 1,070 including impair
Slide 29: Net income to business operating profit – year to date
Net income to business operating profit – year to date Year-to-date Q3 in USD millions 2003 2002 IFRS Net Income 1,402 -2,792 Adjust for: Special provisions -17 3,061 Adjust for: Net gain on disposal of businesses -311 -463 Adjust for: Realized and unrealized capital (gains)/losses, 17 1,211 includi
Slide 30: Investment portfolio by asset class
Investment portfolio by asset class in USD millions 30 Sep ‘03 31 Dec ‘02 Debt securities 67.1% 62.6% Equity securities Common stocks, including equity unit trusts 6.4% 8.3% Unit trusts (debt securities, real estate, short-term investments) 0.9% 1.5% Common stock portfolios backing the participating
Slide 31: Investment highlights
Investment highlights Year-to-date Q3 in USD millions 2003 2002 Change Net investment income 5,218 4,612 13% Net realized capital gains/(losses) and impairments 159 -446 nm of which: non-cash investment impairment -987 -706 40% Net unrealized capital losses (in oper. stmt) -105 -522 -80% of which: B
Slide 32: Total investment return calculation
Total investment return calculation Year-to-date Q3 in USD millions 2003 2002 Change Net investment result 5,272 3,644 45% Add back investment expense 212 175 21% Add in gross unrealized gains – end of period 2,666 916 191% Less gross unrealized gains – beginning of period -2,047 -3,663 -44% Subtota
Zurich Financial Services — Q3 2003 Earnings Presentation on 6ix