Zurich Insurance Group Ltd · SIX:ZURN
Zurich Insurance — Investor Day (November 2021)
57 slides from Zurich Insurance's investor day presentation, Nov 18, 2021
Slide 1: Investor Day 2021
Investor Day 2021 November 18, 2021
Slide 2: Agenda
Agenda TIME TOPIC SPEAKER 14:00 - 14:35 Strategic update Mario Greco 14:35 - 14:50 Digitalization, data intelligence & platforms Ericson Chan 14:50 - 15:00 Break 15:00 - 15:30 Commercial insurance Sierra Signorelli 15:30 - 16:00 Financial update George Quinn 16:00 – 16:30 Break 16:30 – 17:15 Q&A 17:
Slide 3: Delivering on targets
Delivering on targets November 18, 2021 Mario Greco Group CEO
Slide 4: Key messages
STRATEGY UPDATE Key messages We are well on track to deliver on our 2020-2022 targets; all our businesses are growing Execution with improved underlying performance and continued focus on efficiency We are creating value through increased customer satisfaction while simplifying product Customer focu
Slide 5: We are well on track to deliver on our 2022 targets
STRATEGY UPDATE We are well on track to deliver on our 2022 targets 2020 - 2022 TARGETS WE HAVE ADAPTED TO THE CHANGED ENVIRONMENT TO DELIVER 2020 – 2022 TARGETS Target HY-21 Commercial Taken advantage of BOPAT ROE >14% 13.0% favorable market conditions to improve profitability EPS ≥5% n.m. and qual
Slide 6: P&C business has returned to growth, driven by Retail and Commercial
STRATEGY UPDATE P&C business has returned to growth, driven by both Retail and Commercial insurance P&C GWP GROWTH (%)1 HY-21 P&C GWP GROWTH BY DRIVER (USDbn)2 COMMERCIAL 12% 9.3 0.5 0.2 +13% 8.2 0.7 Like-for-like1 6% 4% 1% 0% RETAIL AND SME 6.8 FY-17 FY-18 FY-19 FY-20 HY-21 0.4 +8% 6.3 0.0 Like-for
Slide 7: Our Retail P&C business delivers a healthy performance
STRATEGY UPDATE Our Retail P&C business delivers a healthy performance and is growing despite challenging market conditions PORTFOLIO HEALTHY AND STABLE GROWING PORTFOLIO DESPITE PROFITABILITY OVER TIME CHALLENGING MARKET CONDITIONS FY-20 GWP (USDbn) Zurich Retail and SME combined ratio (%)1 GWP gro
Slide 8: We continue to grow in the COVID-19 challenged SME sector
STRATEGY UPDATE We continue to grow in the COVID-19 challenged SME sector through prioritizing investments in our key markets UNITED KINGDOM SWITZERLAND GERMANY GWP GWP GWP +3% p.a. +5% p.a. +3% p.a. Like-for-like1 Like-for-like1 Like-for-like1 • New digital platform for our customers and • Integrat
Slide 9: Renewed and new distribution agreements expanding addressable customers
STRATEGY UPDATE Renewed and new distribution agreements are expanding the pool of addressable customers WE HAVE A PROVEN TRACK RECORD IN SUCCESSFULLY WE ARE CONTINUOUSLY EXPANDING OUR FOOTPRINT COLLABORATING WITH 3RD PARTY DISTRIBUTORS THROUGH NEW PARTNERSHIPS Renewed and new bank partnerships P&C d
Slide 10: Increased customer satisfaction drives net customer growth
STRATEGY UPDATE Increased customer satisfaction drives net customer growth together with new acquisitions HIGHER CUSTOMER SATISFACTION IMPROVED RETENTION NET CUSTOMER GROWTH ACROSS THE GROUP1 +2.5 million EMEA net new customers4 Farmers +10 +16 +6 +7 +19 +3ppts EMEA2 Asia Pacific1 Latin America +3 +
Slide 11: We continue to address customer pain points
STRATEGY UPDATE We continue to address customer pain points in order to improve customer satisfaction ACTIONS ON NPS THAT SHOW WE ARE ON THE RIGHT PATH TNPS Pain point Action impact Long claims processing Rolled-out fully automated and +5pts time digitalized fast track claims processing Long purchas
Slide 12: Satisfied customers buy more from us and stay longer
STRATEGY UPDATE Satisfied customers buy more from us and stay longer SATISFIED CUSTOMERS ARE MORE …BUY MORE… …AND STAY LONGER LOYAL… Time on book by customer satisfaction1 Average # of policies per customer1 Time on book by policyholder density (# of years)1 1.3x 1.2x ~3x Detractors Promotors Detrac
Slide 13: Farmers Exchanges focused on growing customer reach through distribution
STRATEGY UPDATE Farmers Exchanges1 is focused on growing customer reach by expanding and diversifying distribution TARGETED INITIATIVES HAVE RESULTED IN IMPROVED INCREASED NEW BUSINESS PRODUCTIVITY ACROSS ALL NEW BUSINESS PRODUCTIVITY DISTRIBUTION CHANNELS New business policy count (000s) • More lic
Slide 14: Improved portfolio quality in Commercial insurance
STRATEGY UPDATE Improved portfolio quality in Commercial insurance positions us well for success through the cycle REBALANCED PORTFOLIO IMPROVED PROFITABILITY AND REDUCED VOLATILITY -14ppts 27% 34% 107% 100% 100% 97% 92% NEP by line of 2% business (%) 42% 32% Combined 22% 25% ratio (%) 9% 9% FY-17 F
Slide 15: Our Life business is a key contributor to our earnings
STRATEGY UPDATE Our Life business is a key contributor to our earnings, supported by a unique and resilient distribution footprint OUR LIFE BUSINESS IS A KEY CONTRIBUTOR TO BOP BALANCED DISTRIBUTION MIX BOP by business (USDbn) 9M-21 Annual premium equivalent by pillar (%)1 2% 2.9 26% 33% 2.1 2.1 1.6
Slide 16: Strong focus on capital light products with leading protection position
STRATEGY UPDATE We have a strong focus on capital light products with a leading market position in protection BUSINESS MIX WITH FOCUS ON A LEADING PLAYER IN THE LIFE STRONG PROTECTION FRANCHISE CAPITAL LIGHT PRODUCTS1 PROTECTION MARKET 1,2 AND FINANCIALS 9M-21 New business mix FY-20 APE protection (
Slide 17: We are taking decisive steps in our sustainability strategy
STRATEGY UPDATE We are taking decisive steps in our sustainability strategy OUR 1.5˚C FUTURE CONFIDENCE IN A WORK DIGITAL SOCIETY SUSTAINABILITY • Committed to no longer underwrite • Global implementation of Data • Increased gender diversity new greenfield oil exploration commitment almost completed
Slide 18: Expanding products and services for the net-zero transition
STRATEGY UPDATE We expand our offering of products and services to help customers transition to a net-zero emissions future PROPERTY & CASUALTY LIFE UNIT-LINKED Launch of the first Insurance-Carbon Neutral World < Offering of business resilience services such as Climate < Equity Fund, combining a lo
Slide 19: Key messages
STRATEGY UPDATE Key messages We are well on track to deliver on our 2020-2022 targets; all our businesses are growing Execution with improved underlying performance and continued focus on efficiency We are creating value through increased customer satisfaction while simplifying product Customer focu
Slide 20: Technology enabling growth
Technology enabling growth November 18, 2021 Ericson Chan Group Chief Innovation & Digital Officer
Slide 21: Drive business growth, improve customer experience, enable new engagement model
DIGITALIZATION, DATA INTELLIGENCE & PLATFORMS Drive business growth, improve customer experience and enable a new engagement model DIGITALIZATION DATA PLATFORMS PLATFORM PLATFORM PLATFORM PLATFORM PLATFORM 5 Empower S Accelerate S Simplify and S all Data drives S Enable S Key focus Commercial Retail
Slide 22: High quality portfolio delivering results
High quality portfolio delivering results November 18, 2021 Sierra Signorelli CEO Commercial Insurance
Slide 23: Key messages
COMMERCIAL INSURANCE Key messages We have a leading global commercial insurance franchise, with a well-balanced portfolio Global leader and distinctive capabilities Underwriting actions and higher rates over the past years resulted in 14ppts of Outstanding results improvement in the combined ratio s
Slide 24: A leading franchise with a well-balanced portfolio
COMMERCIAL INSURANCE A leading franchise, with distinctive capabilities and a well-balanced portfolio 3RD LARGEST COMMERCIAL INSURER DISTINCTIVE CAPABILITIES WELL DIVERSIFIED PORTFOLIO FY-20 NET EARNED PREMIUMS (USDbn)1 FY-20 NET EARNED PREMIUMS (USDbn) International programs insurer #1 to multinati
Slide 25: Our strategy positions us well for success through the cycle
COMMERCIAL INSURANCE Our strategy positions us well for success through the cycle UNCHANGED STRATEGIC PRIORITIES INDUSTRY ENVIRONMENT Customer focus Maintain a Leverage Hard pricing cycle on risk mitigation balanced actionable portfolio insights Increasing Evolving distribution digitalization and la
Slide 26: Disciplined execution drives outstanding financial results
COMMERCIAL INSURANCE Disciplined execution drives outstanding financial results NEP GROWTH (%)1 COMBINED RATIO (%) LARGE LOSS VOLATILITY BOP (USDbn) (ppts)4 1.5 10% -14ppts2 2.0 107% 0.4 1.1 100% 100% 1.2 97% 2% 92% 4% 2.8 2.5 1.9 1.9 1.8 1% 78% 72% 69% 69% 63% -0.5 -0.6 -1% -0.8 13ppts 4ppts -1.1 -
Slide 27: Strong performance driven by improvement in portfolio quality
COMMERCIAL INSURANCE Strong performance driven by improvement in portfolio quality REBALANCED BUSINESS MIX LIMITING CAT EXPOSURE IMPROVED TERMS & CONDITIONS AND DISCIPLINED RISK APPETITE NET EARNED PREMIUMS BY LINE OF BUSINESS (%) FY-20 vs. FY-17 (%)2 +45% Tightened wordings and increased use of Zur
Slide 28: Current market conditions offer opportunities to improve profitability
COMMERCIAL INSURANCE Current market conditions offer opportunities to further improve profitability RATE INCREASES REMAIN STRONG… …AND ABOVE CLAIMS TRENDS INFLATION RISK MITIGANTS NORTH AMERICA (9M-21) Changes in consumer price inflation do 14% Property not feed directly into the drivers of claims 1
Slide 29: Portfolio optimization to support growth in target segments
COMMERCIAL INSURANCE Portfolio optimization to support growth in target segments PROPERTY CASUALTY SPECIALTIES OUTLOOK OUTLOOK OUTLOOK Combined Combined Combined 109% 89%2 105% 98%2 106% 90%2 ratio (%)1 ratio (%) ratio (%) 5.0 6.2 3.6 3.3 4.1 4.6 NEP NEP NEP (USDbn)3 (USDbn)3 (USDbn)3 FY-17 FY-20 FY
Slide 30: Middle market provides an opportunity to grow and diversify
COMMERCIAL INSURANCE Middle market provides an opportunity to grow and improve diversification to better sustain profitability through the cycle UNDER-REPRESENTED SOLID FOUNDATION MORE STABLE AND IN MIDDLE MARKET LESS CAPITAL-INTENSIVE BUSINESS GWP (USDbn)1 MIDDLE MARKET vs. LARGE CORPORATE3 Meaning
Slide 31: Middle market strategy leading to positive early results
COMMERCIAL INSURANCE Middle market strategy is leading to positive early results, more progress to come U.S. EXAMPLE ENHANCE UNDERWRITING CAPABILITY GROW REGIONAL PRESENCE UNDERWRITING PROFITABILITY +42% +7 -4ppts New business # of regional per underwriter offices Cats (%) (USDm) FY-19 FY-20 2018 YE
Slide 32: Enhancing underwriting capabilities and investing in our people
COMMERCIAL INSURANCE We continue to enhance our underwriting capabilities and invest in our people PEOPLE DRIVEN CAPABILITIES ACTIONABLE INSIGHTS • Focus on driving underwriting culture and • Augmented underwriter experience with easy competencies access to insight • Developing talent in countries w
Slide 33: Unique capabilities and services strengthen customer relationships
COMMERCIAL INSURANCE Unique capabilities and services strengthen customer relationships INTERNATIONAL PROGRAMS AND CAPTIVES RESILIENCE SERVICES Leading capabilities in helping customers navigate an We are driving deeper engagement with customers to increasingly complex global environment prevent and
Slide 34: Supporting ambitious decarbonization strategies of customers
COMMERCIAL INSURANCE Accelerating engagement and developing solutions to support ambitious decarbonization strategies of customers WE ARE SUPPORTING THE TRANSITION OF OUR CUSTOMERS Continue to engage carbon intense customers in Climate change Engage risk-based dialogue to understand their transition
Slide 35: Deepening our commitment to the energy transition
COMMERCIAL INSURANCE Deepening our commitment to the energy transition WE CONTINUE TO REDUCE OUR TO FURTHER SUPPORT THE ENERGY …WHILE INCREASING OUR FOCUS ON EXPOSURE TO FOSSIL FUELS TRANSITION, WE WILL… RENEWABLE ENERGIES 2021: Successful execution of our thermal coal, oil sands and oil shale posit
Slide 36: Key messages
COMMERCIAL INSURANCE Key messages We have a leading global commercial insurance franchise, with a well-balanced portfolio Global leader and distinctive capabilities Underwriting actions and higher rates over the past years resulted in 14ppts of Outstanding results improvement in the combined ratio s
Slide 37: Delivering results
Delivering results November 18, 2021 George Quinn Group CFO
Slide 38: Key messages
FINANCE UPDATE Key messages Targets On track to achieve all Group financial targets Capital allocation We expect to make significant changes in our strategy driven capital allocation Reserve strength Reserving is focused on consistency and protection from emerging risks We manage natural catastrophe
Slide 39: Further improving our return on capital in P&C and Life
FINANCE UPDATE We are focused on further improving our return on capital in P&C and Life RETURN ON RISK BASED CAPITAL PER SEGMENT1 Decision making process: P&C Farmers Life • Allocation decisions based on strategic priorities 12% 12% 12% 4% • Financial and other market trends are considered 13% 8% o
Slide 40: We have identified our key areas of focus
FINANCE UPDATE We have identified our key areas of focus ILLUSTRATIONS MOTIVATION TARGETED OUTCOME STATUS Asbestos / pollution / health Eliminate long-tail exposure to asbestos and Capital release and avoidance of adverse portfolios pollution risks reserve development Product creates ALM mismatches
Slide 41: The sale of Life Portfolio 2 would release significant capital
FINANCE UPDATE The sale of Life Portfolio 2 would release significant capital and reduce exposure to rates and credit TRANSACTION BENEFITS LIFE BOP (USDm)1 ~2%p.a. -24% Potential reduction 1,613 in SST target capital: ~USD 1.2bn 1,554 1,614 ~7%p.a. Potential SST ratio impact: ~10ppts Potential Group
Slide 42: On track to exceed our ROE target of >14% by FY-22
FINANCE UPDATE We are on track to exceed our ROE target of >14% by FY-22 ILLUSTRATIVE BOPAT ROE DEVELOPMENT (%) ~0.0-0.5% ~15% ~2.0-2.5% 13.0% ~0.5-1.0% ~0.0-0.5% ~0.5-1.0% ~0.5-1.0% HY-21 Growth in Investment income Business growth Productivity Portfolio quality Capital FY-22 equity base allocation
Slide 43: Delivering on our efficiency promise
FINANCE UPDATE We are delivering on our efficiency promise with further opportunities to improve OTHER UNDERWRITING EXPENSE (OUE) RATIO (%) OTHER UNDERWRITING EXPENSE (OUE) WALK (%) 15.4% 15.4% 0.1% 14.2% 14.1% 1.2% 13.5% 14.1% 13.4% 0.9% 12.7% 0.6% 12.7% FY-16 FY-17 FY-18 FY-19 FY-20 HY-21 FY-16 Gr
Slide 44: We have reduced our long-tail business line exposure
FINANCE UPDATE We have reduced our long-tail business line exposure… P&C BUSINESS MIX (GWP) NORTH AMERICA WORKERS COMP COVID-19 CASE STUDY: CALIFORNIA PRODUCT MIX (GWP) 14ppt reduction in long tail lines exposure USD WCIRB workers comp ~11.2bn COVID-19 gross loss estimate2 15% 18% 27% 36% USD Expect
Slide 45: …which benefited our Group's reserve structure
FINANCE UPDATE …which benefited our Group’s reserve structure P&C RESERVE STRENGTH WORKERS COMP LOSS DEVELOPMENT FACTORS Proxy for current reserve levels FY-16 FY-17 FY-18 FY-19 FY-20 9M-21 2010 2012 2014 2016 2018 2020 Best estimate Reserve strength Loss development factors1 5-year average Ogden ra
Slide 46: Natural catastrophe management is essential to the Group
FINANCE UPDATE Natural catastrophe management is essential to the Group GLOBAL INDUSTRY INSURED LOSSES 1980 – 2020 (USD)1 U.S. LARGE COMMERCIAL UNDERWRITING ACTIONS 200 150 Windstorm / Tornado Line Setting – reduced 100 capacity in critical zones 50 0 Windstorm AAL3 Optimization – introduced 1980 19
Slide 47: Embarking on an ambitious decarbonization journey
FINANCE UPDATE We are embarking on an ambitious decarbonization journey that will reshape our business AMBITIOUS GOALS FOR DECARBONIZATION RESHAPING OUR BUSINESS – INVESTMENTS Category Target / Ambition Engage with top 65% emitters without own Engage Operations Reduce CO2 by 50% by 2025 decarbonizat
Slide 48: Committed to delivering value for our shareholders
FINANCE UPDATE We are committed to delivering value for our shareholders TOTAL SHAREHOLDER RETURN (USD)1 DIVIDEND AND DILUTED EARNINGS PER SHARE2 (CHF) (Indexed to 100% as of January 1, 2016) DPS growth: ~4% p.a. Growth expected to align EPS growth: ~7% p.a. over time (allowing for FX) 260% 240% 28
Slide 49: Key messages
FINANCE UPDATE Key messages Targets On track to achieve all Group financial targets Capital allocation We expect to make significant changes in our strategy driven capital allocation Reserve strength Reserving is focused on consistency and protection from emerging risks We manage natural catastrophe
Slide 50: 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 of Zurich Insurance Group Ltd or the Zurich Insurance Group (the Group). Fo
Slide 51: Biographies
Biographies © Zurich November 18, 2021 Investor Day 51
Slide 52: Mario Greco, Group Chief Executive Officer
BIOGRAPHIES Skills and experience External appointments Mario Greco joined Zurich in March 2016 as Mr. Greco is chairman of the Pan-European Group Chief Executive Officer and member of the Insurance Forum and a member of the board of Executive Committee. Mr. Greco started his directors of the Swiss-
Slide 53: Ericson Chan, Group Chief Information and Digital Officer
BIOGRAPHIES Skills and experience External appointments Ericson Chan has an extensive background in Mr. Chan is a member of the Hong Kong technology leadership prior to joining Zurich as Monetary Authority Financial Infrastructure Group Chief Information and Digital Officer and as Advisory Committee
Slide 54: Sierra Signorelli, CEO Commercial Insurance
BIOGRAPHIES Skills and experience External appointments Sierra Signorelli was appointed CEO Commercial None. Insurance and became a member of the Executive Committee in March 2021. She has Educational background extensive experience in the insurance industry, Ms. Signorelli holds a Bachelor of Scien
Slide 55: George Quinn, Group Chief Financial Officer
BIOGRAPHIES Skills and experience External appointments George Quinn started his career at KPMG 1988 in Mr. Quinn is a member of the finance chapter of London, where he held several positions working the Swiss-American Chamber of Commerce. with the insurance and reinsurance industry. He joined Swiss
Slide 56: For further information
For further information CALL US VISIT OR FOLLOW US INVESTOR RELATIONS AND RATING AGENCY MANAGEMENT Jon Hocking +41 44 628 18 34 Francesco Bonsante +41 44 628 00 68 Samuel Han +41 44 625 32 57 Michèle Matlock +41 44 625 28 50 Fabian Wiederkehr +41 44 625 33 08 EVENTS Patricia Heina +41 44 625 38 44
Slide 57: Thank you
Thank you UPCOMING EVENTS • February 10, 2022 – Annual Results 2021 • April 6, 2022 – Annual General Meeting 2022 • May 12, 2022 – Update for the three months ended March 31, 2022 • August 11, 2022 – Half year results 2022 • November 10, 2022 – Update for the nine months ended September 30, 2022 © Z
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