Zurich Insurance Group Ltd · SIX:ZURN

Zurich Insurance — FY2022 Earnings Presentation

63 slides from Zurich Insurance's earnings presentation, Feb 9, 2023

  1. Slide 1: Strong platform for continued delivery

    Strong platform for continued delivery Annual results 2022 February 9, 2023 Investor and media presentation Zurich Insurance Group © ©Zurich Zurich

  2. Slide 2: Content

    Content Use symbols to navigate through the document Main sections Other important information Key highlights Disclaimer Group results and outlook Dividend policy Property & Casualty (P&C) Customer KPIs Life P&C reinsurance program Farmers Farmers Exchanges details by line of business Group Function

  3. Slide 3: Key highlights

    Key highlights 3 © Zurich

  4. Slide 4: Key messages

    Key messages Successful conclusion of Consistent execution of group strategy drives strong performance across all businesses. Exceeded the 2020-2022 cycle financial targets for the 2020-2022 cycle1. FY-22 BOP rises 12% to USD 6.5bn, the highest since 2007 Improved customer metrics Net promoter score

  5. Slide 5: Group exceeded all financial targets for the 2020-2022 cycle

    Key highlights Group exceeded all financial targets for the 2020-2022 cycle1 BOPAT ROE (%)2 Cash remittances EPS growth (%)3 SST (%)4 (USDbn) 265% 15.7% 12.4 >14% >11.5 5.1% ≥5% p.a. FY-22 4.6 ≥160% FY-21 4.4 3.6% FY-20 3.4 FY-22 Target Cumulative Target FY-22 vs. FY-19 Target FY-22e Target to FY-22

  6. Slide 6: Execution of Group strategy drives strong performance across all businesses

    Key highlights Execution of Group strategy drives strong performance across all businesses Group BOP (USDbn) Top-line (USDbn) 6.5 40.1 43.3 35.5 5.7 P&C GWP 4.2 3.6 3.8 3.6 Life APE1 24.2 26.5 20.1 Farmers Exchanges2 GWP FY-20 FY-21 FY-22 FY-20 FY-21 FY-22 1 Annual premium equivalent (APE) is report

  7. Slide 7: Robust growth in Commercial as well as Retail and SME insurance

    Key highlights Robust growth in Commercial as well as Retail and SME insurance, driven by higher premium rates and net new business P&C GWP growth (%)1 FY-22 P&C GWP growth by driver (USDbn)2 14% Commercial 20.2 0.9 11% 0.2 1.0 +14% 18.0 Like-for-like 1 6% 4% 1% 0% Retail and SME 15.0 FY-17 FY-18 FY

  8. Slide 8: In Retail, customer satisfaction drives increased retention, customer growth

    Key highlights In Retail, customer satisfaction drives increased retention, customer growth and higher top-line Customer satisfaction Customer loyalty and growth Growing portfolio Retail & SME – tNPS1 FY-22 vs. FY-21 Retail & SME - Retention rate (%) Retail & SME – GWP growth like-for-like (%) 4 +2p

  9. Slide 9: Disciplined execution drives outstanding financial results in Commercial Insurance

    Key highlights Disciplined execution drives outstanding financial results in Commercial Insurance NEP growth (%)1 Combined ratio (%) BOP (USDbn) 2.2 2.8 14% -14ppts 13% 107% 1.5 100% 100% 2.0 97% 94% 2% 92% 0.4 1.1 3.7 3.8 5% 2.8 78% 2.5 72% 69% 69% 65% 1.9 1.9 65% 1% -0.8 -0.5 -1% -1.1 -0.9 -1.5 -1

  10. Slide 10: Life earnings up 8%, while exposure to capital intensive savings reduces

    Key highlights Life earnings up 8%, while exposure to capital intensive savings reduces both in new business and in-force APE by product (%) Reserves by product (%) 1 Life BOP (USDm) +8% 1,963 8% 5% 1,812 22% 33% 92% 95% 78% 67% FY-21 FY-22 FY-21 FY-22 FY-21 FY-22 Savings and annuity Traditional sav

  11. Slide 11: Farmers Exchanges top-line benefiting from MetLife integration

    Key highlights Farmers Exchanges1 top-line benefiting from MetLife integration and positive rate momentum, with continued strong retention GWP (USDm) NPS and retention2 (%) Filed rate change (%) +9% 44.93 43.4 15% 26,519 24,228 82.7% 82.0% 4% 3% FY-21 FY-22 FY-21 FY-22 FY-20 FY-21 FY-22 NPS Retentio

  12. Slide 12: Increased reinvestment yields continue to benefit P&C investment income

    Key highlights Increased reinvestment yields continue to benefit P&C investment income, somewhat offset by FX headwinds P&C investment income (USDm) P&C investment yields (%) P&C duration (# years) 3 1,932 1,961 4.9 4.9 1,847 1,837 5% 4.6 1,740 1,688 4.1 4% 3% 2% 1% 0% FY-17 FY-18 FY-19 FY-20 FY-21

  13. Slide 13: Continued progress in implementing our ESG priorities

    Key highlights Continued progress in implementing our ESG priorities Our progress during 2022 Customers • tNPS1 + 7% Support sustainable transformation • Sustainable solutions revenues almost doubled 2 • CO2e emissions intensity of corporate portfolio -12%3 Planet Mitigate and adapt • Engagement wit

  14. Slide 14: Continued strong cash remittance; CHF 24 dividend proposed

    Key highlights Continued strong cash remittance; CHF 24 dividend proposed1 Cash remittances (USDbn) Dividend per share (CHF) 4.6 +6% p.a. 24 4.4 0.1 3.4 22 1.3 1.4 0.1 20 20 1.4 0.8 0.9 0.7 3.2 3.2 2.3 0.0 -1.0 -0.9 -0.9 FY-20 FY-21 FY-22 FY-19 FY-20 FY-21 FY-221 Property & Casualty Farmers Non-Core

  15. Slide 15: Key messages

    Key messages Successful conclusion of Consistent execution of group strategy drives strong performance across all businesses. Exceeded the 2020-2022 cycle financial targets for the 2020-2022 cycle1. FY-22 BOP rises 12% to USD 6.5bn, the highest since 2007 Improved customer metrics Net promoter score

  16. Slide 16: CFO update

    CFO update 16 © Zurich

  17. Slide 17: Strong results across regions and business lines drive increase in Group BOP

    Group – Business operating profit Strong results across regions and business lines drive increase in Group BOP BOP by region (USDm) BOP by business (USDm) +12% +12% 6,451 6,451 597 5,742 5,742 631 1,909 458 583 1,617 1,909 1,617 1,963 1,812 2,010 1,736 3,121 3,554 2,019 2,418 -1 -195 -671 -1,114 -80

  18. Slide 18: Commentary

    Group – Business operating profit Commentary • Overall Group business operating profit increased strongly in • By business, P&C BOP increased by 14% (19% in local FY-22, with BOP up 12% in U.S. dollars and 18% in local currencies) compared to the prior year, driven by the earn- currencies compared t

  19. Slide 19: Net income attributable to shareholders down as BOP growth is offset

    Group – Net income attributable to shareholders Net income attributable to shareholders down as BOP growth is offset by lower realized capital gains and losses on disposal BOP to NIAS walk (USDm) Key drivers 20.6% Effective tax rate 467 162 -591 • Group BOP of USD 6.5bn is up 12% -288 compared to FY

  20. Slide 20: 2023 outlook

    Group – Outlook 2023 outlook • Commercial Insurance margins are expected to expand while rate continues to moderate through the year Property & Casualty • Retail and SME is expected to start to see improving results as the impact of price increases takes effect and claims inflation moderates • Weake

  21. Slide 21: Strong growth supported by favorable rate environment

    P&C – Top-line Strong growth supported by favorable rate environment FY-22 top-line development Total rate change (%) 2 GWP like-for-like GWP (USDm) Rate change (%) 2 Rate change outlook growth (%) 1 8.1% 7.2% EMEA 17,806 10% 5% Increasing 5.7% North America 21,034 16% 8% Moderating 3.8% Asia Pacifi

  22. Slide 22: Commentary

    P&C – Top-line Commentary • G ross written premiums rose 14% on a like-for-like basis and 8% • North America grew 16% on a like-for-like basis, with crop in U.S. dollar terms. All regions demonstrated strong growth insurance contributing about 5 percentage points to growth due supported by higher pr

  23. Slide 23: P&C BOP up 14% driven by higher top-line and improved combined ratio

    P&C – BOP components P&C BOP up 14% driven by higher top-line and improved combined ratio BOP (USDm) Break down by component (USDm) +5% vs. FY-21 adjusted2 +14% 3,979 3,777 3,554 3,554 425 209 3,121 300 121 2,232 236 1,807 2,307 235 1,991 1,706 1,837 1,837 1,688 1,204 822 -47 -44 -47 -44 -261 42 -15

  24. Slide 24: Commentary

    P&C – BOP components Commentary • FY-22 P& C BOP was USD 3,554m, 14% higher than in the • Investment income was USD 148m above prior year levels previous year. The improvement was supported by higher prices driven by the earn-through of higher yields. feeding into the result. Adjusting for normalize

  25. Slide 25: Underlying improvements offset by impact of crop, motor inflation

    P&C – Combined ratio details Underlying improvements offset by impact of crop, motor inflation and absence of frequency benefits Combined ratio (%) Loss ratio (%) Expense ratio (%) Excl. Crop1 94.5% 94.0% -0.5ppts Excl. Crop1 61.7% 61.3% -0.4ppts Excl. Crop1 32.8% 32.7% -0.1ppts 94.3% 94.3% 63.1% 63

  26. Slide 26: Commentary

    P&C – Combined ratio details Commentary • The P& C combined ratio of 94.3% remained stable compared to • Natural catastrophe and weather-related losses totaled 4.9% the prior year period. Excluding crop insurance, the P&C including USD 485m for Hurricane Ian compared to a combined ratio improved 0.5

  27. Slide 27: Commercial maintains strong profitability while Retail and SME experienced headwinds

    P&C – Combined ratio by segment and customer unit Commercial maintains strong profitability while Retail and SME experienced headwinds from motor inflation AY combined ratio (CR) excl. catastrophes and COVID-19 by region (%) 1 AY CR excl. catastrophes and COVID-19 by customer unit (%) 1 +2.1ppts +1.

  28. Slide 28: Commentary

    P&C – Combined ratio by segment and customer unit Commentary • In E MEA, the accident year combined ratio ex-catastrophes and • The Commercial Insurance accident year combined ratio ex- COVID-19 deteriorated by 1.4 percentage points mainly due to catastrophes and COVID-19 remained stable at a strong

  29. Slide 29: P&C investment result benefits from increase in reinvestment yields

    P&C – Investment result P&C investment result benefits from increase in reinvestment yields, partially offset by realized losses on hedge funds Investment result in BOP (USDm) Investment income yield (%)1 1,793 2.9% 1,731 2.5% 42 FY-21 FY-22 1,837 1,688 Book and reinvestment yield of debt securities

  30. Slide 30: Commentary

    P&C – Investment result Commentary • Investment income in FY-22 was up 9% (USD 148m) compared to the prior-year period, driven by improving investment yields. • This was partially offset by realized capital losses in BOP of USD 44m driven by a reduction in the market value of the hedge fund portfoli

  31. Slide 31: Life BOP up 8% driven by solid underlying performance

    Life – Business operating profit Life BOP up 8% driven by solid underlying performance, improved COVID-19 claims experience and management actions BOP (USDm) +8% 1,963 1,812 1,963 1,812 30 94 30 46 61 25 -15 -15 46 388 138 222 337 398 -44 347 331 352 377 +3% excl. COVID-19 and disposals 1,197 1,214

  32. Slide 32: Commentary

    Life – Business operating profit Commentary • In EMEA, Life BOP increased 1% to USD 1,214m on a reported • In Asia Pacific, Life BOP decreased 5% to USD 331m on a basis. This benefited from the absence of COVID-19 claims, reported basis. In FY-22 the business recorded USD 46m of which amounted to US

  33. Slide 33: GWP, net inflows and AuM below prior year

    Life – Premiums, net inflows and assets under management GWP, net inflows and AuM below prior year reflecting adverse currency and market movements GWP and deposits (USDbn) Net inflows by segment (USDbn) Assets under management (USDbn) 0% -12% -9% like-for-like 1 -21% like-for-like 1 -21% 28.4 6.0 2

  34. Slide 34: Commentary

    Life – Premiums, net inflows and assets under management Commentary • In the Group’s Life business, gross written premiums and • Net inflows of USD 4.7bn were 21% lower than in the prior year deposits were in line with the previous year on a like-for-like on a reported basis and 12% lower on a like-

  35. Slide 35: APE up 1% like-for-like, with new business margin at 24.8%

    Life – New business APE up 1% on a like-for-like basis, with new business margin at an attractive 24.8% APE (USDm)1 NBV (USDm)1 NBM (%)1 New business mix (%) FY-22 APE1 +1% -15% 5% like-for-like 2 like-for-like 2 20% -7% -21% -4.3ppts USD 42% 3,824 959 29.1% 3,555m 3,555 164 24.8% 1,041 761 33% 1,11

  36. Slide 36: Commentary

    Life – New business Commentary • Life new business annual premium equivalent (APE) increased • In North America, APE were 10% below the previous year on a 1% on a like-for-like basis driven by higher sales in capital like-for-like basis, driven by underwriting actions implemented in efficient saving

  37. Slide 37: Lower investment result in Life driven by market impacts and FX

    Life – Investment result Lower investment result in Life driven by market impacts and FX movements, partially offset by higher reinvestment yield Investment result in BOP, gross of PH (USDm)1 Investment income yield of Group investments (%)2 3,608 4.0% 621 2.6% 2,316 FY-21 FY-22 2,987 2,916 Book and

  38. Slide 38: Commentary

    Life – Investment result Commentary • The Life investment result, which is gross of policyholder sharing, reduced by 36% to USD 2.3bn in FY-22, driven by realized capital losses from increasing market rates, low performing equity markets and the USD strengthening. 9 February 2023 Annual results 2022

  39. Slide 39: Growth in Farmers Exchanges drives increase in fees

    Farmers Management Services – Overview Growth in Farmers Exchanges1 drives increase in fees; MGEP margin impacted by MetLife integration Business operating profit (USDm) MGEP margin (%) 2 +13% 1,735 6.6% 6.6% 1,534 21 1,713 1,568 -34 FY-21 FY-22 FY-21 FY-22 Gross management result Net investment inc

  40. Slide 40: Commentary

    Farmers Management Services – Overview Commentary • Farmers Management Services (FMS) BOP increased 13% compared to the prior year. This was mainly driven by growth in the premium base of the Farmers Exchanges (up +9% compared to FY-21), boosted by the inclusion of the acquired MetLife U.S. P&C busi

  41. Slide 41: Farmers Life with lower pandemic-related mortality; Farmers Re improved

    Farmers Life and Farmers Re – Overview Farmers Life with lower pandemic-related mortality; NBV drop driven by mix and market impacts; Farmers Re improved Business operating profit Farmers Life APE Farmers Life NBV Farmers Life NBM (%)1 (USDm) (USDm)1 (USDm)1 175 142% 6 111 83 78 80 69% 168 55 84 -1

  42. Slide 42: Commentary

    Farmers Life and Farmers Re – Overview Commentary • Farmers Life BOP of USD 168m was well above the prior year, • Farmers Re BOP of USD 6m was USD 7m above the prior year closer to the expected annual run-rate. The improvement was driven by higher investment income and an improved combined driven by

  43. Slide 43: Group Functions benefiting from lower HQ expenses; Non-Core Businesses

    Group Functions and Operations & Non-Core Businesses – BOP Group Functions benefiting from lower HQ expenses; Non-Core Businesses with negative market and reserve impacts Group Functions and Operations BOP (USDm) Non-Core Businesses BOP (USDm) -1 -311 -292 -195 -49 -42 -445 -446 -806 -780 FY-21 FY-2

  44. Slide 44: Commentary

    Group Functions and Operations & Non-Core Businesses – BOP Commentary • Group Functions and Operations reported net expenses of USD 780m compared to USD 806m in the prior-year period. The improvement was mainly driven by lower HQ expenses. • The Group’s Non-Core Businesses, which comprises run-off p

  45. Slide 45: Strong underlying capital generation lead to increased SST ratio

    Group – Solvency Strong underlying capital generation combined with favorable markets lead to increased SST ratio 33% -40% 265% 64% 212% -9% 6% SST ratio (%)1 +65% Interest rates +3% Real estate +1% FX -4% Credit spreads -1% Equity markets FY-21 Assumption and Management Market Economic profit / Cap

  46. Slide 46: Commentary

    Group – Solvency Commentary • As of Q4-22, the Group’s Swiss Solvency Test (SST) ratio based on the Group's Internal Model as approved by the Swiss Financial Market Supervisory Authority FINMA was estimated at 265%, well above the Group’s SST ratio target of 160% or above. • The 13ppts improvement c

  47. Slide 47: Decline in shareholders' equity driven by unrealized losses

    Group – Balance sheet and capital structure Decline in shareholders’ equity driven by unrealized losses, dividend payment, and FX movements Shareholders’ equity (USDm) Capital structure (%) 1 -30% 37,881 4,603 -3,521 10% 12% -1,154 18% -10,928 22% 26,634 -247 71% 66% FY-21 NIAS Dividend Currency Net

  48. Slide 48: Commentary

    Group – Balance sheet and capital structure Commentary • Shareholders’ equity declined by USD 11.2bn compared to year • In 2022 the Group redeemed USD 1bn, GBP 450m of perpetual end 2021, mainly driven by net unrealized losses, unfavorable capital notes, EUR 500m of dated subordinated debt, as well

  49. Slide 49: 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 predictio ns of or indicate future events, trends, plans or objectives of Zurich Insurance Group Ltd or the Zurich Insurance Group (the Group). F

  50. Slide 50: Appendix

    Appendix 50 © Zurich

  51. Slide 51: We are focused on continuing to reward our shareholders

    Group – Dividend policy We are focused on continuing to reward our shareholders Dividend policy1 Dividend per share (CHF) +6% p.a. 24 NIAS2 payout ratio of ~75% 22 20 20 Dividend increases based on sustainable earnings growth FY-19 FY-20 FY-21 FY-223 Minimum target of prior year level 1 The dividend

  52. Slide 52: Update on brand consideration

    Brand consideration Update on brand consideration Brand consideration ranking 1 15 14 15 15 Awareness 60% 57% 53% 53% Consideration 21% 33% 33% 27% 21% 13% 13% 13% Preference 20192 2020 2021 2022 Ownership Below top 5 Top 5 Top 3 1 Retail markets in scope: Argentina, Australia, Austria, Brazil, Germ

  53. Slide 53: Reinsurance program protecting our balance sheet

    P&C – Reinsurance program Reinsurance program protecting our balance sheet Group catastrophe reinsurance protection (USDm) Main additional treaties Global property per risk 200 550 300 Global surety excess of loss 1,200 300 U.S. property quota share 1,200 1,200 550 424 U.S. liability quota share 650

  54. Slide 54: All lines of businesses contributed to premium growth at the Farmers Exchanges

    Farmers Exchanges1 – GWP, PIF, combined ratio, and surplus All lines of businesses contributed to premium growth at the Farmers Exchanges1; rate push impacting policies-in-force Gross written premiums Policies-in-force Combined ratio2 Surplus (USDm) (000’s) (%) 104.3% 105.2% 40.8% + 9% -4% 9.7% 8.0%

  55. Slide 55: Very strong capital position; balance sheet resilient to market movements

    Group – Solvency Very strong capital position; balance sheet resilient to market movements Group Swiss Solvency Test (%) 1 Q3-22 SST sensitivities impact (ppts)2,3 300% 265% Interest rate +50bps +12ppts 216% 221% 222% 204% 212% Interest rate -50bps -14ppts 200% 189% 182% Equities +20% +5ppts ≥160% E

  56. Slide 56: Well diversified capital base by business segment

    Group – SST Components Well diversified capital base by business segment FY-22 Available Financial Resources (USDbn) FY-22 Risk Capital Split (%) 1 6% Market risk Shareholders equity 26.6 7% 2% Premium and reserve risk 10% Business risk 50% Dividend accrual -3.8 Natural catastrophe risk 25% Life ins

  57. Slide 57: Low average debt cost and balanced maturity profile

    Group – Debt Low average debt cost and balanced maturity profile Debt (USDbn) and average debt cost (%) Balanced refinancing needs (USDbn)1 15.1 2.5 14.0 Average 0.3 FY-21 FY-22 2.2 debt cost (%) 1.9 0.4 Subordinated 0.2 1.7 9.8 4.1% 3.8% 8.9 Senior 1.6% 1.6% 0.7 1.2 1.1 2.2 Total 3.2% 3.0% 0.9 0.9

  58. Slide 58: Well diversified and high-quality investment portfolio

    Group – Investment portfolio Well diversified and high-quality investment portfolio FY-22 Group investments (%)1 FY-22 asset quality (%) FY-22 non-financial credit (%) USD 53bn USD 75bn Other 6% 5% 3% 0% 7% 0% 4% 4% 2% 19% Consumer 16% 5% non-cyclical 10% 32% 6% 34% 6% Utility 3% Consumer cyclical U

  59. Slide 59: Well diversified and high-quality credit and private debt exposure

    Group – Investment portfolio Well diversified and high-quality credit and private debt exposure FY-22 rating of credit and private debt securities (%) USD 23.4bn USD 17.8bn USD 12.1bn USD 6.9bn USD 3.7bn USD 10.8bn 2% 0% 1% 1% 1% 9% 13% 1% 6% 4% 25% 27% 44% 19% 53% 31% 50% 89% 72% 16% 46% 3% 33% 25%

  60. Slide 60: Calculation of like-for-like growth

    Alternative performance measures Calculation of like-for-like growth Like-for-like growth FY-21 (USDm) FY-22 (USDm) L-F-L2 KPI (%) Rep M&A Adj Rep FX M&A1 Adj1 P&C GWP 40,123 0 40,123 43,335 2,595 0 45,930 14% Life GWP / 28,353 -542 27,811 25,890 2,122 -214 27,798 0% deposits Life net 6,002 58 6,060

  61. Slide 61: Other information

    Other information 61 © Zurich

  62. Slide 62: For further information

    For further information i ital So i ty Call us Visit or follow us Investor Relations and Rating Agency Management • Jon Hocking +41 44 628 18 34 • Björn Bierfreund +41 44 625 23 13 • Francesco Bonsante +41 44 628 00 68 • Samuel Han +41 44 625 32 57 Investor Relations website • Michèle Matlock +41 44

  63. Slide 63: Thank you

    Thank you Upcoming events • March 30, 2023 – ESG at Zurich (live webcast) • April 6, 2023 – Annual General Meeting 2023 • May 17, 2023 – Update for the three months ended March 31, 2023 • August 10, 2023 – Half year results 2023 • November 9, 2023 – Update for the nine months ended September 30, 202

Zurich Insurance Group — FY2022 Earnings Presentation on 6ix