Zurich Insurance Group Ltd · SIX:ZURN
Zurich Insurance — Non-Deal Roadshow (March 2014)
91 slides from Zurich Insurance's roadshow presentation, March 2014
Slide 1: Investor Roadshows February / March 2014
Investor Roadshows February / March 2014
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 of Zurich Insurance Group Ltd or the Zurich Insurance Group (the “Group”).
Slide 3: Investor Roadshows February – March 2014 topics
Investor Roadshows February – March 2014 Topic Slides Key points 4 to 11 FY 2013 results 12 to 20 Strategy for 2014 – 2016 21 to 41 Farmers 42 to 53 Cash and capital 54 to 62 Appendix 63 to 91 © Zurich Insurance Company Ltd Investor Roadshows, February-March 2014 3
Slide 4: Key points
Z ZURICH Key points ae oe, | veer i = oe | a 2 mF me Lbssteseee Bel & ee en
Slide 5: Solid results underpin high cash returns
KEY POINTS Solid results underpin high cash returns BOP NIAS NIAS ROE2 USD 4.7bn USD 4.0bn 12.0% Dividend per share proposal4 For year ended For year ended For year ended 31 December 2013 31 December 2013 31 December 2013 Z-ECM3 Net cash CHF 17 BOPAT ROE1 remittances to be paid in April 2014 10.5% 1
Slide 6: Drivers of our 2013 performance
KEY POINTS Drivers of our 2013 performance Good growth in priority markets and continued rate increases General Most of the portfolio is delivering hurdle returns Insurance Some areas not performing to expectations Strong growth in protection business, mainly in Emerging Markets Global Life
Slide 7: Cornerstones of our strategy
KEY POINTS Cornerstones of our strategy Group Strategy Key focus areas Prioritizing investment Corporate 1 in distinctive positions Commercial mid-market Select retail Extract value from Global Life back books Managing other Continue to capture value from profitable, smaller 2 businesses f
Slide 8: Targets focused on delivering an attractive total return to investors
KEY POINTS Targets focused on delivering an attractive total return to investors Zurich’s targets for 2014 - 2016 Improving return on BOPAT ROE target 12 - 14%1 equity Maintaining a very Z-ECM ratio 100 - 120% strong capital position Generating high levels Net cash remittances to Group2 > USD 9bn of
Slide 9: Key priorities for 2014
KEY POINTS Key priorities for 2014 Group strategy Key priorities for 2014 Prioritizing Corporate: enhancing capabilities, including joint Global Corporate / CLP offering investment in 1 distinctive Commercial: enhancing capabilities in NAC, leveraging predictive analytics positions Select reta
Slide 10: Outlook for 2014
KEY POINTS Outlook for 2014 Improved combined ratio1 General Headwinds from low yields should be a much smaller issue than in 2013 Insurance Non-tech expenses likely to be higher, and hedge fund gains lower Growth in risk margin, slower decline in investment margin Global Life Continued st
Slide 11: Key messages
KEY POINTS Key messages Solid operating profit in all core businesses Good growth in priority GI and Life markets, Farmers continues transition Strong cash remittances and capital position underpin CHF 17 per share dividend proposal 2014 priorities driven by new strategy © Zurich Insurance C
Slide 12: FY 2013 results
@ ZURICH FY 2013 results
Slide 13: Business operating profit by segment
FY 2013 RESULTS Business operating profit by segment in USD millions Q4-13 Q4-121 Change 2013 20121 Change General Insurance 736 27 nm 2,859 2,112 35% Global Life 294 385 -24% 1,272 1,351 -6% Farmers (incl. Farmers Re) 408 411 -1% 1,516 1,402 8% Other Operating Businesses -356 -260 -37% -1,039 -910
Slide 14: Reconciliation from BOP to NIAS
FY 2013 RESULTS Reconciliation from BOP to NIAS in USD millions Q4-13 Q4-121 Change 2013 20121 Change Business Operating Profit 1,113 573 94% 4,680 4,084 15% BOP attr. to Non-contr. int. 66 80 -18% 288 164 76% Net capital gains/losses 578 947 -39% 1,143 1,278 -11% Restructuring provisions2 -212 -72
Slide 15: General Insurance – Key performance indicators
FY 2013 RESULTS General Insurance – Key performance indicators in USD millions Q4-13 Q4-12 Change 2013 2012 Change GWP and policy fees 8,256 8,301 -1% 36,438 35,610 2%1 Rate change2 4.2% 4.3% -0.1pts 3.7% 3.8% -0.1pts Loss ratio 68.6% 75.5% 6.8pts 68.3% 70.3% 2.0pts Expense ratio 27.4% 28.7% 1.3pts
Slide 16: General Insurance – Rate Change Monitor and GWP performance
FY 2013 RESULTS General Insurance – Rate Change Monitor1 and GWP performance Rate Change Monitor1 FY-13 Discrete Q4-13 Int’l Total Int’l Total GC NAC Europe Markets GI GC NAC Europe Markets GI Personal Lines n/a n/a 3% 4% 3% n/a n/a 2% 5% 3% Commercial Lines 4% 5% 3% 3% 4% 5% 4% 3% 3% 5% Gross Writt
Slide 17: General Insurance – Combined ratio trends
FY 2013 RESULTS General Insurance – Combined ratio trends Large LR Underlying LR Underlying and Large Losses1 Prior year development2 80% 74.9% 5% 4.8% 72.6% 4.1% 70.0% 70.3% 4% 70% 3% 2.4% Combined Ratio 60% 2.1% 2% in % of NEP, as reported 66.3% 64.3% 50% 61.4% 60.3% 1% 100% 98.9% 98.4% 97.9% 40%
Slide 18: Global Life – Key performance indicators
FY 2013 RESULTS Global Life – Key performance indicators in USD millions 2013 2012 Change Change for the years ended December 31 in LC1 GWP and policy fees (incl. insurance 27,095 30,259 -10% -10% deposits) Net inflows to Assets under Mgmt. -2,694 1,431 nm nm Annual Premium Equivalent (APE) 2 4,418
Slide 19: Farmers – Key performance indicators
FY 2013 RESULTS Farmers – Key performance indicators in USD millions Q4-13 Q4-12 Change 2013 2012 Change Farmers Management Services Management fees and other related 697 712 -2.0% 2,810 2,846 -1.3% revenues Managed gross earned premium margin1 7.1% 7.3% -0.2pts 7.2% 7.3% -0.1pts Business operating
Slide 20: Farmers Exchanges – Key performance indicators
FY 2013 RESULTS Farmers Exchanges1 – Key performance indicators in USD millions Q4-13 Q4-12 Change 2013 2012 Change Gross written premiums, excl. SoT impact2 4,367 4,533 -3.7% 18,643 19,009 -1.9% Net underwriting result3 302 -38 nm -59 -1,062 94.4% Expense ratio3 33.9% 33.0% -0.9pts 33.1% 32.9% -0.2
Slide 21: Strategy 2014 – 2016
@ ZURICH Strategy 2014 - 2016
Slide 22: Building on our strengths as we move into a new phase
STRATEGY Building on our strengths as we move into a new phase Zurich Share Performance (in USD) Disciplined investment and focused underwriting have helped us outperform the sector since the credit crisis began 2013 Target Status Combined ratio We set ambitious targets for 2010 - 2013, Growth
Slide 23: What we will continue, change and improve
STRATEGY What we will continue, change and improve What will we Underwriting focus and investment discipline will continue to do remain unchanged Prioritizing investment in distinctive positions and What’s new managing other businesses for value What will we do Improving operating profitability and
Slide 24: Customer needs are changing…
STRATEGY Customer needs are changing… World ranking by Employee General revenue1, 2012 Benefits Insurance Corporate customers and intermediaries Broker 1 1 2 are beginning to request combined life and Broker 2 2 1 general insurance solutions in some market Broker 3 3 3 segments Broker 4 4 4 Comm
Slide 25: …creating opportunities we will capitalize on
STRATEGY …creating opportunities we will capitalize on Our advantage, as a global and composite insurer Corporate Uniquely positioned as a Globalization and interconnectedness of risk corporate insurer with global drive need of global capabilities reach and composite proposition Composite offe
Slide 26: We are strong in Corporate and Commercial…work to do in Retail
STRATEGY We are strong in Corporate and Commercial…work to do in Retail Breakdown of Zurich‘s GWP (2011) by market share per country Zurich’s market share (2011)1 GI-Corporate and 11 countries, 7% Commercial among which3 2% Above 5% Below 3% mid-market2 17% Australia From 3 to 5% Not categorized 1
Slide 27: Prioritizing investment in distinctive positions
STRATEGY Prioritizing investment in distinctive positions Target customer segments Corporate Commercial mid-market Retail (select markets) Risk participation Social status Bespoke Global Industry attractiveness Values Increase cross sell and Promote predictive Increase product-density commonal
Slide 28: Results from Global Portfolio Review
STRATEGY Results from Global Portfolio Review Number of business units, by GPR1 grouping Priority markets Markets with critical market Financial Assessment share and high returns Markets with high profitable Low Mid High growth potential High Strategic Assessment Manage for value 19 priority mar
Slide 29: Managing other businesses for value
STRATEGY Managing other businesses for value Group Portfolio Review Two thirds of our capital is allocated to BOPAT ROE: 5% priority markets and manage for value 33% of Z-ECM “as-is” markets One third of our capital is allocated to our other manage for value businesses BOPAT ROE: 13% 62% of Z-EC
Slide 30: Growing our operating earnings
STRATEGY Growing our operating earnings Key objectives Investing selectively in growth in priority markets General Improved combined ratio, more than offsetting lower investment Insurance income Growth in technical margins exceeding decline in the investment Global Life margin Expense effici
Slide 31: BOPAT ROE is our key target
STRATEGY BOPAT ROE is our key target BOPAT ROE based on Shareholders Equity excluding Unrealized Gains and Losses Description 12.0%- 14.0% We will measure our BOPAT ROE 13.5% based on Shareholder Equity 12.1% excluding Unrealized gains and 11.2% Losses 10.5% Operating improvement initiatives mor
Slide 32: Report card – to be used at a group level and by each segment
STRATEGY Report card – to be used at a group level and by each segment Focus Update Key strategic developments Investments in and initiatives 1 priority markets Customer proof points and metrics Growth in market share and margin Tangible proof points on managing these 2 Managing for value bu
Slide 33: Cornerstones of our strategy – Life
STRATEGY - LIFE Cornerstones of our strategy Group Strategy What does it mean for Global Life Prioritizing investment Focusing on two global businesses – 1 Bank Distribution and Corporate Life & Pension – and in distinctive positions Targeted Local Opportunities Building global capabilities for
Slide 34: Focus on a select number of growth opportunities
STRATEGY - LIFE Focus on a select number of growth opportunities Serving the needs of our customers Global Capabilities Targeted Local Bank Corporate Life In-force Opportunities, Regions Distribution & Pensions Management e.g. Europe UK IFA North America US IFA Latin Brazil America Mex
Slide 35: Focus on selected growth, while managing for value, and turnaround
STRATEGY - LIFE Focus on selected growth, while managing for value, and turnaround Key Performance Indicators by Business Classification business classifications, 2012, USD m 4,767 1,085 1’3381 Underperforming businesses or weak Optimize existing Turn- around markets 27% 32% business 60% Mature
Slide 36: The actions we take should positively impact cash remittance
STRATEGY - LIFE The actions we take should positively impact cash remittance 2011 - 2013 2014 - 2016 2017 Onwards We have exceeded the run Shift of product mix and funding New business strategy is rate in prior years through of protection keeps cash expected to reach an inflection management actions
Slide 37: Key messages – General Insurance
STRATEGY - GENERAL INSURANCE Key messages Group Strategy What does it mean for General Insurance Prioritizing investment Investing in growth in markets where we enjoy clear 1 competitive advantages, while focusing on customer in distinctive positions value, data and analytics Managing other busi
Slide 38: Global Corporate’s success is based on customer focus
STRATEGY - GENERAL INSURANCE Global Corporate’s success is based on customer focus Tangible results… …driven by global capabilities Gross written premium Customer retention in USD billions in % Largest international network with +13% +3.9pts 206 territories and 3‘000 people 8.6 90.5% 7.9 86.6% 87.
Slide 39: Leveraging predictive analytics is key to North America Commercial
STRATEGY - GENERAL INSURANCE Leveraging predictive analytics is key to North America Commercial’s sustainable success Ambition “…to consistently deliver distinctive risk insights, through a compelling value proposition to our customers and brokers, delivered through a simple Zurich Way of doing busi
Slide 40: We will respond to customer needs in chosen retail markets
STRATEGY - GENERAL INSURANCE We will respond to customer needs in chosen retail markets Redefinition of our go-to-market strategy to deliver superior value to our target customer sub-segments Omni-channel integrated approach Higher service levels at key “moments of Extensive research truth” toward
Slide 41: Active Portfolio Management – manage to hurdle ROE, or turnaround
STRATEGY - GENERAL INSURANCE Active Portfolio Management – manage to hurdle ROE, or turnaround, exiting if needed Strategic management of portfolio Evaluation of our business, based on past-performance and our view of prospects, led us to divide our portfolio into two categories Invest in focus ma
Slide 42: Farmers strategy
fo" FARMERS INSURANCE Farmers strategy
Slide 43: Farmers strategy
FARMERS Farmers strategy Cornerstones of Farmers strategy PRIORITIZING INVESTMENT IN DISTINCTIVE POSITIONS Focus on targeting value conscious customers Improve the customer experience Drive eastern expansion Focus on a single consumer facing brand MANAGING FOR VALUE Restore profitability o
Slide 44: Foundation for Farmers consumer strategy – Customer segmentation
FARMERS Foundation for Farmers consumer strategy – Customer segmentation Targeting demand via Confident Planners Auto&Home Auto&Home Consumer Life Consumer Life % of Segment Spend Spend Time Value Time Value Households (USD billions) (%) (USD billions) (%) Confident Planners 17% 69 28% 746 32% Value
Slide 45: Foundation for Farmers consumer strategy – Omni-channel approach
FARMERS Foundation for Farmers consumer strategy – Omni-channel approach Channel preferences by segment Strongly prefer No strong Strongly prefer agent preference direct Total 18% 67% 15% Confident Planners 22% 64% 14% Relationship Seekers 45% 51% 4% Loyal Outsourcers 12% 73% 14% Do-it-Myselfers 2%
Slide 46: Improving customer experience critical to strategy
FARMERS Improving customer experience critical to strategy – large growth lever Household retention by Net Promoter Score Focus on improving the customer experience at Farmers as measured by Net Promoter Score (NPS) Survey response segment This is critical to retaining Confident Planners, 100% b
Slide 47: Eastern Expansion
FARMERS Eastern Expansion Current Eastern Expansion Currently in 5 Eastern states with Farmers Agents (PA, NJ, GA, MD & NY) ME VT Strong results to date in our Eastern NY NH MA Expansion efforts CT RI PA − 479 agents and 398 additional licensed NJ MD DE producers in these states1 WV VA − Topped
Slide 48: Repositioning to improve profitability
FARMERS Repositioning to improve profitability Managing for value: GWP in USD billions 2.0 Over the last two years profitability 9m-12 challenges have been more than weather. 1.5 9m-13 Significant repositioning of the non-core 1.0 Farmers book has created a decline of USD 0.5 350m comparing 2013 t
Slide 49: Repositioning 21st Century Direct
FARMERS Repositioning 21st Century Direct 21st Century Direct Gross Written Premium, in USD millions Farmers repositions 21st Century Direct for 1,600 several reasons: 1,500 1,400 − Proprietary consumer research shows 1,300 there is no direct market, but rather 1,200 1,100 segments that use all ch
Slide 50: Progress has been made in improving expense structure
FARMERS Progress has been made in improving expense structure LAE and expense ratio improvement1,2 Farmers Exchanges reduced expenses by 3 points since 2011, while at the same time 50% investing in Eastern Expansion, distribution 46.0% 44.1% and customer experience initiatives 45% 43.2% 40% − Focu
Slide 51: Strengthening Farmers Exchanges capital will lead to reduced reliance on reinsurance
FARMERS Strengthening Farmers Exchanges capital will lead to reduced reliance on reinsurance Farmers Exchanges surplus ratio Historically, and in accordance with NAIC2 guidelines Farmers Exchanges surplus has been presented including Farmers in USD millions Reinsurance Company1. 42.0% 6'000 40.0%
Slide 52: Key messages
FARMERS Key messages Farmers is building on its strengths to compete in a rapidly changing market Go-to-market strategy is focused on targeting value conscious customers Growth opportunity remains in the East and Farmers is gaining traction Focus is on improving Farmers Exchanges’ balance sh
Slide 53: Farmers relationship to Zurich
FARMERS Farmers relationship to Zurich What is “Farmers”? Farmers is a brand name beneficially owned by the Farmers Exchanges. The “Farmers Exchanges” are Farmers Insurance Exchange, Fire Insurance Exchange, Truck Insurance Exchange and their subsidiaries and affiliates. The three Exchanges are
Slide 54: Cash and capital
@ ZURICH Cash and capital
Slide 55: Key messages
CASH AND CAPITAL Key messages Strong financial position Capital flexibility and buffers to absorb volatility Operating free capital generation is improving Remit > USD 9bn in net cash to the holding company in 2014 - 2016, after central costs, while investing to grow the business © Zurich In
Slide 56: Three key factors underpin our dividend
CASH AND CAPITAL Three key factors underpin our dividend Z-ECM2 ratio at 120%1, SST 3 at 206%1 Balance sheet security Significant capital buffers absorb volatility Unrewarded investment risk is minimized Flexible capital structure enables a high proportion of free capital generated to be rem
Slide 57: We have a very strong balance sheet…
CASH AND CAPITAL We have a very strong balance sheet… Z-ECM1 Ratio SST2 Ratio Solvency I 120% 206% 261% As of 1 October 2013 As of 1 July 2013 As of 30 September 2013 Moody’s financial Moody’s earnings Financial strength leverage coverage rating 25% 8x AA range As of 31 December 2012 As of 31 Decemb
Slide 58: ...with low capital volatility coming from investment risks compared to peers
CASH AND CAPITAL ...with low capital volatility coming from investment risks compared to peers… Investment Risk Capital1 as percentage of Total Risk Capital Adjusted to 99.95% confidence level2 Key observation ALM/Market risk contribution 100% to total Z-ECM is estimated to be lower than at select
Slide 59: …and an efficient capital structure
CASH AND CAPITAL …and an efficient capital structure Strategy Key aspects Active capital management to minimise timing friction Manage local subsidiaries to between free capital generation and up streaming to the regulatory minimum plus group an adequate buffer for short Capital targets set and
Slide 60: Net Income to Free Capital Generation (2012)
CASH AND CAPITAL Net Income to Free Capital Generation (2012) 4.2 USD billions 3.9 Key Differences 0.3 3.7 0.8 1.3 -0.5 1.3 IFRS to local statutory 1.9 GI: Mainly tax loss carry 2.1 forward in U.S. GI otherwise 1.9 relatively similar to IFRS GL: Mainly intangibles 1.1 0.7 deferred in IFRS 0.5
Slide 61: Very strong track record of remitting cash to group
CASH AND CAPITAL Very strong track record of remitting cash to group USD billions 3.7 Key messages 3.5 2.9 2010 and 2011 benefitted from ZNA1 surplus note repayments 2.8 2.1 2.6 2012 impacted by one-off 2.4 regulatory capital restrictions 1.4 in the U.S. and Europe GI, and Germany GI reserve 0.6
Slide 62: Growing free capital generation underpins new remittance target
CASH AND CAPITAL Growing free capital generation underpins new remittance target Levers Key aspects BOPAT ROE 12 - 14% Profitability Grow operating profits Allocate capital efficiently to products and balance Growth sheets Prioritise investments Capital investment Stop investing in non-per
Slide 63: Appendix
@ ZURICH Appendix
Slide 64: General Insurance – BOP and combined ratio by business
APPENDIX General Insurance – BOP and combined ratio by business Business operating profit Combined ratio (%) in USD millions Global CAT3 92.3% 2013 2012 Change Corporate 0.6 CAT3 for the years ended December 31 6.8 99.1% Global Corporate 879 498 77% NA 95.3% Commercial CAT3 4.5 99.7% North America C
Slide 65: General Insurance – Gross written premiums and policy fees
APPENDIX General Insurance – Gross written premiums and policy fees In USD millions 2013 2012 Change Change for the years ended December 31 in LC1 Global Corporate 9,264 8,609 8% 8%2 North America Commercial 10,215 10,003 2% 2%2 Europe 11,799 11,882 -1% -2% International Markets 5,700 5,603 2% 12% G
Slide 66: Zurich North America – Rate change vs. industry
APPENDIX Zurich North America – Rate change vs. industry Rate change 10% ZNA Carrier survey 5% (Towers Watson1) Broker surveys 0% (CIAB) -5% -10% -15% Q4 05 Q4 06 Q4 07 Q4 08 Q4 09 Q4 10 Q4 11 Q4 12 Q4 13 © Zurich Insurance Company Ltd 1 Towers Watson – carrier survey estimated at ZNA mix of busines
Slide 67: General Insurance – Comparison of expense ratio
APPENDIX General Insurance – Comparison of expense ratio 28.0% 27.2% Change year-over-year Expense ratio development In percentage points Discrete quarters, in percentage points Other tech 14.4% expenses1 13.7% 28.8 28.7 27.1 27.5 27.2 26.9 27.3 27.4 -0.1 -0.8 -0.3 14.5 14.8 14.2 14.1 13.5 13.5 13.6
Slide 68: General Insurance – Comparison of loss ratio
APPENDIX General Insurance – Comparison of loss ratio FY-13 FY-12 Loss ratio development 1.1pts 70.3% Discrete quarters improvement Underlying loss ratio 68.3% 75.5% 70.3% 69.4% 68.6% 67.5% 67.6% 67.7% 67.4% 61.4% 60.3% -8.6% 2.1% -2.5% 2.4% -0.3% -10.0% USD USD USD USD USD USD 720m -101m -2,973m 58
Slide 69: General Insurance – Major catastrophe and large losses
APPENDIX General Insurance – Major catastrophe and large losses Major catastrophe1 and Large Losses2 in USD millions 1,400 1,322 1,200 966 1,000 821 800 690 653 740 5 year quarterly 553 547 600 average1 (USD 728m) 400 200 1 not weighted for volume 0 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Im
Slide 70: Development of paid to ultimate losses in our largest businesses
APPENDIX Development of paid to ultimate losses in our largest businesses Development of paid-losses/ultimate-losses ratio1 Key takeaways Accident year view, in % 12 24 36 48 60 72 GI Region Year months months months months months months 2008 49% 71% 78% 82% 85% 88% This regional view Europe 2009
Slide 71: Non-life ultimate loss ratios by accident year
APPENDIX Non-life ultimate loss ratios by accident year Cumulative incurred 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 net loss ratios1 In the year 68.3 % 73.3 % 69.6 % 72.7 % 74.6 % 72.3 % 73.5 % 74.2 % 71.3 % 69.4 % 1 year later 64.2 % 68.1 % 66.2 % 71.7 % 74.1 % 72.0 % 73.2 % 74.0 % 70.0 %
Slide 72: General Insurance – Reinsurance program for natural catastrophes
APPENDIX General Insurance – Reinsurance program for natural catastrophes Excess of loss protection Combined Global Cat Occurrence Retention / Aggregate Treaty1, USD 150m 30% Co-Participation Major changes as of January 1, 2014: Global Cat Treaty1, USD 500m xs underlying towers 20% US Cat: Renewed
Slide 73: Global Life – New business by pillar
APPENDIX Global Life – New business by pillar in USD millions NBV2 NBV2 Change APE2 APE2 Change for the years ended December 31 2013 2012 in LC1 2013 2012 in LC1 Bank Distribution 435 316 44% 1,348 1,187 19% IFA/Brokers 274 233 20% 1,003 972 4% Agents 203 165 23% 473 463 2% Total Retail Pillars 912
Slide 74: Global Life – New business by region/country
APPENDIX Global Life – New business by region/country in USD millions NBV2 NBV2 Change APE2 APE2 Change for the years ended December 31 2013 2012 in LC1 2013 2012 in LC1 North America 117 109 7% 162 125 29% Latin America 368 282 40% 1,178 1,457 -14% Of which: Zurich Santander 268 182 52% 821 701 26%
Slide 75: Global Life – Business operating profit: Profit by Source
APPENDIX Global Life – Business operating profit: Profit by Source in USD millions New Business Business in Force Total for the years ended December 31 2013 2012 2013 2012 2013 2012 Net Expense margin -1,340 -1,434 1,523 1,410 183 -23 Net Risk margin 821 769 821 769 Net Investment margin 579 716 579
Slide 76: Global Life – Embedded value result
APPENDIX Global Life – Embedded value result in USD millions 2013 2012 for the years ended December 31 Opening embedded value 18,861 15,846 New business value1 1,251 8904 Expected contribution from in-force2 689 954 Operating variances3 -1,084 -105 Embedded value operating earnings1 855 1,739 Econom
Slide 77: Zurich Santander quarterly results
APPENDIX Zurich Santander quarterly results Profit before tax Intangibles amortization Intangibles amortization (100%) (100%) Core segment BOP GI & Life (100%) -21 -21 -20 -20 -21 -20 -18 -19 GI & Life (51%) -16 -13 -12 -11 155 171 160 -27 -25 -21 165 -36 -34 -30 -29 63 65 65 156 135 -41 -37 133 133
Slide 78: Farmers Exchanges – Financial highlights
APPENDIX Farmers Exchanges1 – Financial highlights in USD millions 6'000 42.0% 2013 2012 40.0% for the years ended December 31 5'000 38.0% Gross written premiums2 18,643 18,935 4'000 36.0% 34.0% 3'000 Net underwriting result3 -59 -1,062 32.0% 2'000 30.0% Beginning surplus4,5 5,626 5,656 28.0% 1'000
Slide 79: Farmers Exchanges – Gross written premiums by line of business
APPENDIX Farmers Exchanges – Gross written premiums by line of business in USD millions 2013 2012 Change for the years ended December 31 Auto 9,507 9,938 -4.3% of which standard Auto 8,560 8,765 -2.3% of which non-standard Auto1 947 1,173 -19.2% Homeowners2 4,796 4,687 2.3% Business Insurance 2,134
Slide 80: Farmers Exchanges – Policies in force
APPENDIX Farmers Exchanges – Policies in force in thousand policies 2013 Change 2012 for the years ended December 31 # % Auto 10,552 -1,036 -8.9% 11,633 of which standard Auto 9,666 -784 -7.5% 10,495 of which non-standard Auto1 886 -252 -22.1% 1,138 Homeowners 4,914 -217 -4.2% 5,131 Business Insuran
Slide 81: Farmers Exchanges – Combined ratio
APPENDIX Farmers Exchanges – Combined ratio1 for the years ended December 31 2013 2012 Change Auto 99.8% 105.5% 5.7pts of which standard Auto 99.8% 103.9% 4.1pts of which non-standard Auto2 99.9% 116.2% 16.3pts Homeowners 101.2% 102.7% 1.5pts Business Insurance 107.6% 110.6% 3.0pts of which Business
Slide 82: Farmers Exchanges – Development of the combined ratio
APPENDIX Farmers Exchanges – Development of the combined ratio Quarterly combined ratio Incl. CAT1 impact Incl. 17 Catastrophe Incl. Ike & Gustav Events 13 Catastrophe Events 115% Incl. 13 Catastrophe Events 110% Incl. Incl. Rita & Katrina Irene 105% Incl. Excl. Fogel/SoT California settlements wild
Slide 83: Other Operating and Non-Core Businesses – Business operating profit contribution
APPENDIX Other Operating and Non-Core Businesses – Business operating profit contribution in USD millions Q4-13 Q4-12 Change 2013 2012 Change Other Operating Businesses - Holding and financing -213 -206 -3% -843 -735 -15% - Headquarters -143 -54 nm -196 -175 -12% Total Other Operating -356 -260 -37%
Slide 84: Investment performance of Group Investments
APPENDIX Investment performance of Group Investments in USD millions Q4-13 Q4-12 Change 2013 2012 Change Net investment income 1,582 1,629 -3% 6,240 6,782 -8% Net capital gains/(losses) on investments 552 1,213 -54% 1,157 2,201 -47% and impairments1 of which attributable to shareholders 465 1,037 -5
Slide 85: Zurich’s investment portfolio benefits greatly from diversification
APPENDIX Zurich’s investment portfolio benefits greatly from diversification and is balanced in terms of risk Risk Allocation of Zurich’s investment portfolio As of December 31, 2013 Asset allocation (%) Risk diversification Risk exposure (%)1 and matching (%) 100 Hedge Funds / Liquidity Real Estate
Slide 86: Development of shareholders’ equity in FY-13
APPENDIX Development of shareholders’ equity in FY-13 in USD millions 4,028 -2,927 36,000 35,000 34,505 -1,933 34,000 -268 -367 33,000 -718 183 32,503 32,000 31,000 30,000 29,000 28,000 27,000 26,000 25,000 24,000 Balance as of Dividends to Cumulative Net Income Change in net Cumulative Net actuaria
Slide 87: Solvency calculations
APPENDIX Solvency calculations Solvency ratios in % 268 278 261 2 258 Z-ECM 178 185 206 1 206 110 114 121 120 SST Solvency I HY-12 FY-12 HY-13 FY-13 Z-ECM model position in USD billions 9m-13 HY-13 Available Financial Resources (AFR) 44.5 43.8 Z-ECM AFR (after dividend accrual) 3 42.4 42.5 Z-ECM cap
Slide 88: Z-ECM ratio development
APPENDIX Z-ECM1 ratio development in USD billions (rounded) 136% 114% 121% 120% 119% 103% Available to policyholders 40 41 41 43 42 40 38 35 37 36 35 36 95% 34 30 30 28 27 25 20 15 10 5 RBC AFR RBC AFR RBC AFR RBC AFR RBC AFR RBC AFR RBC AFR 0 Jan. 1 Jan. 1 Jan. 1 Jan. 1 Jan. 1 Jul. 1 Oct. 1 2009 20
Slide 89: Capital management driven by Zurich Economic Capital Model (Z-ECM)
APPENDIX Capital management driven by Zurich Economic Capital Model (Z-ECM) Z-ECM capital actions SST Framework >120% Z-ECM >120% - Consider increased No action required Above target risk taking and/or remedial actions 120% 100% - 120% No actions required as within 190% AA Target range stated object
Slide 90: Estimation of Available Financial Resources (AFR) as of 9m-13
APPENDIX Estimation of Available Financial Resources (AFR) as of 9m-13 in USD billions (rounded) 50 (2.2) 45 10.2 44.5 40 42.4 35 (2.1) (20.0) 24.3 30 32.1 30.0 25 20 15 10 5 © Zurich Insurance Company Ltd 0 Reported Distributions Net Net Value of in- Financial Total AFR Capital Net AFR shareholder’
Slide 91: Z-ECM capital required by segment and risk type as of 9m-13
APPENDIX Z-ECM capital required by segment and risk type as of 9m-13 Capital Allocation: Total RBC: USD 37.7 billion1 USD 35.5 billion 8% Market / ALM risk Other2 9% 8% Operational risk Farmers1 Business risk 14% 32% General 36% P&R risk 3 Insurance 52% 3% Re-ins credit risk Global Life 3% Life insu
Zurich Insurance Group — Non-Deal Roadshow (March 2014) on 6ix