Zurich Insurance Group Ltd · SIX:ZURN
Zurich Insurance — Investor Day (December 2018)
108 slides from Zurich Insurance's investor day presentation, Dec 5, 2018
Slide 1: Investor Day – Delivering and building for the future
Investor Day – Delivering and building for the future December 5, 2018 London Zurich Insurance Group
Slide 2: Agenda
Agenda TIME (GMT) TOPIC SPEAKER 09:30 – 10:00 Delivering and building for the future Mario Greco 10:00 – 10:30 Well on track to deliver on our targets George Quinn 10:30 – 11:00 Q&A 11:00 – 11:15 Coffee break 11:30 – 12:15 Break out session 1 North America, Switzerland, Australia and Ireland teams 1
Slide 3: Disclaimer
Disclaimer 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’). Forward-looking statement
Slide 4: Strategic update – Delivering and building for the future
Strategic update – Delivering and building for the future Mario Greco, Group Chief Executive Officer
Slide 5: Key messages
STRATEGIC UPDATE Key messages Fit for the We are fully delivering on our financial targets; discipline and efficiency have been restored; future our strong balance sheet and cash generation support an attractive and growing dividend Improving The rebalancing of our business mix will support earnings
Slide 6: We are delivering on our targets
STRATEGIC UPDATE We are delivering on our targets 2017-2019 TARGETS STATUS BOPAT ROE >12% and increasing 12.3% at HY-18 EXPENSE SAVINGS USD 1.5bn USD 1.1bn at FY-18e Z-ECM 100-120% 134% at 9M-181 CASH REMITTANCES >USD 9.5bn >USD 7bn in 2017-18e Minimum CHF 18 DIVIDEND CHF 18 for FY-17 NIAS payout ~7
Slide 7: We look different to the company we were in 2016
STRATEGIC UPDATE We look different to the company we were in 2016 FROM TO Complex Group structure Disciplined execution Product-based company Customer-led company Focused and balanced footprint Dispersed footprint Strong capital base Balance sheet provider Empowered local units Increased ser
Slide 8: We have significantly reduced expenses both in absolute and relative terms
STRATEGIC UPDATE We have significantly reduced expenses both in absolute and relative terms BREAKDOWN OF EXPENSE SAVINGS (%) P&C OTHER UNDERWRITING EXPENSES (INDEXED TO 2015)1 115 USD 10.3bn USD 1.1bn USD 0.4bn Increasing 110 11% 20% ~20% 105 100 59% ~35% 95 42% 90 Saving 85 80 38% ~45% 31% 75 70 FY
Slide 9: Our portfolio has a growing exposure to lower volatility businesses
STRATEGIC UPDATE Our portfolio has a growing exposure to lower volatility businesses BOP SPLIT BY BUSINESS (%) P&C NEP BY CUSTOMER UNIT (%) 29% 27% 55% 60% 25% 31% 46% 42% 45% 40% FY-16 HY-18 FY-16 HY-18 Farmers1 Life2 P&C Retail & Other Commercial © Zurich 1 Includes Farmers Management Services and
Slide 10: Changes to new business mix are improving our commercial portfolio
STRATEGIC UPDATE Changes to new business mix are steadily improving our commercial portfolio and support an improved combined ratio NEW BUSINESS GWP (%)1 TOTAL GWP (%)2 AY COMBINED RATIO (%)3 -10ppts 27% 29% 25% 26% 30% 36% 22% 25% 25% 26% 28% 34% 50% 50% 49% 45% 41% 30% FY-16 FY-17 HY-18 FY-16 FY-1
Slide 11: Our Life business is growing and is cash generative
STRATEGIC UPDATE Our Life business is growing and is cash generative, including in the more developing markets of APAC and Latin America LIFE BOP (USDm) APAC AND LATIN AMERICA CASH REMITTANCES (USDm) +6% 1,258 1,130 1,111 114 237 326 428 323 307 2261 63 33 592 582 606 -42 -2 -85 FY-15 FY-16 FY-17 FY
Slide 12: We have a leading market position in Life protection
STRATEGIC UPDATE We have a leading market position in Life protection HY-18 LIFE NBV BY PRODUCT (%) PROTECTION MARKET SHARE (%)1 STRONG FRANCHISE AND FINANCIALS -1% 16% # of customers >40m ≥ 20% 7% 10-20% 2 # of underwriters ~400 78% Internal rate of return >15% 5-10% (HY-18) Savings & Annuity Unit-
Slide 13: Our very strong capital position and cash generation support an attractive dividend payout
STRATEGIC UPDATE Our very strong capital position and cash generation support an attractive dividend payout CAPITAL STRENGTH CASH COVER OF DIVIDEND (USDbn)2 10.3 Z-ECM, 9M-18 (%)1 134% 8.0 AA- S&P financial strength rating stable Cash remittance Dividends paid © Zurich 1 Ratio as of September 30, 20
Slide 14: Geographic refocus on countries with high potential
STRATEGIC UPDATE Geographic refocus on countries with high potential WE HAVE ACHIEVED LEADING POSITIONS IN ATTRACTIVE MARKETS… …WHILE EXTRACTING CAPITAL FROM NON-STRATEGIC BUSINESSES Deals announced Change in ranking Crop n.m. #2 Middle East P&C Taiwan P&C Travel n.m. #2 Closed annuity book 2017 Wor
Slide 15: We are building a customer centric organization
STRATEGIC UPDATE We are building a customer centric organization IN 2016 WE CHOSE TO BECOME A CUSTOMER-LED …WHICH REQUIRES DEEPENING CUSTOMER RELATIONSHIPS COMPANY… KNOW Manufacturer and Low ROEs and eventual balance sheet provider consolidation Owner of the Higher ROEs and customer relationship mar
Slide 16: Customer loyalty leads to higher profits
STRATEGIC UPDATE Customer loyalty leads to higher profits 1 HIGHER RETENTION HIGHER PRODUCT DENSITY 1.6x 1.2x 2.6 Household # of products 1.6 retention (%)2 per customer Detractors3 Promoters3 Detractors3 Promoters3 1 LOWER LOSS RATIO LOWER ACQUISITION COSTS 2x 2x Loss ratio by tenure Commission 3x
Slide 17: Our focus on customers is yielding positive results
STRATEGIC UPDATE Our focus on customers is yielding positive results NET PROMOTER SCORE (Y-O-Y CHANGE)1 EXAMPLES OF ACTIONS TAKEN AND IMPACT ON TNPS3 +12 Reduced call waiting times +6ppts +8 Care center training and website +7 +8ppts improvements +5 +3 Revamped and digitalized car +11ppts repair app
Slide 18: New Zurich Customer Active Management (ZCAM) unit
STRATEGIC UPDATE New Zurich Customer Active Management (ZCAM) unit helps capture a higher share of customer and distributor value GENERATE PERSONALIZED INSIGHTS IN REAL TIME, CUSTOMER SINGLE VIEW WITH INSIGHTS TO DISTRIBUTION INTEGRATED INTO EXISTING CRM TOOLS CHANNELS Examples from one data sample
Slide 19: We are building out our service offerings to improve customer experience
STRATEGIC UPDATE We are building out our service offerings to improve customer experience ACTIVE COLLABORATIONS IN DEVELOPMENT Support great drivers and ~1.2m connected drivers Mobility commuters and make their 1 vehicles safer Across >20 states Make customers’ homes Smart Home/ Global leader in IoT
Slide 20: We continue to enhance our access to customers through new distribution agreements
STRATEGIC UPDATE We continue to enhance our access to customers through new distribution agreements and innovation WE HAVE ADDED FURTHER DISTRIBUTION AGREEMENTS…1 …AND DEVELOPED INNOVATIVE APPROACHES TO TARGET MILLENNIALS AND SMEs Partner: Country / Scope: Customers: 2 ~6m ~1.5m ~3m ~2.5m 3 ~2.9m ~1
Slide 21: Key messages
STRATEGIC UPDATE Key messages Fit for the We are fully delivering on our financial targets; discipline and efficiency have been restored; future our strong balance sheet and cash generation support an attractive and growing dividend Improving The rebalancing of our business mix will support earnings
Slide 22: Finance update – Well on track to deliver on our targets
Finance update – Well on track to deliver on our targets George Quinn, Group Chief Financial Officer
Slide 23: Key messages
FINANCE UPDATE Key messages Delivering our On track to deliver on all Group financial targets targets Increasing P&C Changing business mix in P&C and disciplined underwriting is reducing volatility while profitability increasing profitability High quality Our focus on protection and unit-linked cont
Slide 24: Well on track to achieve all 2017-2019 targets
FINANCE UPDATE Well on track to achieve all 2017-2019 targets, with all businesses contributing BOPAT ROE (%)1 Z-ECM Ratio (%)2 P&C COMBINED RATIO -6ppts 12.3% >12.0% 134% 120% REDUCTION HY-18 vs FY-15 100% HY-18 Target Q3-18 Target range LIFE BUSINESS OPERATING +6% p.a. PROFIT GROWTH FY-17 vs FY-15
Slide 25: Unchanged attractive ROE development
FINANCE UPDATE Unchanged attractive ROE development ILLUSTRATIVE BOPAT ROE DEVELOPMENT (%) ~14% ~0.5% ~0.5% 0-1% ~1% ~0.5% 12.1% ~1.75% 12% 1.5-2% ~0.5% 0.5-1% FY-171 Growth in Life & Loss ratio Expense US tax Capital 2019 Potential 2019 Non- Disposal NIAS ROE equity base Farmers improvement savings
Slide 26: P&C combined ratio is improving with reduced volatility
FINANCE UPDATE P&C combined ratio is improving with reduced volatility REDUCTION IN AY COMBINED RATIO EXCLUDING LOWER LARGE LOSS VOLATILITY (ppts)1 CATASTROPHES (%) 2014/2015 -3.5ppts 100.0% 97.3% 96.5% 8ppts Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 2016/2017/2018 FY-15 FY-16 FY-17 2ppts Q1-1
Slide 27: We are achieving the top-end of our PYD guidance
FINANCE UPDATE We are achieving the top-end of our PYD guidance UNDERLYING P&C PRIOR YEAR RESERVE DEVELOPMENT (% OF NET EARNED PREMIUMS)1 2.6% 2.5% 2.0% 2.1% 2.0% Average favorable 1.8% PYD excl. Ogden 1.6% 1.0% H1-16 H2-16 H1-17 H2-17 H1-18 © Zurich 1 Underlying PYD (prior year reserve development)
Slide 28: We continue to focus on changing the business mix and on optimizing combined ratio
FINANCE UPDATE We continue to focus on changing the business mix and on optimizing combined ratio and overall return P&C BUSINESS AND GEOGRAPHICAL MIX (% NEP) INDICATIVE 2018 PERFORMANCE OF P&C BUSINESSES AY Combined 5% 8% 15% 7% ratio (%) 20% 8% 27% 39% 27% 37% 28% APAC 27% 100% 49% 47% North 21% 1
Slide 29: Through our customer focus approach we expect to increase the retention ratio
FINANCE UPDATE Through our customer focus approach we expect to increase the retention ratio and lower activation costs at the same time NET PROMOTER SCORE1 P&C RETENTION RATES (%) LOWER COSTS FOR RETAINED BUSINESS Activation costs per lead (EUR)2 55 82% 80% >4x 43 79% >2x >2x FY-17 HY-18 FY-16 FY-1
Slide 30: Life business generates sustainable annual BOP growth
FINANCE UPDATE Life business generates sustainable annual BOP growth, driven by both revenue growth and higher efficiency LIFE BOP (USDm) REVENUES (USDm) OPERATING EXPENSES (USDm)2 +8% -3% +11% 5,064 1,419 1,373 1,258 4,670 1,130 393 1,658 442 428 1,386 326 1,256 390 307 341 1,264 332 250 166 582 60
Slide 31: Loadings and fees together with technical margins drive Life revenues
FINANCE UPDATE Loadings and fees together with technical margins are the most important drivers of Life revenues in all regions APAC & LATIN AMERICA REVENUES UK, IRELAND AND ZURICH CONTINENTAL EUROPE REVENUES (USDm) BY MARGIN (%) INTERNATIONAL REVENUES (USDm) (USDm) BY MARGIN (%) BY MARGIN (%) 1,658
Slide 32: Underlying favorable development across all Life businesses expected to continue
FINANCE UPDATE Underlying favorable development across all Life businesses expected to continue REGIONS KEY DRIVERS AND EXPECTED TRENDS AND MARGINS BY REGION GWP & deposits (USDm) Trend Loadings / Non-UL reserves (USDm)1 Trend Technical Operating costs (USDm)2 Trend 4,309 fees ratio 6,748 ratio 442
Slide 33: Highly cash generative nature of our Life business
FINANCE UPDATE Highly cash generative nature of our Life business VALUE IN FORCE (USDbn) LIFE NET CASH REMITTANCES (USDbn) FY-16 6.8 Reported VIF FY-17 8.6 9.3 Certainty equivalent PV1 10.9 >2x Real-world expected 15.2 undiscounted net cashflows2 18.8 > USD 1.0bn NEW BUSINESS VALUE (USDbn) Expected
Slide 34: Good performance of our closed M&A transactions
FINANCE UPDATE Good performance of our closed M&A transactions RCIS ACQUISITION MACQUARIE LIFE ACQUISITION COVER-MORE ACQUISITION RCIS AY combined ratio Total APE for Zurich Australia Life (AUDm)1 Cover-More sales (USDm) excluding catastrophes (%) Pre-acquisition +1% 83% 80% +30% Q1-15 Q3-15 Q1-16 Q
Slide 35: FX risk in our LatAm business well managed
FINANCE UPDATE FX risk in our LatAm business well managed ARGENTINA ASSET AND LIABILITY ARGENTINA FX MANAGEMENT COMMENTS SPLIT (%)1 Assets USD long- Active FX and asset-liability- position 42% management by matching 58% currency, duration and guarantees Strategy in Argentina addresses macroecono
Slide 36: Focused on delivering an attractive and growing dividend
FINANCE UPDATE Focused on delivering an attractive and growing dividend OPERATING CAPITAL GENERATION (%) NET CASH REMITTANCES (USDbn) NIAS PAYOUT RATIO (%)1 3.7 77% 3.4 >3.3 75% Dividend 11% policy 7% FY-17 HY-18 FY-17 FY-18e FY-17 FY-18e Z-ECM operating profits (%) Z-ECM operating profits (USDbn) ©
Slide 37: We are focused on shareholder returns and a disciplined acquisition and disposal approach
FINANCE UPDATE We are focused on shareholder returns and a disciplined acquisition and disposal approach DIVIDENDS AND OTHER SHAREHOLDER RETURNS (USDbn) M&A TRANSACTIONS AND DISPOSALS (USDbn) USD 9.0bn USD 3.3bn Amount of dividends paid Net amount between and shares repurchased in purchase price of
Slide 38: Key messages
FINANCE UPDATE Key messages Delivering our On track to deliver on all Group financial targets targets Increasing P&C Changing business mix in P&C and disciplined underwriting is reducing volatility while profitability increasing profitability High quality Our focus on protection and unit-linked cont
Slide 39: North America – Poised for long-term value creation
North America – Poised for long-term value creation Kathleen Savio, CEO North America Dalynn Hoch, CFO North America Paul Horgan, Head of North America Commercial Insurance
Slide 40: Key messages
NORTH AMERICA Key messages Top 5 commercial insurer with strong capabilities and a diversified ~USD 15bn GWP portfolio Leading insurer serving individuals and small to large businesses through multiple distribution channels Strengthened Improved combined ratio by 1.3ppts in HY-18 compared to FY-16 w
Slide 41: Zurich North America – 100+ years of service to our customers
NORTH AMERICA Zurich North America – 100+ years of service to our customers © Zurich December 5, 2018 Investor Day 41
Slide 42: Zurich North America is a leading insurer with strong capabilities
NORTH AMERICA Zurich North America is a leading insurer with strong capabilities LEADING INSURER STRONG CAPABILITIES Top 5 U.S. commercial insurer Customers and Distributors #1 Group captives Deep relationships with customers and key distribution partners #2 International Programs People and Culture
Slide 43: We have a diversified and balanced portfolio
NORTH AMERICA We have a diversified and balanced portfolio BUSINESS UNITS (NWP, %) DISTRIBUTION CHANNELS (GWP, %) LINES OF BUSINESS (NWP, %) Commercial Insurance Regional Property brokers Direct sales 59% 31% 13% 17% Crop agents 11% National Specialties 17% brokers 13% 13% Captive consultants 7% 52%
Slide 44: Disciplined execution has strengthened financial results
NORTH AMERICA Disciplined execution has strengthened financial results BOP (USDm)1 COMBINED RATIO (%) OUE RATIO (%)2 -1.3ppts ~-2ppts 12.6% 1,124 102.8% 97.8% 96.5% 10.7% 798 H2 677 250 12.6% 12.5% 11.4% 618 548 H1 447 FY-16 FY-17 HY-18 FY-16 FY-17 HY-18 FY-16 FY-17 FY-18e % Half Year © Zurich 1 BOP
Slide 45: Combined ratio gap exists when compared to top peers
NORTH AMERICA Combined ratio gap exists when compared to top peers HY-18 COMBINED RATIO (%) Opportunity 99.1% 99.4% -4ppts 96.5% 92.4% 91.4% Industry1 Zurich North America Top peers2 Alternative Commercial Markets Insurance Grow Improve © Zurich 1 Industry combined ratio is a full year 2018 estimate
Slide 46: Strategic priorities laying the foundation to create long-term value
NORTH AMERICA Strategic priorities laying the foundation to create long-term value Further strengthen COMMERCIAL foundational capabilities: Solidify position in Large Commercial Customer & distributor experience Value propositions Bolster Middle Market presence Technical expertise Operationa
Slide 47: We are executing on our plans to improve the commercial insurance combined ratio
NORTH AMERICA We are executing on our plans to improve the commercial insurance combined ratio PROFITABLE GROWTH IN TARGETED CUSTOMER SEGMENTS INDICATIVE COMMERCIAL INSURANCE COMBINED RATIO (%) Enhance our go-to-market approach in Middle Market Solidify position in the large customer space by la
Slide 48: Enhanced go-to-market approach to bolster Middle Market presence
NORTH AMERICA Enhanced go-to-market approach to bolster Middle Market presence VALUE PROPOSITION UNDERWRITING EXPERTISE OPERATING MODEL One Middle Market “storefront” Robust technical expertise in each Strong presence with brokers in delivering a consistent appetite target industry segment tar
Slide 49: Segment specific plans for profitable growth in Alternative Markets
NORTH AMERICA Segment specific plans exist to ensure continued profitable growth in Alternative Markets DIRECT MARKETS: GROWING F&I PORTFOLIO PROGRAMS: GROWING WITH TARGETED PROGRAM ADMINISTRATORS +19% Growing low volatility Finance & Insurance portfolio through large and mega dealers +9 Building de
Slide 50: Customer-centric value propositions driving stronger NPS
NORTH AMERICA Customer-centric value propositions driving stronger NPS ELEMENTS OF RISK ENGINEERING VALUE PROPOSITION RISK ENGINEERING TRANSACTIONAL NPS +15ppts Dedicated expertise 400+ risk engineers with an average of 77 92 20+ years of experience Proactive advice Precautions in preparation for ev
Slide 51: Simplifying operating environment resulting in improved experience, lower expenses
NORTH AMERICA Simplifying operating environment resulting in improved distributor and employee experience, lower expenses SELECT EXAMPLES OF SIMPLIFICATION IMPACT REALIZED1 Improved 1 Distributor RNPS 5ppts 8 Consolidated 8 special … to 1 Improved line forms… Employee NPS 28ppts Reduced expenses2 20
Slide 52: Fostering an innovation mindset across the organization
NORTH AMERICA Fostering an innovation mindset across the organization to identify, pilot, and deliver new solutions FOSTERING INNOVATION MINDSET DELIVERED NEW SOLUTIONS Added new customer interaction channels through Innovation use of chatbots and digital calendars Lab Launched new cyber policy, bec
Slide 53: Key messages
NORTH AMERICA Key messages Top 5 commercial insurer with strong capabilities and a diversified ~USD 15bn GWP portfolio Leading insurer serving individuals and small to large businesses through multiple distribution channels Strengthened Improved combined ratio by 1.3ppts in HY-18 compared to FY-16 w
Slide 54: Switzerland – Positioned for long-term success
Switzerland – Positioned for long-term success Juan Beer, Chief Executive Officer Bettina Bornmann, Chief Financial Officer Sandro Meyer, Head of Life
Slide 55: Key messages
SWITZERLAND Key messages A strong leading composite business with solid profitability and well positioned for Switzerland long-term growth and profitability A market leader with strong performance track record and clear competitive advantages, Commercial difficult to replicate, and with a good basis
Slide 56: Switzerland, a small country with many differentiating strengths
SWITZERLAND Switzerland, a small country with many differentiating strengths in and beyond ice hockey RETAIL LIFE COMMERCIAL © Zurich December 5, 2018 Investor Day 56
Slide 57: We are operating in a profitable market that offers upside potential
SWITZERLAND We are operating in a profitable market that offers upside potential, in both P&C and Life INSURANCE MARKET GROWTH1 P&C MARKET1,2 LIFE MARKET1 P&C GWP (CHFbn)2 FY-17 GWP split by LOB (%) Asset split by pension arrangement (%)3 10% Personal +2% 10% Accident & health pension plans 20.7 32%
Slide 58: We are well positioned to continue our strong contribution to the Group results
SWITZERLAND We are well positioned to continue our strong contribution to the Group results, including a P&C combined ratio of 89%4 A STRONG MARKET POSITION A WELL DIVERSIFIED BUSINESS A STRONG CONTRIBUTOR4 P&C market share (%, based on GWP of 21 CHFbn)1 FY-17 GWP (%) GWP share (%) 10% 29% 16.5% CHF
Slide 59: Market leader in P&C Commercial Insurance with strong performance track record
SWITZERLAND We are the market leader in P&C Commercial Insurance (CI) with a strong performance track record FY-17 KEY FIGURES GROWTH & PROFITABILITY FY-17 GWP SPLIT (%) P&C CI GWP (CHFm) Business mix #1 in commercial insurance Property 838 13% 805 Accident & health 753 739 1001 3% 38% 715 Liability
Slide 60: Strong position in international programs
SWITZERLAND We have a strong position in international programs through our global capabilities, technical excellence and long-term relationships A UNIQUE RELATIONSHIP MODEL A STRONG PROPOSITION WELL FY-17 KEY FIGURES DELIVERED Best in class relationship model/ Propositions way beyond 250 customers
Slide 61: Our strategic positioning in Individual and Corporate Life & Pensions is paying off
SWITZERLAND Our strategic positioning in the Individual and Corporate Life & Pensions market is paying off in terms of growth and profitability FY-17 KEY FIGURES FY-17 APE LIFE (CHFm) GROWTH & PROFITABILITY Retail new business mix (%) APE LIFE (CHFm) mover among big players into +7% 1st capital ligh
Slide 62: Our semi-autonomous and capital light business model
SWITZERLAND Our semi-autonomous and capital light business model positions us well for profitable growth in the Corporate Life & Pensions market SEMI-AUTONOMOUS BUSINESS VITA OCCUPATIONAL RETIREMENT MARKET INVESTMENT YIELDS (%) MODEL: A TRIPARTITE RELATIONSHIP SAVINGS BUSINESS VITA GWP (CHFm)1 Full-
Slide 63: Our protection and investment solutions complement our offering
SWITZERLAND Our protection and investment solutions complement our offering CORPORATE PROTECTION CORPORATE AND RETAIL INVESTMENT SOLUTIONS (Zurich Invest AG) Risk-only regular GWP (CHFm) AuM Fee income (CHFbn) (CHFm) 25 90 120 22 +14% +14% 103 20 95 20 18 60 83 16 72 15 15 30 10 5 0 FY-13 FY-14 FY-1
Slide 64: Our brand and customer base are a foundation to reinvigorate growth in P&C Retail
SWITZERLAND Our brand and our customer base represent a strong foundation from which to reinvigorate growth in P&C Retail FY-17 KEY FIGURES FY-17 GWP SPLIT GROWTH & PROFITABILITY By line of business (%) P&C Retail GWP (CHFm)3 6% -2% Motor in P&C 17% Accident & health 2,349 2,300 #3 Retail 1.3m custo
Slide 65: We are executing a plan centered around six focus areas
SWITZERLAND We are executing a plan centered around six focus areas leveraging our Group assets CUSTOMER DISTRIBUTION PROFIT POOL SIMPLIFICATION EXPERIENCE POWER EXTENSION We match or exceed our clients’ We strengthen our tied agents We develop a balanced and We simplify our processes and expectatio
Slide 66: Key messages
SWITZERLAND Key messages A strong leading composite business with solid profitability and well positioned for Switzerland long-term growth and profitability A market leader with strong performance track record and clear competitive advantages, Commercial difficult to replicate, and with a good basis
Slide 67: Australia Life – Accelerating growth
Australia Life – Accelerating growth Tim Bailey, CEO Australia Life Mark Henderson, CFO Australia Life
Slide 68: Key messages
AUSTRALIA Key messages Structural The Australian life market offers attractive fundamentals and good growth opportunities change Strong Since 2013 we have reduced our cost ratio by 15ppts, supporting 16% p.a. growth in BOP and financials 24% p.a. growth in premiums Life insurance We are well positio
Slide 69: Zurich is one of the most recognized life insurance brands in Australia
AUSTRALIA Zurich is one of the most recognized life insurance brands in Australia © Zurich December 5, 2018 Investor Day 69
Slide 70: Zurich Australia Life is a key contributor within the APAC region
AUSTRALIA Zurich Australia Life is a key contributor within the APAC region STRONG LIFE FOOTPRINT IN APAC1 AUSTRALIA LIFE MAKES A SIGNIFICANT CONTRIBUTION TO GROUP1 24% BOP APE NBV n.m. 16% Group 19% 3% 7% (Life) 6% Market Market share #3 14% position (In-force premium) 53% 324 APE (USDm) © Zurich 1
Slide 71: Australia has an attractive economy and a growing life market
AUSTRALIA Australia has an attractive economy and a growing life market GDP GROWTH AT UPPER END OF DEVELOPED MARKETS1 LIFE GWP INCREASING AS A PERCENTAGE OF GDP2 10yr CAGR (%) 1.43% 4.1% 1.38% 2.8% 2.6% 2.5% 1.29% 1.25% 1.1% 1.13% AU US GB DE CH FY-13 FY-14 FY-15 FY-16 FY-17 © Zurich 1 World Bank Da
Slide 72: Australian market growth supported by in-force repricing; IFA and Bank key channels
AUSTRALIA Australian market growth is supported by in-force repricing; IFA and Bank most important channels for retail business MARKET IN-FORCE PREMIUMS - INDIVIDUAL LIFE (AUDbn)1 ZURICH’S PRO-FORMA IN-FORCE DISTRIBUTION MIX (%)2 10% 9% 4% 18% 0.9 10.0 1.4 9.6 1.0 0.8 1.4 59% 9.1 0.9 19% FY-15 New L
Slide 73: Zurich Australia Life has delivered consistent profitable growth
AUSTRALIA Zurich Australia Life has delivered consistent profitable growth RETAIL IN-FORCE PREMIUMS (AUDm) COST RATIO (%)1 BUSINESS OPERATING PROFIT (AUDm)3 -15ppts 673 34% 121 31% +16% +24% 28% 92 463 23% 79 369 20% 66 64 329 285 FY-13 FY-14 FY-15 FY-162 FY-17 FY-13 FY-14 FY-15 FY-162 FY-17 FY-13 F
Slide 74: Disability Income Insurance profitability has been challenged
AUSTRALIA Disability Income Insurance (DII) profitability has been challenged, however Zurich’s portfolio remains profitable INDUSTRY RETAIL NET PROFIT ZURICH WITH FAVORABLE FY-17 IN- ZURICH WITH HIGHER PROFIT (AUDm)1 FORCE MIX (%) MARGIN VS INDUSTRY (%)2 658 15.9% 593 486 7% 11.8% 336 360 40% 53% 1
Slide 75: Continuing customer and adviser engagement will support future success
AUSTRALIA Continuing and enhancing customer and adviser engagement will support future success MARKET LEADING ADVISER QUOTE & APPLICATION TOOL TNPS +30ppts in 2018 CUSTOMER LOYALTY PROGRAM Lapse rate 0.7ppts below market average1 © Zurich 1 NMG Quarterly Risk Distribution Monitor. December 5, 2018 I
Slide 76: Macquarie Life acquisition strengthened our position
AUSTRALIA Macquarie Life1 acquisition strengthened our position and distribution capabilities in Australia AN EXCELLENT STRATEGIC FIT AWARD WINNING NEW PROPOSITION PROFITABLE GROWTH POST COMPLETION Pure retail risk portfolio aligned with Zurich’s existing business 115% Highly attractive and diff
Slide 77: Comparison of Macquarie Life and OnePath Life acquisitions
AUSTRALIA Comparison of Macquarie Life and OnePath Life acquisitions MACQUARIE LIFE1 ONEPATH LIFE Signed March 2016 December 2017 Completed October 2016 Expected March 2019 Retail life protection (~AUD 1.2bn)2 Key products Retail life protection (~AUD 0.3bn)2 Group life protection (~AUD 0.4bn)2 Key
Slide 78: Structural change of Australian market favors large specialized insurers
AUSTRALIA Structural change of Australian market favors large specialized insurers PRO-FORMA INDUSTRY MARKET SHARE (AUDbn)1 RAPID SHIFT OF OWNERSHIP TOWARDS MULTINATIONALS Insurer 2015 Ownership 2018 Ownership 2 Australian wealth Closed for new business mgmt. company in-force managed by Resolution L
Slide 79: Zurich is consistently growing new business market share
AUSTRALIA Zurich is consistently growing new business market share in a contracting environment while increasing profitability INDIVIDUAL LIFE MARKET APE (AUDm)1 -13% 234 224 226 220 192 193 8.3% New business 6.0% margin 6.2% 5.9% +21ppts2 5.1% 4.4% 10 12 13 14 12 16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2
Slide 80: Key messages
AUSTRALIA Key messages Structural The Australian life market offers attractive fundamentals and good growth opportunities change Strong Since 2013 we have reduced our cost ratio by 15ppts, supporting 16% p.a. growth in BOP and financials 24% p.a. growth in premiums Life insurance We are well positio
Slide 81: Ireland – Huge opportunity, clear ambition
Ireland – Huge opportunity, clear ambition Anthony Brennan, Chief Executive Officer David O’Dowd, Head of Life & Pensions
Slide 82: Key messages
IRELAND Key messages The leading composite insurer with a strong record of above market growth and profitability, Ireland operating in a market with huge opportunity and having a clear ambition for further growth Evolving Demographics are driving evolving customer needs in savings and retirement, th
Slide 83: Ireland, a young and dynamic market with evolving customer needs
IRELAND Ireland, a young and dynamic market with evolving customer needs © Zurich December 5, 2018 Investor Day 83
Slide 84: We are the leading composite insurer
IRELAND We are the leading composite insurer and are well placed to continue our track record of growth LIFE PROPERTY & CASUALTY (P&C) BUSINESS OPERATING PROFIT (EURm) FY-17 APE by line of business (%) FY-17 GWP by line of business (%) 73 Protection Liability 71 13% 11% Annuities 8% International pr
Slide 85: One of the most dynamic economies in Europe
IRELAND One of the most dynamic economies in Europe with attractive demographics provides significant opportunities for insurance GDP GROWTH IRELAND VS EUROPE (%, indexed to 2007) A YOUNG AND GROWING POPULATION (000’s of people) 150% 90 80 140% 70 130% 60 120% 50 110% 40 30 100% 20 90% 10 80% 0 Age
Slide 86: Focus on customer and distributor needs resulted in consistent Life outperformance
IRELAND Our focus on customer and distributor needs resulted in a consistent Life outperformance ZURICH VS. MARKET GROWTH1 APE (EURm) +30% 347 +8% 267 21% Zurich APE CAGR FY-16 FY-17 9m-18 NBV (EURm) 8% +54% 31 20 FY-05 FY-07 FY-09 FY-11 FY-13 FY-15 FY-17 Zurich market share (%) Market APE (EURm) FY
Slide 87: Delivering products that meet customer needs drives growth in savings and pension funds
IRELAND Delivering products that meet customer needs drives strong growth in savings and pension funds ADDRESSING CUSTOMER NEEDS ASSETS UNDER MANAGEMENT IN PRISMA FUNDS (EURm)1,2 TO DELIVER 2,500 Customers segmented by needs 2,000 1,500 Simplified product 1,000 addressing needs 500 Tools to support
Slide 88: Changing customer needs present significant opportunities
IRELAND Changing customer needs present significant opportunities for us to leverage our strengths and drive future growth THE NUMBER OF PEOPLE ENTERING RETIREMENT IS WE ARE INCREASING OUR SHARE OF THE GROWING UNIT GROWING RAPIDLY1 LINKED RETIREMENT DRAWDOWN MARKET2 Population aged 65 and over (000’
Slide 89: Expense discipline and investment in digitalization improved efficiency
IRELAND Expense discipline and investment in digitalization combined with growth have led to improved efficiency Process re-engineering Life units costs per policy (%, indexed to 2015) Digitalize the core 100% 93% 85% API technology 82% Straight through processing FY-15 FY-16 FY-17 FY-18e Applicatio
Slide 90: In P&C we have led the market in turning around profitability
IRELAND In P&C we have led the market in turning around profitability through disciplined underwriting ZURICH IRELAND VS MARKET COMBINED RATIOS (%)1 P&C ACCIDENT YEAR LOSS RATIO (%) -16ppts 78% 119% 74% 111% 107% 66% 105% 104% 62% 95% ~97% 94% FY-14 FY-15 FY-16 FY-17 P&C GWP (EURm) +7% 365 379 FY-14
Slide 91: Transforming our direct P&C business
IRELAND We are transforming our direct P&C business to deliver improved customer propositions and experience and lower cost ACTIONS RESULTS Improved experience – Improved experience – Digital first approach 60% of quotes online 80% communication digital Simplified customer journey Improved exper
Slide 92: Opportunities to grow in profitable niche areas such as farm insurance
IRELAND We have opportunities to grow in a range of profitable niche areas such as farm insurance OPPORTUNITY TO GROW FARM OUR UNIQUE PROPOSITION BUSINESS VIA DIRECT CHANNEL GWP (EURm)1 28 with brokers, with 50% share, #1 doubling in the last 5 years 14 Broker channel 14 FY-17 112 #2 in Farm market
Slide 93: Key messages
IRELAND Key messages The leading composite insurer with a strong record of above market growth and profitability, Ireland operating in a market with huge opportunity and having a clear ambition for further growth Evolving Demographics are driving evolving customer needs in savings and retirement, th
Slide 94: Biographies
BIOGRAPHIES Biographies © Zurich December 5, 2018 Investor Day 94
Slide 95: Mario Greco
BIOGRAPHIES Skills and experience He became general manager in Mario Greco has broad experience charge of the insurance business External appointments in the insurance industry, having the following year. In 1998, he was Mr. Greco is a board member served in senior executive positions appointed mana
Slide 96: George Quinn, Kathleen Savio
BIOGRAPHIES George Quinn Skills and experience George Quinn started his career at KPMG 1988 in Group Chief London, where he held several positions working Financial Officer with the insurance and reinsurance industry. He joined Swiss Re in 1999 as Group Chief Accounting Nationality: British Officer
Slide 97: Paul Horgan, Dalynn Hoch
BIOGRAPHIES Paul Horgan Skills and experience worldwide headquarters in Zurich, Switzerland; Paul Horgan is the Head of North America and Chief Underwriting Officer for Global Head of North Commercial Insurance for Zurich North America Corporate in North America. America and is responsible for the d
Slide 98: Juan Beer, Bettina Bornmann
BIOGRAPHIES Juan Beer Skills and experience International Program Business for Zurich's Juan Beer has been Chief Executive Officer (CEO) Commercial Insurance business in Spain, Global CEO Zurich for Zurich Switzerland since February 2018. Chief Underwriting Officer for Zurich's Global Switzerland He
Slide 99: Sandro Meyer
BIOGRAPHIES Sandro Meyer Skills and experience Sandro Meyer joined Zurich in 1994 from Head of Life Winterthur Reinsurance Corp. and launched Insurance his career in the strategic business unit formerly Zurich known as Life International. Between 2001 and 2006, he built up the Zurich Employee Benefi
Slide 100: Tim Bailey, Mark Henderson
BIOGRAPHIES Skills and experience identification and mitigation of risks across Global Tim Bailey Tim became CEO Life and Investments, Zurich Life as a member of both the Global Life and Group CEO Zurich Australia, on 1 January 2015. Under Tim's Risk Management Executive Teams and three leadership,
Slide 101: Anthony Brennan, David O'Dowd
BIOGRAPHIES Anthony Skills and experience In July 2016 Anthony was appointed to the With Zurich since 1985, Anthony has over 30 years position of CEO, Zurich Ireland – responsible Brennan practical experience in managing across a number for both Life and General Insurance businesses of functions in
Slide 102: Notes
Notes © Zurich December 5, 2018 Investor Day 102
Slide 103: Notes
Notes © Zurich December 5, 2018 Investor Day 103
Slide 104: Notes
Notes © Zurich December 5, 2018 Investor Day 104
Slide 105: Notes
Notes © Zurich December 5, 2018 Investor Day 105
Slide 106: Notes
Notes © Zurich December 5, 2018 Investor Day 106
Slide 107: For further information
For further information CALL US VISIT OR FOLLOW US Investor Relations and Rating Agency Management Richard Burden +41 44 628 96 40 Francesco Bonsante +41 44 628 00 68 Samuel Han +41 44 625 32 57 Michèle Matlock +41 44 625 28 50 Gianni Vitale +41 44 625 48 26 Events Investor Relations website Patri
Slide 108: Calendar
CALENDAR: February 7, 2019, Annual results 2018 March 19-20, 2019, Morgan Stanley European Financials Conference, London April 1-2, 2019, HSBC West Coast Conference, San Francisco April 3, 2019, Annual General Meeting May 9, 2019, Update for the three months ended March 31, 2019 August 8
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