Zurich Insurance Group Ltd · SIX:ZURN
Zurich Insurance — Zurich Financial Services — 9M 2007 Earnings Presentation
37 slides from Zurich Insurance's earnings presentation, Nov 15, 2007
Slide 1: Results Reporting for the Nine Months to September 30, 2007
Results Reporting for the Nine Months to September 30, 2007 Analysts Presentation Zurich, November 15, 2007
Slide 2: Disclaimer and cautionary statement
Disclaimer and cautionary statement Certain statements in this document are forward-looking statements, including, but not limited to, statements that are predications of or indicate future events, trends, plans or objectives. Forward-looking statements include statements regarding our targeted prof
Slide 3: Agenda
Agenda • Introduction James J. Schiro • Results for the Nine Months Dieter Wemmer to September 30, 2007 • Closing remarks James J. Schiro • Q&A © Zurich Financial Services - Results Reporting for the Nine Months to September 30, 2007 - November 15, 2007 3
Slide 4: Introduction
Introduction James J. Schiro Chief Executive Officer Zurich, November 15, 2007
Slide 5: Financial highlights
Financial highlights in USD millions 2007 20061 Change for the nine months ended September 30 Business operating profit 4,880 4,423 10% Net income attributable to shareholders 4,157 3,326 25% General Insurance combined ratio 96.9% 94.5% -2.4pts Global Life new business margin2 24.0% 19.2% 4.8pts Far
Slide 6: Focus on volume growth
Zurich applies a differentiated focus to unlock and grow business value Global IB Focus on volume growth Farmers Life EGI Legend for GI BDs: IB International GC Businesses EGI Europe General Insurance NAC GC Global Corporate NAC North America Commercial Focus on margin enhancement © Zurich Financial
Slide 7: The Zurich Way – Target of USD 2.4 billion for 2008 to 2010
The Zurich Way – Target of USD 2.4 billion for 2008 to 2010 Total planned benefits • We are well on track to achieve our 2008 to 2010: 2007 target. USD 2.4 billion • Developing our three year plan, we expect benefits of USD 2.4 billion USD from 2008 to 2010 800m USD USD USD • 14 TZW workstreams with
Slide 8: Results for the Nine Months to September 30, 2007
Results for the Nine Months to September 30, 2007 Dieter Wemmer Chief Financial Officer Zurich, November 15, 2007
Slide 9: Business operating profit by segment
Business operating profit by segment in USD millions 2007 20061 Change for the nine months ended September 30 General Insurance 2,779 2,781 0% Global Life 1,090 853 28% Farmers Management Services 1,005 936 7% Other Businesses 585 438 34% Corporate Functions -577 -585 1% Total 4,880 4,423 10% 1 Thro
Slide 10: Top line development by segment
Top line development by segment in USD millions 2007 2006 Change Change for the nine months ended September 30 in LC1 Gross written premiums and policy fees General Insurance 27,323 26,295 4% 0% Global Life (incl. insurance deposits)2 15,366 14,772 4% -3% Other Businesses 1,824 1,734 5% 5% Annual Pr
Slide 11: General Insurance – key performance indicators
General Insurance – key performance indicators Business Operating Profit Combined ratio (%) Major in USD millions 2007 2006 Change Global CAT 2.0 95.1 for the nine months ended Sept. 30 Corporate 94.5 Global Corporate 576 529 9% 94.6 NA North America Commercial 1,087 856 27% Commercial 95.7 Europe E
Slide 12: Comparison of General Insurance loss ratio allowing for known CAT and PYD
Comparison of General Insurance loss ratio allowing for known CAT and PYD 9 months 2007 9 months 2006 75% 75% 72.3% 3.4% -2.5% 71.4% -0.4% 71.1% 70.7% 0.0% 70% 70% USD -79m USD 761m USD -558m 65% 65% 60% 60% Booked Major PYD2 Underlying Booked Major PYD2 Underlying Loss Ratio CAT1 Loss Ratio Loss Ra
Slide 13: Development of Reserves for Losses and Loss Adjustment Expenses (LAE)
Development of Reserves for Losses and Loss Adjustment Expenses (LAE) in USD millions 2007 2006 Net reserves for losses and LAE, as of January 1 50,814 46,194 Net losses and LAE paid -14,347 -14,012 Net losses and LAE incurred - Current year 17,454 15,927 - Prior years -6481 -78 Currency translation
Slide 14: Global Life – key performance indicators
Global Life – key performance indicators in USD millions 2007 2006 Change Change for the nine months ended September 30 in LC1 Annual Premium Equivalent (APE) 2,002 1,744 15% 8% New business value, after tax 480 334 44% 37% New business margin, after tax2 24.0% 19.2% 4.8pts Business operating profit
Slide 15: Global Life – emerging markets are growing strongly and profitably
Global Life – emerging markets are growing strongly and profitably in USD millions APE APE Growth NBM1 NBM1 for the nine months to September 30 2007 2006 2007 2006 Emerging markets 470 323 46% 24.7% 22.7% of which: South East Asia 216 126 71% 34.0% 38.3% Share of emerging markets in total Global Lif
Slide 16: Farmers Management Services – key performance indicators
Farmers Management Services – key performance indicators in USD millions 2007 2006 Change for the nine months ended September 30 Management fees and other related revenues 1,679 1,589 6% Business operating profit 1,005 936 7% Gross operating margin 48.6% 51.8% -3.2pts © Zurich Financial Services - R
Slide 17: Farmers Exchanges – key performance indicators
Farmers Exchanges1 – key performance indicators in USD millions 2007 2006 Change for the nine months ended September 30 Gross written premiums 11,970 11,384 5% Net underwriting result 5 271 -98.2% Combined ratio 98.5% 96.0% -2.5pts Adjusted combined ratio2 92.3% 89.0% -3.3pts Surplus ratio 40.5% 37.
Slide 18: Other Businesses and Corporate Functions – Business operating profit contribution
Other Businesses and Corporate Functions – Business operating profit contribution in USD millions 2007 2006 Change for the nine months ended September 30 Other Businesses: - Farmers Re 124 135 -8% - Centre 191 164 16% - Other 270 139 94% Total Other Businesses 585 438 34% Corporate Functions -577 -5
Slide 19: Investment performance of Group investments
Investment performance of Group investments in USD millions 2007 2006 Change for the nine months ended September 30 Net investment income 6,383 5,849 9% Net capital gains on investments and 1,088 1,130 -4% impairments of which attributable to shareholders 874 813 8% Net investment result 7,471 6,979
Slide 20: Development of shareholders' equity
Development of shareholders’ equity in USD millions 30,000 29,000 1,325 28,396 28,000 1,025 4,157 1,717 27,000 715 26,531 26,000 944 25,587 25,000 24,000 Balance Dec IAS 19 SoRIE Restated Net Income Dividends Share Change in net Other Balance as of 1 31, 2006 as Balance as of paid buyback unrealized
Slide 21: Net income by currency: currency changes balanced
Net income by currency: currency changes balanced Change of GBP/CHF: +6% Change of USD/CHF: -3% GBP: 8% Change of EUR/CHF: +5% EUR: 21% USD: 54% CHF: 11% neutral Other: 6% Numbers for the nine months ended September 30, 2007; change of average exchange rates of the nine months 2007 over 2006 © Zuric
Slide 22: Financial highlights
Financial highlights in USD millions 2007 20061 Change for the nine months ended September 30 Business operating profit 4,880 4,423 10% Net income attributable to shareholders 4,157 3,326 25% General Insurance combined ratio 96.9% 94.5% -2.4pts Global Life new business margin2 24.0% 19.2% 4.8pts Far
Slide 23: James J. Schiro Chief Executive Officer
James J. Schiro Chief Executive Officer Zurich, November 15, 2007
Slide 24: Q&A
Q&A © Zurich Financial Services - Results Reporting for the Nine Months to September 30, 2007 - November 15, 2007 24
Slide 25: Appendix
Appendix © Zurich Financial Services - Results Reporting for the Nine Months to September 30, 2007 - November 15, 2007 25
Slide 26: The Zurich Way initiatives – 2008 target
The Zurich Way initiatives – 2008 target by function by business USD 800m division USD 800m USD 700m USD 700m Growth/ 32% Distribution Europe General 21% 35% Insurance 31% USD 500m USD 500m 16% 36% 17% Claims 18% North America 22% 34% Commercial 16% 28% 43% 34% U/W 20% 17% Global Corporate 36% 15% 1
Slide 27: Nine months business division BOP-ROE based on RBC-allocated IFRS equity
Nine months business division BOP-ROE1 based on RBC-allocated IFRS equity 2007 2006 for the nine months ended September 30 General Insurance 27.8% 35.2% - Global Corporate 24.4% 31.5% - North America Commercial 29.0% 26.1% - Europe General Insurance 26.3% 56.4% - International Businesses 17.4% 15.7%
Slide 28: Global Life – new business indicators
Global Life – new business indicators in USD millions APE APE Change Change NBV2 NBV2 Change for the 9 months ended Sept. 30 2007 2006 in LC1 2007 2006 United States 87 81 7% 7% 80 45 79% United Kingdom 649 613 6% -3% 87 76 16% Germany 350 326 7% -1% 106 58 84% Switzerland 70 61 15% 11% 21 15 40% Re
Slide 29: Farmers Exchanges – financial highlights: strong premium and surplus growth
Farmers Exchanges1 – financial highlights: strong premium and surplus growth in USD millions 2007 2006 6,000 42.0% for the nine months ended Sept. 30 5,000 40.0% Gross written premiums 11,970 11,384 4,000 38.0% Net underwriting result 5 271 3,000 36.0% Net surplus growth 308 352 2,000 34.0% Ending s
Slide 30: Farmers Exchanges – gross written premiums by line of business
Farmers Exchanges – gross written premiums by line of business in USD millions 2007 2006 Change for the nine months ended September 30 Auto 6,197 5,876 5.5% Homeowners 3,245 3,074 5.6% Commercial P&C 933 887 5.2% Workers’ Compensation 276 291 -5.4% Specialty 1,217 1,157 5.2% Other 102 99 2.7% Total
Slide 31: Farmers Exchanges – strong growth in gross written premiums
Farmers Exchanges – strong growth in gross written premiums 6% 5.2% 5.4% 5.0% 4.9% 5.1% 4.6% 4.0% 3.9% 4% 3.2% 3.3% 3.1% 2.6% 2.2% 2% 1.4% 0% 3 months Half year 9 months Full year 3 months Half year 9 months 2006 2006 2006 2006 2007 2007 2007 GWP growth GWP growth, ex Work Comp. © Zurich Financial S
Slide 32: Farmers Exchanges – combined ratio remains strong
Farmers Exchanges – combined ratio remains strong for the nine months ended September 30 20071 20061 Change Auto 99.7% 99.7% 0.0pts Homeowners 95.0% 89.2% -5.8pts Commercial P&C2 95.2% 93.7% -1.5pts Workers’ Compensation 96.4% 95.6% -0.8pts Specialty 94.4% 92.1% -2.3pts Total 98.5% 96.0% -2.5pts Adj
Slide 33: Farmers Exchanges – development of the combined ratio
Farmers Exchanges – development of the combined ratio Quarterly combined ratio 115% 110% California wildfires 105% Rita 100% Florida hurricanes Katrina 95% 90% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2002 2003 2004 2005 2006 2007 © Zurich Financial Services - Results Rep
Slide 34: Farmers Exchanges – competitive performance
Farmers Exchanges – competitive performance Growth vs. GAAP Combined Ratio1 - June 2007 Sept 2007 Q307 YTD Peer Averages4 2007 Industry Estimate NPW growth = -1.5% Growth NPW % Industry 3 Q307 Peer Average CR = 89.5% 6.0 97.3% Farmers 5.0 Exchanges2 4.0 3.0 2.0 1.0 0.0 State Farm Safeco 3 Industry -
Slide 35: Group Investments – Exposure to US sub-prime remains very small
Group Investments – Exposure to US sub-prime remains very small (0.16%) and of high quality Group Investments US sub-prime: USD 317m (0.16%) USD 193bn (100%) 100% inv. grade 76% AAA Minimal downgrades by rating agencies since June 07 (USD 10m) Debt No impairments in 2007 y-t-d securities O
Slide 36: Group Investments – Exposure to CDO remains very small
Group Investments – Exposure to CDO remains very small (0.23%) and of high quality CDO: USD 450m (0.23%) Group Investments 99% inv. grade, 1% unrated USD 193bn (100%) 71% AAA 79% backed by UK bank loans (CLO) and 21% by other types of collateral assets Debt Minimal impairments in 2007 y-t-d
Slide 37: Group Investments – debt securities of very high quality
Group Investments – Zurich’s debt securities are of very high quality (99.4% investment grade) Group Investments Debt securities USD 193bn USD 121bn credit rating: AAA 63.3% credit rating: AA Other Debt 99.4% 12.7% asset securities investment classes grade 37% 63% credit rating: A 17.8% Unrated/belo
Zurich Financial Services — 9M 2007 Earnings Presentation on 6ix