Zurich Insurance Group Ltd · SIX:ZURN
Zurich Insurance — Q1 2014 Earnings Presentation
36 slides from Zurich Insurance's earnings presentation, May 15, 2014
Slide 1: Results for the three months to March 31, 2014
Results for the three months to March 31, 2014 Analysts and Media Presentation May 15, 2014 Zurich Insurance Group
Slide 2: Key messages
Key messages Solid start to the year Good combined ratio, benefitting from one-off gain and low catastrophe losses; focus on continuing to improve accident year profitability Farmers transition continues, with some early positive signals Capital deployment in the business supported by strong
Slide 3: Group – Business operating profit
Group – Business operating profit Solid start to the year BOP BY SEGMENT (USDm) BOP/NIAS RECONCILIATION (USDm) +2% 19 1,370 1,381 326 1,351 421 85 15 66 858 807 845 23.9% tax rate 308 1,381 290 319 1,272 370 420 415 81 37 -229 -221 -172 -26 Q1-14 RCG1 Restructuring SH Other Q1-14 Q1-12 Q1-13 Q1-14 B
Slide 4: General Insurance – Topline
General Insurance – Topline Stable rate increases with topline flat in local currency GWP GROWTH IN LC (%) RATE CHANGE1 (%) Q1-13 Q4-13 Q1-14 -2% GC 8% 4% 5% 3% 4% -2% NAC 5% 5% 4% 4% 6% -1% EMEA -4% 2% 3% 2% -2% 3% IM 21% 5% 5% 4% 27% 0% Total2 3% 3% 4% 3% 5% Q1-14 Q1-13 Q1-12 1 GWP development due
Slide 5: General Insurance – Combined ratio
General Insurance – Combined ratio Good CR, benefitting from a one-off gain and low cat losses COMBINED RATIO SPLIT (%) COMBINED RATIO BY REGION (%) 94.6% 94.9% 93.9% 90.7% 2.2% GC 1.6% 1.9% 87.0% 95.0% NAC 99.3% 94.3% 93.6% 93.1% EMEA 94.5% 93.2% 97.2% IM 101.0% 93.9% -0.3% Total -1.9% -1.2% 94.9%
Slide 6: General Insurance – BOP components
General Insurance – BOP components Good profitability benefitting from some one-offs BOP BREAK DOWN (USDm) KEY DRIVERS (USDm) +5% 15 858 845 26 807 89 11 845 384 367 456 807 691 614 573 -207 -141 -150 -33 -34 -10 Q1-13 UWR Investment RCG NTR / NCI Q1-14 Q1-12 Q1-13 Q1-14 Income Underwriting result I
Slide 7: Global Life – New business
Global Life – New business Continued growth in APE and assets under management APE (USDm) NBM & NBV NET INFLOWS & AUM NBM (%) Net inflows (USDbn) 30.6 25.9 1.5 +7%1 20.5 0.6 1,101 1,042 0.0 25 59 99 +1%1 919 49 114 NBV (USDm) -10%1 AuM (USDbn) 47 107 44 283 272 265 253 30 253 246 32 79 289 43 29 26
Slide 8: Global Life – BOP by region
Global Life – BOP by region One-offs offset each other in operating profits BOP BY REGION (USDm) KEY DRIVERS (USDm) +4% 319 16 308 53 319 21 308 57 21 290 28 7 1 28 40 44 77 77 44 58 62 62 20 241 241 173 183 183 -1 -10 -12 -10 -12 -8 -8 Q1-12 Q1-13 Q1-14 Q1-13 Europe Latin North APME Other Q1-14 Ame
Slide 9: Farmers Exchanges – KPI
Farmers Exchanges1 – KPI Early positive signals in top-line performance GWP GROWTH (%) COMBINED RATIO (%)3 SURPLUS4 102.0% 37.8% 33.8% 34.5% 3.4% 96.4% 96.5% -0.6% 2.0% 2.5% -0.9% -2.1% 98.6% 94.4% 94.0% 4.7 4.8 5.1 -2.6% -3.7%2 1.0 1.0 1.0 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q1-12 Q1-13 Q1-14 Q1-12 Q1-13
Slide 10: Farmers – KPI
Farmers – KPI Expense savings compensate for lower management fees at FMS BOP (USDm) FMS MARGIN (%)1 FARMERS RE CR (%)2 420 415 7.3% 7.3% 101.5% 370 3.1% 7.1% 95.3% 95.6% 1.9% 2.2% 338 340 352 98.4% 93.4% 93.4% 82 75 18 Q1-12 Q1-13 Q1-14 Q1-12 Q1-13 Q1-14 Q1-12 Q1-13 Q1-14 Catastrophes 3 FMS FRe CR
Slide 11: Group – Balance sheet and capital
Group – Balance sheet and capital Capital strong, supporting redeployment SHAREHOLDERS EQUITY (USDm) CAPITAL MODEL RATIO (%) 857 19 -41 60 34,670 278% 261% 258% 1,272 206% 217% 185% 121% 127% 114% 32,503 FY-13 NIAS Net CTA Pension Other Q1-14 Z-ECM SST2 Solvency I URG/L plans1 FY-12 HY-13 FY-13 1 Ne
Slide 12: Key messages
Key messages Solid start to the year Good combined ratio, benefitting from one-off gain and low catastrophe losses; focus on continuing to improve accident year profitability Farmers transition continues, with some early positive signals Capital deployment in the business supported by strong
Slide 13: 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 14: Appendix
@ ZURICH Appendix
Slide 15: GI – Combined ratio details
GI – Combined ratio details AY loss ratio further improved with ER slightly deteriorating LOSS RATIO (%) EXPENSE RATIO (%) 70.3% 68.3% 28.0% 27.2% 27.2% 27.6% 27.1% 4.4% 67.5% 3.2% 67.7% 2.2% 66.3% 1.6% 13.6% 13.5% 12.9% 13.7% 13.9% 1.9% 68.0% 67.5% 67.2% 66.4% 65.6% 14.4% 13.7% 14.2% 13.5% 13.7% -0
Slide 16: GI – Loss ratio details
GI – Loss ratio details AY loss ratio further improved LOSS RATIO (%) 75.5% 69.4% 67.6% 70.3% 9.7% 67.4% 68.6% 67.5% 5.8% 3.0% 2.2% 67.7% 1.6% 66.3% 2.2% 3.7% 1.6% 1.9% 67.2% 67.9% 68.1% 68.5% 66.4% 67.8% 66.7% 69.0% 65.6% -1.9% -2.7% -0.3% -2.0% -1.2% -3.3% -4.2% -3.1% Q1-12 Q2-12 Q3-12 Q4-12 Q1-13
Slide 17: GI Global Corporate – KPI
GI Global Corporate – KPI Combined ratio benefitting from very low catastrophe losses Q1-14 KEY FINANCIALS GWP Zurich rate Combined USD 264m USD 302m USD 237m Growth1 change2 Ratio -2% 3% 91% 89.6% 87.0% 90.7% 19.0% 18.4% 19.5% KEY DRIVERS 70.6% 68.6% 71.2% Growth impacted by some timing effects w
Slide 18: GI North America Commercial – KPI
GI North America Commercial – KPI Growth impacted by one-offs, with improved combined ratio Q1-14 KEY FINANCIALS GWP Zurich rate Combined USD 268m USD 181m USD 221m Growth1 change2 Ratio -2% 4% 95% 96.2% 99.3% 95.0% 29.9% 29.5% 29.0% KEY DRIVERS 66.3% 69.7% 66.0% Underlying growth at +4% Stable
Slide 19: GI EMEA – KPI
GI EMEA – KPI Broadly flat top-line, underlying combined ratio progress Q1-14 KEY FINANCIALS GWP Zurich rate Combined USD 265m USD 258m USD 311m Growth1 change2 Ratio -1% 2% 93% 94.8% 94.4% 93.1% 26.4% 26.6% 27.3% KEY DRIVERS 68.5% 67.8% 65.8% Solid combined ratio with some underlying improvement,
Slide 20: GI International Markets – KPI
GI International Markets – KPI Reduced growth partly driven by focus on profitability Q1-14 KEY FINANCIALS GWP Zurich rate Combined USD 47m USD 79m USD 95m Growth1 change2 Ratio 3% 4% 97% 97.5% 101.0% 97.2% 36.1% 37.9% 36.9% KEY DRIVERS 61.4% 63.0% 60.3% Underlying growth at 8% Higher rate incre
Slide 21: GI – Rate change monitor
GI – Rate change monitor Fairly stable increases, with some market pressure in US property ZURICH RATE CHANGE ASSESSMENT Business Assessment Group Fairly stable rate increases compared to Q1 2013 Modest rate increases in all regions apart from Asia Pacific; casualty lines positive, flat overall Glob
Slide 22: GI – Natural catastrophe reinsurance
GI – Natural catastrophe reinsurance Program further benefitted from lower reinsurance prices NATURAL CATASTROPHE REINSURANCE TREATIES1 (USDm) 30 20 30 150 150 30 500 500 20 150 20 30 10 20 500 150 Single global USD 150m treaty, which can be applied to any region2 10 10 930 750 300 500 Single global
Slide 23: GL – New business by pillar
GL – New business by pillar Strong first quarter production Q1-14 KEY FINANCIALS APE (USDm) CLP single 1,101 NBM PVNBP 919 1,042 premium 328 398 355 214 381 362 26% USD 10.3bn USD 1.3bn 350 334 341 Q1-12 Q1-13 Q1-14 NBV (USDm) KEY DRIVERS 283 253 185 94 Growing CLP APE due to increases in 83 76 67
Slide 24: GL – Net inflows & Asset under management
GL – Net inflows & Asset under management Positive net flows and asset development NET INFLOWS BY REGION (USDbn) AUM DEVELOPMENT (USDbn) 1.5 267 272 1 3 1 0.2 31 32 0.1 0.6 0.6 114 117 0.2 0.1 0.2 0.1 0.4 0.5 0.3 0.1 0.2 -0.1 122 124 0.0 -0.7 0.0 FY-13 Net inflows Market FX Q1-14 movements Q1-12 Q1-
Slide 25: Farmers Exchanges – GWP
Farmers Exchanges – GWP Early positive signals in top-line performance DEVELOPMENT OF GWP BY BUSINESS LINE (USDm) -2.1% 4,673 4,575 -110 17 12 -15 39 -40 2,223 2,113 1,057 1,074 425 437 271 257 517 555 180 140 Q1-13 Auto Home Business Bristol West1 Specialty Other2 Q1-14 Insurance Auto Home Business
Slide 26: Farmers Exchanges – PIF/VIF
Farmers Exchanges – PIF/VIF1 Bristol West turns the corner in terms of VIF growth DEVELOPMENT OF PIF/VIF1 BY BUSINESS LINE (THOUSANDS) -0.7% 19,298 19,164 -130 -32 -1 29 13 -13 9,653 9,523 4,875 4,843 414 413 886 915 2,941 2,954 530 517 FY-13 Auto Home Business Bristol West2 Specialty Other3 Q1-14 I
Slide 27: Farmers Exchanges – Combined ratio
Farmers Exchanges – Combined ratio Combined ratio unchanged despite higher catastrophe losses COMBINED RATIO BY BUSINESS LINE (%)1 121.1% 112.8% 105.7% 102.6% 101.7% 97.2% 97.7% 98.8% 96.4% 96.5% 93.7% 91.0% 89.8% 88.6% Auto Home Business Insurance Bristol West2 Specialty Other3 Total Q1-13 Q1-14 1
Slide 28: Farmers Exchanges – Combined ratio history
Farmers Exchanges – Combined ratio history Catastrophe losses drive volatility in quarterly combined ratio QUARTERLY COMBINED RATIO (%) Catastrophes impact1 Incl. Incl. Incl. 17 Catastrophe California 13 Catastrophe 120 Events wildfires Events Incl. 115 13 Catastrophe Events 110 Incl. Irene Incl. Ex
Slide 29: Group Investments – Asset allocation
Group Investments – Asset allocation Balanced sources of investment risk and return ASSET ALLOCATION (%)1 RISK DIVERSIFICATION2 RISK DRIVERS (%)2,3 Total Group Investments: USD 214bn 5% 5% 1% 4% 11% 1% 100% 5% 8% 32% 37% 23% 32% 16% 79% Sum of single Investment Investment Fixed income Equities secur
Slide 30: Group Investments – Debt securities portfolio
Group Investments – Debt securities portfolio High quality debt securities portfolio BY CATEGORY (%) BY RATING (%) Total debt securities: USD 159bn 2% 12% 22% 23% 49% 39% 17% 37% Government and government related bonds MBS/ABS AAA AA A BBB Non-investment grade Corporate bonds 15 May 2014 Results for
Slide 31: Group Investments – Investment income yield
Group Investments – Investment income yield1 Decline in investment income yields has slowed GENERAL INSURANCE GLOBAL LIFE GROUP 0.41% 0.38% 0.36% Equity2 0.56% Equity2 0.55% Equity2 0.48% 0.56% 0.53% 0.52% 0.65% 0.87% 0.76% Debt 0.66% Debt 0.90% Debt 0.77% 0.82% 0.99% 0.89% 1.31% 1.41% 1.43% Real es
Slide 32: Group – Economic capital models
Group – Economic capital models Capital strong, supporting redeployment Z-ECM RATIO DEVELOPMENT (%) SST1 RATIO DEVELOPMENT (%) 3% -6% 6% -2% 6% 127% 11% 3% 217% -4% 121% 206% HY-13 Business Market Dividend Model FY-13 HY-13 Business Market Dividend Model FY-13 profits movements accrual changes profi
Slide 33: Group – Z-ECM
Group – Z-ECM Well diversified capital base by risk type Q1-14 AFR DEVELOPMENT (USDbn) RBC BY RISK TYPE AND BUSINESS (%) ALM / Market risk Shareholders equity 33 11% Operational risk 33% Business risk 16% P&R risk1 Dividend accrual 3 2% Re-ins credit risk 4% 9% 3% Life insurance risk Net intangibles
Slide 34: For further information
For further information CALL US VISIT OR FOLLOW US Investor Relations James Quin +41 44 625 21 10 André Meier +41 44 625 37 75 Michael Boardman +41 44 625 26 37 Gianni Vitale +41 44 625 48 26 Rating Agency Management Michèle Matlock +41 44 625 28 50 www.zurich.com Events Patricia Heina +41 44 625 38
Slide 35: Notes
Notes 15 May 2014 Results for the three months to March 31, 2014 35
Slide 36: Calendar
Calendar: - May 28, Deutsche Bank Global Financial Services Investor Conference, New York - August 7, Half year results 2014 - September 30 – October 2, BoAML Annual Banking & Insurance CEO Conference - November 6, Results for nine months to September 30, 2014 - February 12, 2015, Annual results 201
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