Slide 1: Half Year Results Reporting 2007
Half Year Results Reporting 2007 Analysts and Media Presentation Zurich, August 16, 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 • Half year results 2007 Dieter Wemmer • Q&A • Closing remarks James J. Schiro © Zurich Financial Services - Half Year Results Reporting 2007 - August 16, 2007 3
Slide 4: Introduction
Introduction James J. Schiro Chief Executive Officer Zurich, August 16, 2007
Slide 5: Financial highlights
Financial highlights in USD millions 2007 20061 Change for the six months to June 30 Business operating profit 3,278 2,923 12% Net income attributable to shareholders 2,684 2,011 33% General Insurance combined ratio 96.5% 94.5% -2pts Global Life new business margin2 24.1% 17.8% 6.3pts Farmers Mgmt S
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: Half year results 2007
Half year results 2007 Dieter Wemmer Chief Financial Officer Zurich, August 16, 2007
Slide 8: Business operating profit by segment
Business operating profit by segment in USD millions 2007 20061 Change for the six months to June 30 General Insurance 1,838 1,787 3% Global Life 721 576 25% Farmers Management Services 672 626 7% Other Businesses 478 304 57% Corporate Functions -430 -371 -16% Total 3,278 2,923 12% 1 Throughout this
Slide 9: Top line development by segment
Top line development by segment in USD millions 2007 2006 Change Change for the six months to June 30 in LC1 Gross written premiums and policy fees General Insurance 19,026 18,454 3% 0% Global Life (incl. insurance deposits)2 10,427 10,190 2% -5% Other Businesses 1,210 1,117 8% 8% Annual Premium Equ
Slide 10: General Insurance – key performance indicators
General Insurance – key performance indicators Business Operating Profit Combined ratio (%) in USD millions Major CAT 2007 2006 Change Global 3.2 94.4 for the six months to June 30 Corporate 93.6 Global Corporate 385 367 5% 92.9 NA North America Commercial 767 544 41% Commercial 95.5 Europe Europe G
Slide 11: Comparison of General Insurance loss ratio allowing for known CAT and PYD
Comparison of General Insurance loss ratio allowing for known CAT and PYD HY 2007 HY 2006 75% 75% 72.3% 72.2% 71.1% 1.4% 70.8% 0.0% 70% 3.9% 70% USD 201m 2.7% USD 566m USD 390m 65% 65% 60% 60% Booked Major PYD2 Underlying Booked Major PYD2 Underlying Loss Ratio CAT1 Loss Ratio Loss Ratio CAT1 Loss R
Slide 12: 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 -9,482 -9,216 Net losses and LAE incurred - Current year 11,457 10,619 - Prior years -4651 -180 Currency translation
Slide 13: New global aggregate catastrophe cover protects the Group in case of frequency of CATs
New global aggregate catastrophe cover protects the Group in case of frequency of CATs all figures in USD millions US European Rest of Catastrophe Catastrophe World Treaty1 Treaty1 2007 Catastrophe 2007 Treaty1 2007 Excess of loss protection Retention USD 2,030 USD 2,030 USD USD1,000 1,000 inc. USD
Slide 14: Global Life – key performance indicators
Global Life – key performance indicators in USD millions 2007 2006 Change Change for the six months to June 30 in LC1 Annual Premium Equivalent (APE) 1,323 1,184 12% 5% New business value, after tax 319 211 51% 45% New business margin, after tax2 24.1% 17.8% 6.3pts Embedded value operating profit 1,
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 six months to June 30 2007 2006 2007 2006 Emerging markets 299 221 35% 24.5% 22.6% of which: South East Asia 138 85 62% 35.0% 38.8% Share of emerging markets in total Global Life APE 2
Slide 16: Global Life - Embedded Value result
Global Life - Embedded Value result in USD millions 2007 2007 2006 2006 for the six months to June 30 USD m Return USD m Return Opening Embedded Value 14,092 11,680 Expected operating profit1,2 428 444 New business value2 319 211 Operating variance2 2543 -60 Total operating profit2 1,001 12.3% 595 1
Slide 17: Farmers Management Services – key performance indicators
Farmers Management Services – key performance indicators in USD millions 2007 2006 Change for the six months to June 30 Management fees and other related revenues 1,093 1,054 4% Business operating profit 672 626 7% Gross operating margin 49.5% 52.3% -2.8pts © Zurich Financial Services - Half Year Re
Slide 18: Farmers Exchanges – key performance indicators
Farmers Exchanges1 – key performance indicators in USD millions 2007 2006 Change for the six months to June 30 Gross written premiums 7,780 7,435 5% Net underwriting result 72 228 -68% Combined ratio 97.7% 95.8% -1.9pts Adjusted combined ratio2 91.1% 88.7% -2.4pts Surplus ratio 41.0% 38.3% 2.7pts 1
Slide 19: 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 six months to June 30 Other Businesses: Farmers Re 88 87 1% Centre 122 128 -5% Other 268 90 198% Total Other Businesses 478 304 57% Corporate Functions -430 -371 -16% © Zurich F
Slide 20: Investment performance of Group investments
Investment performance of Group investments in USD millions 2007 2006 Change for the six months to June 30 Net investment income 4,282 3,872 11% Net capital gains on investments and 516 507 2% impairments of which attributable to shareholders 440 415 6% Net investment result 4,798 4,379 10% Net inve
Slide 21: Group Investments – Exposure to US sub-prime is very small (0.18%) and of high quality
Group Investments – Exposure to US sub-prime is very small (0.18%) and of high quality Group Investments USD 186bn (100%) US sub-prime: USD 340m (0.18%) 100% inv. grade 76% AAA No downgrades by rating Debt agencies in June/July 07 securities Only USD 53m is of 2006 vintage 63% year, and USD
Slide 22: Group Investments – Exposure to CDO is very small (0.26%) and of high quality
Group Investments – Exposure to CDO is very small (0.26%) and of high quality Group Investments USD 186bn (100%) CDO: USD 479m (0.26%) 99% inv. grade, 1% unrated 69% AAA Debt 76% backed by UK bank loans (CLO) and 24% by other types of collateral assets securities US sub-prime exposure (of th
Slide 23: Development of shareholders’ equity
Development of shareholders’ equity in USD millions 28,000 1,313 27,000 2,684 26,531 1,025 26,077 26,000 944 25,588 1,072 1,214 25,000 24,000 Balance Dec IAS 19 SoRIE Restated Net Income Dividends Share buyback Change in net Other Balance as of 31, 2006 as Balance as of paid unrealized Movements1 Ju
Slide 24: Closing remarks
Closing remarks James J. Schiro Chief Executive Officer Zurich, August 16, 2007
Slide 25: Q&A
Q&A © Zurich Financial Services - Half Year Results Reporting 2007 - August 16, 2007 25
Slide 26: Appendix
Appendix © Zurich Financial Services - Half Year Results Reporting 2007 - August 16, 2007 26
Slide 27: The Zurich Way – Target of USD 2 billion for 2007 to 2009
The Zurich Way – Target of USD 2 billion for 2007 to 2009 Total planned benefits • Developing our three year plan, we 2007 to 2009: expect benefits of USD 2 billion from USD 2 billion 2007 to 2009. USD • We are well on track to achieve our 2007 700m target. USD USD • 12 major work-streams with over
Slide 28: The Zurich Way initiatives – 2007 target
The Zurich Way initiatives –2007 target by function USD 700m by business USD 700m division 21% Growth/ Distribution 31% Europe General USD 500m USD 500m USD 500m USD 500m Insurance 5% 18% 16% Claims 30% 34% 23% 16% 28% North America Commercial 25% 33% 43% U/W 20% 36% 5% 15% 13% Global Corporate 20%
Slide 29: HY 2007 business division BOP-ROE based on RBC-allocated IFRS equity
HY 2007 business division BOP-ROE1 based on RBC-allocated IFRS equity 2007 2006 for the six months to June 30 General Insurance 29.9% 37.1% - Global Corporate 26.3% 35.3% - North America Commercial 33.1% 27.5% - Europe General Insurance 29.9% 59.7% - International Businesses 18.2% 18.8% - Group Rein
Slide 30: Global Life – new business indicators
Global Life – new business indicators in USD millions APE APE Change Change NBV2 NBV2 Change for the six months to June 30 2007 2006 In LC1 2007 2006 United States 59 53 11% 11% 57 26 119% United Kingdom 440 399 10% 0% 56 37 52% Germany 218 225 -3% -10% 64 42 51% Switzerland 52 46 13% 9% 19 4 330% R
Slide 31: 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 six months to June 30 5,000 40.0% Gross written premiums 7,780 7,435 4,000 38.0% Net underwriting result 72 228 3,000 36.0% Net surplus growth 284 304 2,000 34.0% Ending surplus
Slide 32: 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 six months to June 30 Auto 3,971 3,870 2.6% Homeowners 2,078 1,913 8.6% Commercial P&C 633 596 6.2% Workers’ Compensation 194 203 -4.4% Specialty 839 789 6.3% Other 65 64 1.5% Total 7,780 7,435 4.
Slide 33: Farmers Exchanges – strong growth in gross written premiums
Farmers Exchanges – strong growth in gross written premiums 6% 5.2% 5.0% 4.9% 4.6% 4.0% 3.9% 4% 3.1% 3.2% 3.3% 2.6% 2.2% 2% 1.4% 0% 3 months Half year 9 months Full year 3 months Half year 2006 2006 2006 2006 2007 2007 GWP growth GWP growth, ex Work Comp. © Zurich Financial Services - Half Year Resu
Slide 34: Farmers Exchanges – combined ratio remains very strong
Farmers Exchanges – combined ratio remains very strong for the six months to June 30 20071 20061 Change Auto 99.7% 99.9% 0.2pts Homeowners 93.8% 88.1% -5.7pts Commercial P&C2 95.8% 95.0% -0.8pts Workers’ Compensation 95.0% 94.7% -0.3pts Specialty 92.3% 91.1% -1.2pts Total 97.7% 95.8% -1.9pts Adjuste
Slide 35: 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 2002 2003 2004 2005 2006 2007 © Zurich Financial Services - Half Year Resu
Slide 36: Group Investments – Zurich’s debt securities are of very high quality (99.4% investment grade)
Group Investments – Zurich’s debt securities are of very high quality (99.4% investment grade) Group Investments Debt securities USD 186bn USD 117bn credit rating: AAA 63.2% credit rating: AA Other Debt 99.4% 12.8% asset Debt securities investment classes securities grade 37% 63% 63% credit rating: