Zurich Insurance Group Ltd · SIX:ZURN
Zurich Insurance — H1 2016 Earnings Presentation
85 slides from Zurich Insurance's earnings presentation, Aug 11, 2016
Slide 1: Half year results 2016 – Investor & Media presentation
Half year results 2016 Investor & Media presentation August 11, 2016 Zurich Insurance Group
Slide 2: Content
Content Use symbols to navigate through the document MAIN SECTION APPENDIX Key highlights Group BOP BOP BOP Group BOP General Insurance General Insurance Global Life Global Life Farmers Exchanges Farmers Other Operating Businesses Group Investments Group Investmen
Slide 3: Key highlights
@ ZURICH Key highlights
Slide 4: Key messages
Key messages General Continuing underlying improvement Insurance Global Life Consistent delivery Farmers Strong FMS result benefitting from growth in fees Group Actions taken to simplify structure and reduce costs Capital Resilient capital position August 11, 2016 ? Half year results 2016 4
Slide 5: Key financials
Key financials Good BOP result HY-16 KEY RESULTS TARGET METRICS OVER STRATEGIC PERIOD HY-16 Target BOP BOPAT ROE1 11.3% 12 - 14% USD 2.2bn (-2%) Q2-163 Target Z-ECM2 107% 100 – 120% NIAS Cumulative Cumulative Net cash 2014-164 2014-2016 USD 1.6bn (-22%) remittances > USD 10bn > USD 9bn 1 Business Op
Slide 6: Report card – General Insurance
Report card – General Insurance Good progress so far KPIs BY REGION (USDm) ACHIEVEMENTS GWP (USDm) BOP (USDm) HY-16 AY CR ex cat1 at 96.3%, 2.8ppts below FY-15 18,669 18,517 Turnaround actions result in underlying 1,166 1,205 2,063 1,813 75 improvements in all markets 57 Announced exit from va
Slide 7: Report card – Global Life
Report card – Global Life In-force Management and Bank JVs deliver sustainable BOP KPIs BY REGION (USDm) ACHIEVEMENTS APE NBV BOP Achieved goal of delivering >USD 350m 2,443 495 673 BOP per quarter, in local currency 667 73 34 88 2,249 23 29 28 Expansion of new business margin 73 20 411 47 100 6
Slide 8: Report card – Farmers Exchanges
Report card – Farmers Exchanges1 Continued progress in strategic execution driving growth NET PROMOTER SCORE2 RETENTION3 80.1% 80.0% 79.9% 80.2% 79.9% 40.4 43.0 43.5 38.8 39.7 HY-15 9m-15 FY-15 Q1-16 HY-16 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 NET GAIN / LOSS OF AGENTS4 NEW BUSINESS COUNT GROWTH5 7.0% 233 4
Slide 9: HY-16 performance
@ ZURICH HY-16 performance
Slide 10: Group – BOP and NIAS
Group – BOP and NIAS GI improving, other businesses on track BOP BY SEGMENT (USDm) NIAS WALK (USDm)1 -2% 2,238 2,194 113 -44 -132 -47 -187 +17% 1,166 1,205 149 1,107 943 2,059 663 673 667 460 1,613 355 349 719 678 328 335 8 10 32 -184 -249 -330 -16 -388 HY-15 BOP RCG SH Other2 HY-16 NIAS Taxes NIAS
Slide 11: General Insurance – Topline
General Insurance – Topline Premium increase reflects RCIS acquisition GWP GROWTH IN LC1 (%) RATE CHANGE2 (%) Q2-15 Q1-16 Q2-16 -13% GC -10% -1% 2% 1% 11% Ex. RCIS 44% 7% NAC 5% 1% 2% 1% -1% -4% EMEA 0% 1% 3% 2% 1% 11% IM 12% 4% 1% 2% -5% Ex. RCIS 12% Total3 0% -1% 1% 2% 2% 3% Q2-16 Q2-15 Q2-14 1 In
Slide 12: General Insurance – Tiering results
General Insurance – Tiering results1 Focus on profitability over volume, full benefit to earn through HY-16 RATE INCREASES BY TIER2 (%) HY-16 RETENTION BY TIER2 (%) Tier 1 -2% Tier 1 84% Tier 2 0% Tier 2 84% Tier 3 4% Tier 3 78% Tier 4 14% Tier 4 62% Total 2% Total 80% 1 GI overall results based on
Slide 13: General Insurance – Loss ratio over time
General Insurance – Loss ratio over time AY loss ratio ex-cat improving in 2016 LOSS RATIO (%) 77.7% 75.7% 3.7% 68.4% 2.3% 6.7% 68.8% 68.1% 66.1% 65.7% 65.8% 65.3% 65.9% 1.9% 3.4% 1.1% 5.8% 1.9% 3.0% 1.4% 2.3% 68.0% 69.5% 67.0% 65.6% 63.7% 64.4% 65.4% 66.3% 66.5% 64.4% 3.7% -1.8% -0.1% -1.6% -0.8% -
Slide 14: General Insurance – Combined ratio details
General Insurance – Combined ratio details Management actions are delivering results LOSS RATIO (%) EXPENSE RATIO (%) 71.8% 31.7% 30.9% 31.6% 30.5% 30.3% 0.9% 29.7% 68.8% 68.4% 67.5% 3.5% 66.4% 3.4% 14.0% 14.1% 3.5% 5.8% 13.7% 14.3% 13.1% 13.9% 2.3% 65.9% 2.3% 65.2% 67.3% 65.4% 66.3% 64.4% 63.7% 17.
Slide 15: General Insurance – Regional combined ratios
General Insurance – Regional combined ratios AY combined ratio ex-cat further improving COMBINED RATIO SPLIT (%) COMBINED RATIO BY REGION (%) 108.9% 108.6% 100.0% 3.7% 6.7% 97.7% 99.0% 99.0% 2.3% 3.4% 1.1% 5.8% GC 113.9% 99.0% NAC 98.2% 93.8% 99.2% EMEA 102.5% 101.3% 97.9% 98.1% 94.7% 93.8% IM 103.3
Slide 16: General Insurance – BOP components
General Insurance – BOP components Increased BOP reflects ongoing improvement and FX gain BOP BREAK DOWN (USDm) KEY DRIVERS (USDm) 801 +44% 663 -28 82 663 20 335 43 66 20 460 66 460 0 571 587 508 99 18 -41 -21 -71 -25 -52 -34 Q2-15 UWR Inv. Inc. RCG NTR FX G/L NCI Q2-16 -16 Q2-14 Q2-15 Q2-16 Underwr
Slide 17: Global Life – New business & Net Inflows
Global Life – New business & Net Inflows Strong NBV from favorable business mix and higher margins APE (USDm)1,2 NBM & NBV1,2 NET INFLOWS & AUM NBM (%) Net inflows (USDbn) -6% 24.0 4.5 22.2 18.7 3.4 1,272 1,251 0.9 14 34 22 42 1,177 55 42 8 40 39 348 264 +16% 258 NBV (USDm) AuM (USDbn) -2% 247 241 2
Slide 18: Global Life – BOP by region
Global Life – BOP by region Increase in EMEA and LatAm offset by the other regions and FX BOP BY REGION (USDm)1 KEY DRIVERS (USDm) -1% 355 349 -12 315 355 24 -8 -6 349 16 1 8 16 -20 22 35 16 1 8 46 35 46 46 68 58 68 51 58 223 232 244 232 244 -27 -5 -5 Q2-14 Q2-15 Q2-16 Q2-15 EMEA LatAm2 North APAC O
Slide 19: Global Life – Source of earnings
Global Life – Source of earnings Higher revenues and expense savings drive BOP increase in LC BOP BY SOURCE OF EARNINGS (USDm) REGIONAL BOP & KPI (USDm) D HY-151 Reported BOP by region (% D vs. HY-15 reported) -31% 9% 4% -6% -18% Loadings & fees 1,363 360 1,723 1% 460 Inv. margin2 273 329 41% 56 121
Slide 20: Farmers Exchanges – KPIs
Farmers Exchanges1 – KPIs Continued growth, driven mainly by rate GWP GROWTH (%) COMBINED RATIO2 (%) SURPLUS2 (USDbn) 37.1% 36.6% 108.3% 108.6% 35.5% 104.8% 3.8% 12.9% 12.1% 3.6% 10.0% 3.1% 6.5 6.0 5.8 2.3% 1.9% 95.4% 94.8% 96.5% 5.5 5.5 5.3 0.9 0.5 0.5 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q2-14 Q2-15 Q2-1
Slide 21: Farmers – KPIs
Farmers – KPIs Stable FMS results, underwriting loss at Farmers Re BOP (USDm) MGEP MARGIN (%)1 FARMERS RE CR (%)2 341 7.4% 105.5% 108.4% 335 7.0% 7.0% 103.9% 328 12.2% 12.4% 9.1% 362 350 329 93.1% 94.8% 96.2% -21 0 -15 Q2-14 Q2-15 Q2-16 Q2-14 Q2-15 Q2-16 Q2-14 Q2-15 Q2-16 Catastrophes FMS FRe CR (ex
Slide 22: Group Investments – Investment income yield
Group Investments – Investment income yield1 Disciplined risk taking offset by lower reinvestment environment GENERAL INSURANCE GLOBAL LIFE GROUP 1.31% 2.01% 1.65% Equity 1.22% Equity 1.95% Equity 1.54% 1.03% Trade 1.71% Trade 1.29% 1.33% Yield at 1.52% Yield at ~1.7%2 1.42% Debt 1.22% ~2.0%2 Debt 1
Slide 23: Group – Balance sheet and capital
Group – Balance sheet and capital Resilient capital position across all metrics SHAREHOLDERS’ EQUITY (USDm) Z-ECM RATIO (%) -360 127% 122% 930 121% -546 31,632 108% 107% 30,869 739 Q1-16 NIAS Net URG/L CTA Pension HY-16 FY-13 FY-14 FY-15 Q1-16 Q2-161 plans & other 1 Reflects midpoint estimate with a
Slide 24: Key messages
Key messages General Continuing underlying improvement Insurance Global Life Consistent delivery Farmers Strong FMS result benefitting from growth in fees Group Actions taken to simplify structure and reduce costs Capital Resilient capital position August 11, 2016 ? Half year results 2016 24
Slide 25: 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 26: Appendix
@ ZURICH Appendix
Slide 27: Group – Business Operating Profit
Group – Business Operating Profit GI improving, other businesses on track BOP BY SEGMENT (USDm) BOP TO NIAS WALK (USDm) +17% 1,240 137 -82 1,107 120 -364 943 801 -82 663 460 98 30.3% tax rate 1,107 315 355 349 739 341 328 335 63 8 -280 -184 -249 Q2-16 RCG1 Accounting SH Other Q2-16 -16 BOP and restr
Slide 28: GI – HY-16 BOP components
GI – HY-16 BOP components BOP up 3% on a half-year basis BOP BREAK DOWN (USDm) KEY DRIVERS (USDm) 1,681 +3% 1,205 1,166 -33 643 -14 33 -81 132 1,205 3 1,166 216 230 1,147 996 1,044 40 131 -99 -1 -58 -56 -50 -49 -82 HY-15 UWR Inv. Inc. RCG NTR FX G/L NCI HY-16 HY-14 HY-15 HY-16 Underwriting result (U
Slide 29: GI – HY-16 Combined ratio
GI – HY-16 Combined ratio AY CR ex-cat improving COMBINED RATIO SPLIT (%) COMBINED RATIO BY REGION (%) 98.3% 98.4% 95.7% 2.4% 3.5% 2.1% 99.0% GC 101.0% 99.0% NAC 96.4% 93.8% EMEA 94.5% 97.3% 96.3% 97.2% 93.8% IM 101.0% 98.4% Total 98.3% -0.9% -1.4% -1.5% 80% 85% 90% 95% 100% 105% HY-14 HY-15 HY-16 C
Slide 30: GI – Prior year development by region
GI – Prior year development (PYD) by region Q1-16 and Q2-16 PYD within expected range PYD (% OF NET EARNED PREMIUM) -1.8% -0.1% -1.6% -0.8% -1.5% -1.3% 3.7% -0.5% -1.5% -1.5% 2.8% Unfavorable PYD 1.3% 1.0% 0.2% 1.2% 1.1% 0.2% 0.1% 0.4% 0.2% 0.4% 0.1% -0.1% -0.1% -0.1% -0.4% -0.4% -0.6% -0.6% 0.0% -0
Slide 31: GI – Catastrophes split by region
GI – Catastrophes split by region HY-16 catastrophes overall in line with expectations CATASTROPHES (% OF NET EARNED PREMIUM)1 6.7% 5.8% 1.9% 1.8% 0.5% 3.4% 3.0% Ø 3.0% 0.7% 1.4% 2.4% 2.3% 2.3% 1.9% 4.3% 0.3% 1.9% 0.0% 0.7% 0.6% 0.3% 0.5% 1.4% 0.8% 1.2% 0.1% 0.5% 1.1% 0.8% 0.6% 0.3% 0.1% 1.5% 0.7% 0
Slide 32: GI Global Corporate – KPIs
GI Global Corporate – KPIs Stabilization vs FY-15, further improvements expected HY-16 KEY FINANCIALS GWP Zurich rate Combined USD 214m USD 273m Growth1 change2 Ratio -12% 1% 99% 101.0% 99.0% 23.3% 22.1% KEY DRIVERS 77.7% 76.9% GWP down mainly as a result of lower retention and new business volume
Slide 33: GI North America Commercial – KPIs
GI North America Commercial – KPIs CR impacted by large losses and cat, ex. RCIS attr. LR improving HY-16 KEY FINANCIALS GWP Zurich rate Combined USD 469m USD 328m Growth1 change2 Ratio 2% 1% 99% 96.4% 99.0% 32.2% 31.1% KEY DRIVERS 64.1% 67.9% Excluding RCIS, growth driven by timing effect and cap
Slide 34: Q2-16 P&L impact of RCIS acquisition
Q2-16 P&L impact of RCIS acquisition Incremental GWP of USD 1.1bn, different CR composition Q2-16 IMPACT GENERAL INSURANCE Q2-16 IMPACT NAC GI excl. NAC excl. Total GI RCIS1 Total NAC RCIS1 RCIS RCIS GWP (USDm) 9,402 1,116 8,286 GWP (USDm) 4,247 1,116 3,131 NEP (USDm) 6,775 128 6,647 NEP (USDm) 2,09
Slide 35: GI EMEA – KPIs
GI EMEA – KPIs Good start to the year HY-16 KEY FINANCIALS GWP Zurich rate Combined USD 426m USD 588m Growth1 change2 Ratio -4% 3% 94% 97.2% 93.8% 31.5% 30.7% KEY DRIVERS 65.8% 63.1% GWP down mainly driven by lower new business in UK, Germany, Switzerland and Italy and the sale of the retail portf
Slide 36: GI International Markets – KPIs
GI International Markets – KPIs AY loss ratio continues to improve, growth impacted by exits HY-16 KEY FINANCIALS GWP Zurich rate Combined USD 71m USD 266m Growth1 change2 Ratio 6% 1% 94% 101.0% 93.8% 43.1% 44.1% KEY DRIVERS 57.8% Growth in Latin America is partly offset by 49.6% the exit of lines
Slide 37: GI – Rate change monitor
GI – Rate change monitor Rate increases driven by re-underwriting actions Q2-16 ZURICH RATE CHANGE ASSESSMENT Business Assessment Solid rate increases above prior year levels reflecting focus on re-underwriting with lower levels Group in the US due to market pressures. Higher rates in the US and in
Slide 38: GI – Catastrophe reinsurance
GI – Catastrophe reinsurance Program further benefitted from lower reinsurance prices CATASTROPHE REINSURANCE TREATIES (USDm) 10 200 105 10 200 10 200 750 10 200 Single global USD 200m treaty, which can be applied to any region2 750 750 10 350 750 433 350 350 Single global USD 750m treaty, which can
Slide 39: GL – New business by pillar
GL – New business by pillar Higher NBV across all the pillars but mainly in CLP business Q2-16 KEY FINANCIALS1 APE (USDm) CLP single NBM PVNBP 1,272 1,251 premium 1,177 419 457 390 24% USD 14bn USD 1.3bn 463 406 462 390 389 326 Q2-14 Q2-15 Q2-16 KEY DRIVERS NBV increased mainly from favorable busine
Slide 40: GL – Net inflows & Assets under management
GL – Net inflows & Assets under management Higher net inflow partially offset by FX NET INFLOWS BY REGION (USDbn)1 AUM DEVELOPMENT (USDbn)2 4.5 259 257 0.2 5 0 -3 38 35 3.4 1.2 0.0 0.1 0.5 103 111 1.0 0.4 0.9 0.1 2.8 1.0 1.9 116 112 0.4 -0.3 -0.2 -0.2 Balance as Net inflows Market FX Balance HY-14 H
Slide 41: GL North America – Key financials
GL North America – Key financials Revenue increase offset by mortality and growth investments BOP BY SOURCE OF EARNINGS (USDm) KEY FINANCIALS & KPI (USDm) D HY-151 100 Loadings & fees 200 1 201 3% 69 57 57 Inv. margin 16 51% 43 37 Technical margin 44 -45% Operating costs -79 HY-14 HY-15 HY-16 -21% A
Slide 42: GL Latin America – Key financials
GL Latin America – Key financials Local currency BOP growth with strong revenue increase BOP BY SOURCE OF EARNINGS (USDm) KEY FINANCIALS & KPI (USDm) D HY-151 128 121 Loadings & fees 317 14 331 12% 111 83 Inv. margin 74 69 55% 56 Technical margin 73 -13% Operating costs -95 HY-14 HY-15 HY-16 -11% Ac
Slide 43: GL EMEA – Key financials
GL EMEA – Key financials Local currency BOP increase supported by expense efficiencies BOP BY SOURCE OF EARNINGS (USDm) KEY FINANCIALS & KPI (USDm) D HY-151 476 460 443 Loadings & fees 755 331 1,086 -4% 311 276 Inv. margin2 155 211 46% 234 56 Technical margin 359 -4% Operating costs -428 HY-14 HY-15
Slide 44: GL APAC – Key financials
GL APAC – Key financials Volume driven growth offset by acquisition costs BOP BY SOURCE OF EARNINGS (USDm) KEY FINANCIALS & KPI (USDm) D HY-151 47 Loadings & fees 84 15 99 17% 40 36 29 29 28 Inv. margin 23 -3% Technical margin 39 -19% HY-14 HY-15 HY-16 Operating costs -79 -1% Acquisition costs -123
Slide 45: Zurich Santander – Quarterly results
Zurich Santander – Quarterly results Continued growth offset in USD by adverse FX development PROFIT BEFORE TAX GI & LIFE (100%) INTANGIBLES AMORTIZATION (100%) 173 239 176 -16 -15 -13 -13 -12 -13 177 181 188 182 -18 -18 -17 170 174 147 151 -4 -3 -3 -3 163 163 168 -6 -5 -4 142 127 131 143 -7 -7 Q2-1
Slide 46: Farmers Exchanges – GWP
Farmers Exchanges1 – GWP Growth primarily driven by rate DEVELOPMENT OF GWP BY BUSINESS LINE (USDm) +3.7% +3.8% 9,883 5,035 9,527 4,848 3,844 +9.5% 1,747 1,917 +9.7% 3,511 -7.1% -5.6% 535 497 242 228 296 299 +1.0% 144 143 -0.9% 2,420 2,584 +6.8% 1,331 1,414 +6.2% 1,211 1,243 +2.6% 632 645 +2.0% 1,03
Slide 47: Farmers Exchanges – PIF/VIF
Farmers Exchanges – PIF/VIF1 VIF growth in Auto business slowing down DEVELOPMENT OF PIF/VIF BY BUSINESS LINE (THOUSANDS) +0.3% +0.1% 19,016 19,069 19,052 19,069 8,109 8,315 +2.5% 8,211 8,315 +1.3% -6.9% 909 846 892 846 -5.1% 757 749 -1.0% 760 749 -1.5% 4,800 4,834 +0.7% 4,815 4,834 +0.4% +1.8% +1.1
Slide 48: Farmers Exchanges – Combined ratio
Farmers Exchanges – Combined ratio Continued impact of unfavorable claim trends in Auto business COMBINED RATIO1 BY BUSINESS LINE (%) Auto 111.2% Auto 111.8% 104.1% 107.6% 101.5% 100.2% Bristol West2 106.4% Bristol West2 108.6% 21st Century 107.9% 21st Century 108.7% CA/HI2 89.8% CA/HI2 102.5% 110.0
Slide 49: Farmers Exchanges – Combined ratio history
Farmers Exchanges – Combined ratio history Texas storms drive bulk of HY-16 catastrophe losses QUARTERLY COMBINED RATIO (%) Incl. Incl. 17 Catastrophe Incl. 120 Ike & Gustav Events 13 Catastrophe Events Incl. 115 13 Catastrophe Incl. Incl. Events 13 Catastrophe Texas storms 110 Incl. Events Irene Ex
Slide 50: Other Operating Businesses
Other Operating Businesses Timing effects and one-off items impact quarterly results QUARTERLY BOP SPLIT (USDm) -38 -24 -51 -64 -51 -48 -78 -113 -137 -115 -82 -133 -134 -171 -171 -146 -139 -171 -171 -167 -184 -149 -222 -219 -249 -280 -286 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Headqua
Slide 51: Group Investments – Asset allocation
Group Investments – Asset allocation Sources of investment risk and return are balanced ASSET ALLOCATION1 RISK DIVERSIFICATION RISK DRIVERS2 Total Group Investments: USD 199bn 3% 6% 1% 9% 5% 1% 100% 5% 27% 5% 30% 37% 23% 21% 79% Sum of single Investment Investment security risks risks risk relative
Slide 52: Group Investments – Debt securities portfolio
Group Investments – Debt securities portfolio1 Debt securities portfolio is of a high quality BY CATEGORY BY RATING Total debt securities: USD 147bn 13% 1% 3% 21% 25% 47% 40% 16% 34% Government and government related bonds MBS/ABS2 AAA A Non-rated Corporate bonds AA BBB Non-investment grade 1 Accoun
Slide 53: Group Investments – Bond portfolio
Group Investments – Bond portfolio1 High quality and well diversified BY SEGMENT BY RATING BY COUNTRY Total bonds: USD 128bn 25% USA 8% 1% 9% United Kingdom 4% 17% 9% Italy 32% 9% France Bond 28% 9% Germany securities 8% Switzerland 7% Spain 64% 32% 3% Netherlands 60% 2% Australia
Slide 54: Group Investments – Government bonds & Other
Group Investments – Government bonds & Other1 High quality and well diversified BY SEGMENT BY RATING BY COUNTRY Total government bonds: USD 69bn 19% USA 8% 0% 14% Italy 4% 24% 11% Germany 31% 24% 9% Spain Bond 9% France securities 8% Switzerland 4% 8% United Kingdom 64% 3% Belgium 61
Slide 55: Group Investments – Corporate bonds
Group Investments – Corporate bonds1 High quality and well diversified BY SEGMENT BY RATING BY INDUSTRY Total corporate bonds: USD 59bn 48% Financial Institutions 7% 3% o/w 89% Banks 14% o/w 5% Insurance 4% 18% Manufacturing 35% 8% Utilities Bond 32% 14% 4% Oil & Gas securities 4% Telecom
Slide 56: Group – Free capital generation
Group – Free capital generation Low 2015 FCG reflects underperformance of General Insurance 2015 FREE CAPITAL GENERATION (USDbn) 1.1 1.0 1.7 0.8 0.1 0.8 0.5 -0.2 0.5 0.3 -0.2 0.3 0.8 General 0.9 0.9 0.9 Insurance, Farmers, Non-Core 0.1 -0.1 0.1 -0.1 0.1 -0.7 0.5 and OOB -0.7 -0.7 IFRS NIAS Accountin
Slide 57: Group – Net cash remittances
Group – Net cash remittances Expect more than USD 10bn in remittances in the 2014-16 period BOPAT (USDbn) OPERATING FCG (USDbn) CASH REMITTANCES (USDbn) 3.4 3.1 3.7 3.9 3.5 3.2 2.9 1.7 >2.4 2.4 2.4 2.3 2.5 1.8 2.5 1.7 2.4 0.5 0.9 0.8 0.9 1.0 1.1 1.0 0.6 0.5 0.5 0.6 1.5 0.9 1.0 1.1 0.9 1.2 1.0 1.1 0.
Slide 58: Group – Economic capital models
Group – Economic capital models Resilient capital position across all metrics Z-ECM RATIO DEVELOPMENT (%) SST1 RATIO DEVELOPMENT (%) 11% 1% 0% -5% 2% 0% -6% -15% 121% 196% 189% -7% -2% 108% FY-15 Business Ins. Risk2 Market Market Cap. Q1-16 FY-14 Business Ins. Risk2 Market Market Cap. FY-15 profit r
Slide 59: Group – Z-ECM components
Group – Z-ECM components Well diversified capital base by risk type Q1-16 AFR1 COMPOSITION (USDbn) RBC1 BY RISK TYPE AND BUSINESS Market risk Shareholders equity 31 2% Re-ins credit risk 6% 4% 9% P&R risk2 Dividend accrual 1 55% Natural cat risk 21% Life insurance risk Net intangibles 18 2% Operatio
Slide 60: Group – Solvency ratio sensitivities
Group – Solvency ratio sensitivities1 Solvency ratios resilient to market movements SOLVENCY RATIO IMPACT2 121% Actual value as of FY-15 189% 123% Interest rate +100 bps 195% 118% Interest rate -100 bps 179% 120% USD appreciation +10% 192% Equities +20% 124% 192% 118% Equities -20% 185% 106% Credit
Slide 61: Group – EPS, BVPS and ROE calculations
Group – EPS, BVPS and ROE calculations1 EPS AND BVPS (CHF) BOPAT ROE AND ROE (%) No., CHF FY-15 HY-16 USDm, % FY-15 HY-16 Common shares issued 150.40m 150.53m SHE 31,178 31,632 Treasury shares 1.24m 1.21m Net URGL / CF hedges 2,850 4,998 Common shares outst. 149.16m 149.32 Adj. SHE 28,328 26,635 WAv
Slide 62: Group – Currency impact
Group – Currency impact Unfavorable FX impact in Global Life results HY-16 KEY RESULTS KPI USDm reported at constant currency BOP 2,194 -2% -2% Group NIAS 1,613 -22% -22% GWP 18,517 -1% +3% NEP 13,227 -5% -1% General Net underwriting result 216 -6% -1% Insurance Investment income 1,020 +3% +8% BOP 1
Slide 63: Commentary
@ ZURICH Commentary
Slide 64: Page 4: Key messages
Page 4: Key messages Zurich’s underlying results continued to improve in the second quarter as a result of management actions outlined previously. The Q2-16 result also benefited from some currency gains, reported in the GI non-technical result, and other one-time effects. General Insurance (GI) is
Slide 65: Page 5: Key financials
Page 5: Key financials Q2-16 Business operating profit (BOP) for the Group was USD 1.1bn and net income attributable to shareholders (NIAS) was USD 0.7bn, with BOP in line with the first quarter despite higher levels of natural catastrophes, and well ahead of the run rates achieved in the second hal
Slide 66: Page 6: Report card – General Insurance
Page 6: Report card – General Insurance In GI good progress has been made in executing on the actions taken in the second half of last year to restore profitability. Results are visible in the HY-16 figures. GWP is up 2% in local currency compared to HY-15, due to the inclusion of RCIS. Excluding th
Slide 67: Page 7: Report card – Global Life
Page 7: Report card – Global Life Global Life continued to deliver underlying growth for the first half of 2016, despite market headwinds and the challenges of a low yield environment. The increase in new business value of 28% in local currency reflects profitable growth in most areas, including suc
Slide 68: Page 8: Report card – Farmers Exchanges
Page 8: Report card – Farmers Exchanges The Farmers Exchanges continue to show progress in the execution of their strategy with further improvement in the Net Promoter score and continued growth in the agency force laying the foundation for future premium growth. Retention overall has remained flat
Slide 69: Page 10: Group – BOP and NIAS
Page 10: Group – BOP and NIAS Q2-16 BOP is up 17% compared to Q2-15 driven mainly by GI, while for the first half BOP declined slightly with growth in GI and FMS offset principally by lower results at Farmers Re and an increased loss in OOB. Lower levels of realized gains coupled with higher levels
Slide 70: Page 11: General Insurance – Topline
Page 11: General Insurance – Topline In Q2-16 the topline for GI increased because of the first-time inclusion of RCIS. The acquisition of RCIS, which closed on March 31, added USD 1.1bn of GWP in Q2-16 to GI in total and North America Commercial (NAC). Further details on the RCIS impact on the resu
Slide 71: Page 12: General Insurance – Tiering results
Page 12: General Insurance – Tiering results Updated tiering results for the Group continue to be encouraging. Overall rate increases on renewal business were 2% for HY-16, with substantial variation in the level of increases achieved across the various tiers of the portfolio. The focus on the lowes
Slide 72: Page 13: General Insurance – Loss ratio over time
Page 13: General Insurance – Loss ratio over time The actions taken since the end of last year have continued to lead to improvement in the development of the underlying loss ratios. The accident year (AY) loss ratio excluding catastrophes for Q2-16 improved to 64.4%, 2.1 percentage points lower tha
Slide 73: Page 14: General Insurance – Combined ratio details
Page 14: General Insurance – Combined ratio details Looking at the loss ratio in more detail, large man-made losses in Q2-16 were 0.5 percentage points lower than in Q2- 15 and 1.7 percentage points better than in Q1-16. The HY-16 position is 1.0 percentage point lower than FY-15. Non- catastrophe l
Slide 74: Page 15: General Insurance – Regional combined ratios
Page 15: General Insurance – Regional combined ratios GI’s combined ratio (CR) was 99.0% in the discrete second quarter, with the AY CR excluding natural catastrophes at 94.7%. This represents a 3.4 percentage point improvement over Q1-16 and is more than 4 percentage points lower than the FY-15. Th
Slide 75: Page 16: General Insurance – BOP components
Page 16: General Insurance – BOP components The GI BOP for the quarter was USD 663m, a sharp improvement compared to the material losses in Q3-15 and Q4-15 and USD 542m of BOP in Q1-16. Compared to Q2-15, the increase in the GI underwriting result is reflected in the decrease of the combined ratio b
Slide 76: Page 17: Global Life – New business & Net inflows
Page 17: Global Life – New business & Net inflows Q2-16 Global Life new business APE volumes were flat in local currency compared to the prior year quarter, with increases in Latin America offset by a decrease in EMEA. By line of business, protection, unit linked and corporate pensions business acco
Slide 77: Page 18: Global Life – BOP by region
Page 18: Global Life – BOP by region Global Life BOP increased 4% in local currency, but decreased 1% compared to the prior year quarter in US dollars, to USD 349m. In EMEA, local currency BOP earnings increased by 7%, growing 5% in USD, where a strong result in Italy and one-off gains in the UK out
Slide 78: Page 19: Global Life – Source of earnings
Page 19: Global Life – Source of earnings Adjusting for various one-off factors, and as explained in the half-year 2016 Sources of Earnings briefing document, overall revenues were flat in local currency in the first half of 2016. While all regions except EMEA saw increases in loadings, a decline in
Slide 79: Page 20: Farmers Exchanges – KPIs
Page 20: Farmers Exchanges – KPIs At the Farmers Exchanges, which are owned by their policyholders, the second quarter followed the same path as the first quarter, with good premium growth driven by rate increases but weak underwriting results as a result of high catastrophe losses concentrated in T
Slide 80: Page 21: Farmers – KPIs
Page 21: Farmers – KPIs Farmers Management Services BOP increased by 7% in the second quarter as management fees continued to grow in line with earned premiums. There were some one-off elements in management expenses and other income which largely offset each other. Farmers Re BOP is sensitive to ca
Slide 81: Page 22: Group Investments – Investment income yield
Page 22: Group Investments – Investment income yield Annualized new money yields for debt securities were around 2.0% for General Insurance and around 1.7% for Life. Compared to Q1-16 the gap to the annualized accounting yield has widened slightly reflecting strong bond markets. Higher dividend inco
Slide 82: Page 23: Group – Balance sheet and capital
Page 23: Group – Balance sheet and capital Shareholders’ equity increased by USD 0.8 billion to USD 31.6 billion in the quarter. Falling yields drove unrealized capital gains of USD 0.9 billion but also an increase in defined benefit pension liabilities. The weakness of the British pound and the eur
Slide 83: Page 24: Key messages
Page 24: Key messages In summary, this result continues to build on the good start to the year and the improvement in underlying results. GI’s underlying combined ratio is improving in-line with expectations, while prior year development is in line with our expectations of 1-2pts. Actions taken to i
Slide 84: For further information
For further information CALL US VISIT OR FOLLOW US Investor Relations Richard Burden +41 44 628 96 40 Aaron Beharelle +41 44 625 25 50 André Meier +41 44 625 37 75 Gianni Vitale +41 44 625 48 26 Rating Agency Management Michèle Matlock +41 44 625 28 50 Investor Relations website Financial result
Slide 85: Calendar
Calendar: - September 27-29, Bank of America Merrill Lynch conference, London - November 10, 2016, Results for the nine months to September 30, 2016 - November 17, 2016, Investor Day, London - February 9, 2017, Annual Results 2016 © Zurich Insurance Company Ltd
Zurich Insurance Group — H1 2016 Earnings Presentation on 6ix