Zurich Insurance Group Ltd · SIX:ZURN

Zurich Insurance — Merger or Acquisition (December 2015)

19 slides from Zurich Insurance's merger presentation, Dec 18, 2015

  1. Slide 1: Zurich to acquire Rural Community Insurance Services (RCIS)

    Zurich to acquire Rural Community Insurance Services (RCIS) December 18, 2015

  2. 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 predictions of or indicate future events, trends, plans or objectives of Zurich Insurance Group Ltd or the Zurich Insurance Group (the ‘Group’).

  3. Slide 3: Compelling strategic and financial rationale

    Compelling strategic and financial rationale Enhances US Transaction is in-line with strategy to prioritize investments in footprint distinctive positions within US Commercial Middle Market Long-term quota share arrangement with RCIS has provided a Builds on Zurich’s deep understanding of Crop Insur

  4. Slide 4: Transaction highlights

    Transaction highlights Transaction  Cash purchase of 100% of RCIS from Wells Fargo  Transaction value of ~USD 675m, excluding RCIS capital in excess of expected regulatory minimum requirements of up to USD 375m Deal value  Purchase price is for a targeted USD 250m statutory book value as of FY-15

  5. Slide 5: Zurich to become a leading crop insurer

    Zurich to become a leading crop insurer STRATEGIC BENEFITS MARKET POSITIONS1 (%)  Unique opportunity to acquire the #2 Crop insurance platform with full capabilities 2013 2014 and 19.1% market share Rain and 21% 20% Hail LLC (ACE)  Increases risk diversity through low correlation to the rest of ou

  6. Slide 6: Financially attractive for Zurich

    Financially attractive for Zurich KEY FINANCIALS NAC PRO FORMA NEP BY LINE4 As-is Including 100% RCIS 2017 Expected Impact1 Gross Written Premiums ~USD 2.0bn 10% 6% 9% 17% 13% Net Earned Premiums2 ~USD 1.6bn 15% 31% Expected 2017 ROI3 >10% 15% 27% 17% 22% 19% Crop Property WC Liability Specialties (

  7. Slide 7: RCIS is a well established, successful crop insurer

    RCIS is a well established, successful crop insurer COMPANY OVERVIEW RCIS, founded in 1982 and headquartered in Anoka, Minnesota, is a leading provider of agricultural insurance in the U.S.; RCIS is owned by Wells Fargo & Company (“WFC”)  Offers federal crop insurance programs including Multi-Peril

  8. Slide 8: Substantial opportunity for Zurich to capture profitable ceded business

    Substantial opportunity for Zurich to capture profitable ceded business RCIS TOPLINE (USDm)1 COMMENTARY 2,986  RCIS has historically ceded ~75% of its business to other carriers1 2,681 2,541 – Zurich is one of five companies that currently participate in a quota share 2,037 (QS) agreement with RCIS

  9. Slide 9: Long term industry average MPCI LR of ~85% with very low expense ratios

    Long term industry average MPCI LR of ~85%1 with very low expense ratios RCIS AND INDUSTRY NET (AFTER FCIC CESSIONS) MPCI LOSS RATIOS1,2 115 104 102 106 90 87 91 93 91 87 87 87 87 88 83 80 84 80 87 86 86 83 77 73 70 75 71 71 70 71 RCIS Net LR Industry Net LR 2000 2001 2002 2003 2004 2005 2006 2007 2

  10. Slide 10: Recent losses driven by record drought and declines in commodity prices

    Recent losses driven by record drought and declines in commodity prices CROP CAUSE OF LOSS 2006-2014 LRs (%)1,2 Drought Excess Moisture/Precip/Rain Commodity price changes Hail Other 2006 2007 2008 2009 2010 2011 2012 2013 2014 Average  Losses in the previous three years have exceeded long-term ave

  11. Slide 11: Recent years impacted by worse than average experience; 2015 expected to be in-line or better

    Recent years impacted by worse than average experience; 2015 expected to be in-line or better RCIS Consolidated US GAAP Adjustments1 Stand alone 100% view 2011 2012 2013 2014 2011 2012 2013 2014 2011 2012 2013 2014 USDm Actual Actual Actual Actual Adjusted Adjusted Adjusted Adjusted Gross Written Pr

  12. Slide 12: Compelling strategic and financial rationale

    Compelling strategic and financial rationale Enhances US Transaction is in-line with strategy to prioritize investments in footprint distinctive positions within US Commercial Middle Market Long-term quota share arrangement with RCIS has provided a Builds on Zurich’s deep understanding of Crop Insur

  13. Slide 13: Crop Insurance overview

    @ ZURICH Crop Insurance overview

  14. Slide 14: Multi-Peril Crop Insurance overview 1/4

    Multi-Peril Crop Insurance overview 1/4 PRODUCT OVERVIEW Crop insurance helps to protect farmers from natural perils and creates a safety net for the agriculture industry. Two types of products exist:  Multi Peril Crop Insurance (“MPCI”), which is a US federal government program administered by the

  15. Slide 15: Multi-Peril Crop Insurance overview 2/4

    Multi-Peril Crop Insurance overview 2/4 OVERVIEW OF FEDERAL SUBSIDIES Through the 1994 Federal Crop Insurance Act and the 2000 Agriculture Risk Protection Act, the USDA is authorized to offer Multi-Peril Crop Insurance (MPCI) coverage to farmers who grow insurable crops. The Federal Crop Insurance C

  16. Slide 16: Multi-Peril Crop Insurance overview 3/4

    Multi-Peril Crop Insurance overview 3/4 FUND DESIGNATION  Fund designation is the AIP’s election of the risk-sharing arrangement with the FCIC, based on the rules and parameters spelled out in the Standard Reinsurance Agreement (“SRA”). Fund designation is the most important risk management tool fo

  17. Slide 17: Multi-Peril Crop Insurance overview 4/4

    Multi-Peril Crop Insurance overview 4/4 FEDERAL SUBSIDIES – RECENT PROPOSALS  In an effort to reduce Federal crop insurance subsidies the Bipartisan Budget Act of 2015, signed into law by the President on November 2, 2015, amended the Federal Crop Insurance Act and in particular the Standard Reinsu

  18. Slide 18: For further information

    For further information CALL US VISIT OR FOLLOW US Investor Relations James Quin +41 44 625 21 10 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 www.zurich.com Events Patricia Heina +41 44 625 38

  19. Slide 19: Calendar

    Calendar: - February 11, 2016, Annual Results 2015 - March 30, 2016, Annual General Meeting 2016 - May 12, 2016, Results for the three months to March 31, 2016 - August 11, 2016, Half year results 2016 - November 10, 2016, Results for the nine months to September 30, 2016 - December 1, 2016, Investo

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