Zurich Insurance Group Ltd · SIX:ZURN
Zurich Insurance — Q1 2015 Earnings Presentation
39 slides from Zurich Insurance's earnings presentation, May 7, 2015
Slide 1: Results for the three months to March 31, 2015
Results for the three months to March 31, 2015 Investor & Media presentation May 7, 2015 Zurich Insurance Group
Slide 2: Key highlights
Key highlights Earnings broadly flat at constant currency Q1-15 KEY RESULTS BOP vs. Q1-14 at constant reported currency USD 1.3bn -6% -2% NIAS vs. Q1-14 at constant reported currency USD 1.2bn -4% 0% May 7, 2015 Results for the three months to March 31, 2015 2
Slide 3: Group – Business operating profit
Group – Business operating profit Results benefitting from low cats and one-off in OOB BOP BY SEGMENT (USDm)1 BOP/NIAS RECONCILIATION (USDm) -6% 0 247 1,351 1,381 412 1,295 78 63 52 807 880 706 24.5% tax rate 308 319 319 1,295 1,219 420 415 391 37 25 -221 -172 -146 -61 Q1-13 Q1-14 Q1-15 Q1-15 RCG2 R
Slide 4: General Insurance – Topline
General Insurance – Topline Good growth, rate environment stable GWP GROWTH IN LC1 (%) RATE CHANGE2 (%) Q1-14 Q4-14 Q1-15 10% GC -2% 3% 1% 1% 8% 2% NAC -2% 4% 1% 2% 5% 1% EMEA -1% 2% 2% 2% -4% 12% IM 3% 4% 5% 6% 17% 5% Total3 0% 3% 2% 2% 3% Q1-15 Q1-14 Q1-13 1 In local currency. 2 GWP development du
Slide 5: General Insurance – Combined ratio
General Insurance – Combined ratio Results benefit from low level of catastrophe losses COMBINED RATIO SPLIT (%)1 COMBINED RATIO BY REGION (%)1 97.0% 95.9% 96.7% 1.6% 1.9% 1.4% 92.9% GC 95.5% 97.0% NAC 95.3% 95.7% 95.8% 96.8% 94.7% EMEA 96.8% 100.0% IM 100.5% 95.9% Total -0.3% -1.5% 96.7% -1.8% Q1-1
Slide 6: General Insurance – BOP components
General Insurance – BOP components Stable BOP, adjusting for pension gain in 2014 and currency BOP BREAK DOWN (USDm)1 KEY DRIVERS (USDm)1 880 -20% 880 78 807 706 308 58 214 35 230 81 706 9 614 560 537 12 45 -33 -34 -24 -36 Q1-13 Q1-14 Q1-15 Q1-14 UWR Investment RCG NTR NCI Q1-15 Income Underwriting
Slide 7: Global Life – New business
Global Life – New business Strong APE growth in Europe despite currency headwinds APE (USDm)1,4 NBM & NBV1,2,4 NET INFLOWS3 & AUM NBM (%) Net inflows (USDbn) +8% 28.4 24.4 1.8 19.2 1,192 0.6 0.0 1,042 1,101 11 46 31 17 37 49 28 44 29 241 NBV (USDm) AuM (USDbn) -4% 265 -15% 289 263 272 240 253 262 40
Slide 8: Global Life – BOP by region
Global Life – BOP by region BOP up 13% at constant currency BOP BY REGION (USDm)1 KEY DRIVERS (USDm)1 0% 319 319 319 319 7 308 6 -1 13 7 13 -43 14 77 62 54 44 77 54 -25 52 62 52 253 253 210 197 210 -10 -10 -11 -8 -11 -8 -10 Q1-13 Q1-14 Q1-15 Q1-14 EMEA Latin North APAC Other Q1-15 America America Ot
Slide 9: Farmers Exchanges – KPIs
Farmers Exchanges1 – KPIs Continued progress, very good combined ratio for Q1 GWP GROWTH (%) COMBINED RATIO (%)3 SURPLUS4 (USDbn) 2.4% 96.5% 38.9% 2.3% 96.4% 37.8% 2.0% 2.5% 93.8% 34.5% 1.6% 6.6 5.8 6.1 0.6% 94.4% 94.0% 92.2% 5.1 5.6 4.8 -0.9% -2.1% 1.0 1.0 0.9 Q1-14 Q2-14 Q3-14 Q4-142 Q1-15 Q1-13 Q
Slide 10: Farmers – KPIs
Farmers – KPIs Margin in line with expectations BOP (USDm) MGEP MARGIN (%)1 FARMERS RE CR (%)2 420 415 7.3% 391 7.1% 95.6% 95.3% 7.0% 93.1% 1.9% 2.2% 1.2% 338 340 330 93.4% 93.4% 91.9% 82 75 61 Q1-13 Q1-14 Q1-15 Q1-13 Q1-14 Q1-15 Q1-13 Q1-14 Q1-15 Catastrophes 3 FMS FRe CR (excl. catastrophes) 1 Mar
Slide 11: Group – Balance sheet and capital
Group – Balance sheet and capital Continued strong solvency position SHAREHOLDERS’ EQUITY (USDm) SOLVENCY RATIOS (%) 954 -1,455 217% 215% 196% 185% 1,219 127% 126% 122% 114% -104 61 35,410 34,735 FY-14 NIAS Net CTA Pension Other1 Q1-15 Z-ECM SST2 URG/L plans FY-12 FY-13 HY-14 FY-14 1 Includes share-
Slide 12: Summary
Summary FACTORS INFLUENCING 2015 (FROM FY-14 RESULTS) Q1-15 HIGHLIGHTS General Further improvement in ex-cat accident year LR USD 50m negative Brazilian EW1 ‘year one’ impact, profitable Insurance from ‘year two’ BOP Global Continued strong performance in bank distribution and CLP USD 1.3bn (-
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 Q1-14 expense ratio included 0.9ppt pension gain LOSS RATIO (%)1 EXPENSE RATIO (%)1 70.3% 30.5% 31.4% 30.3% 29.7% 30.2% 29.3% 68.3% 4.4% 3.2% 67.7% 13.7% 66.4% 65.7% 13.6% 13.7% 13.9% 65.3% 13.5% 13.7% 1.6% 2.3% 1.9% 1.4% 68.0% 67.5% 65.2% 66.4% 65.6% 65.4% 16.8% 16.2% 16
Slide 16: GI – Loss ratio details
GI – Loss ratio details Continued improvement in accident year profitability LOSS RATIO (%)1 69.4% 67.4% 68.6% 5.8% 1.7% 68.1% 67.7% 3.7% 65.7% 65.8% 65.9% 1.9% 65.3% 1.6% 1.9% 3.0% 1.4% 2.3% 66.4% 67.8% 66.8% 68.9% 65.6% 63.7% 64.4% 67.0% 65.4% -0.3% -1.8% -0.1% -1.6% -0.8% -1.5% -3.1% -2.0% -4.2%
Slide 17: GI Global Corporate – KPIs
GI Global Corporate – KPIs Solid growth, with CR impacted by higher large losses Q1-15 KEY FINANCIALS1 GWP Zurich rate Combined USD 248m USD 181m Growth2 change3 Ratio 10% 1% 95% 92.9% 95.5% 22.7% 22.5% KEY DRIVERS 70.2% 73.0% Growth includes some timing effect, 3-4% on an underlying basis, with c
Slide 18: GI North America Commercial – KPIs
GI North America Commercial – KPIs Good start to the year Q1-15 KEY FINANCIALS GWP Zurich rate Combined USD 221m USD 273m Growth1 change2 Ratio 2% 2% 95% 97.0% 95.3% 31.1% 31.6% KEY DRIVERS 66.0% 63.6% Modest growth with continued execution of strategic growth initiatives and increase in retention
Slide 19: GI EMEA – KPIs
GI EMEA – KPIs Flat combined ratio adjusted for pension gain in prior period Q1-15 KEY FINANCIALS1 GWP Zurich rate Combined USD 334m USD 226m Growth2 change3 Ratio 1% 2% 97% 94.7% 96.8% 29.8% 32.2% KEY DRIVERS 64.8% 64.6% 2% growth excluding Russia Retail, expansion in Switzerland, Germany and Spa
Slide 20: GI International Markets – KPIs
GI International Markets – KPIs Lower AY loss ratio offset by higher expenses Q1-15 KEY FINANCIALS GWP Zurich rate Combined USD 95m USD 37m Growth1 change2 Ratio 12% 6% 100% 100.0% 100.5% 39.7% 42.5% KEY DRIVERS 60.3% 58.0% Growth mainly driven by the new extended warranty distribution agreement i
Slide 21: GI – Rate change monitor
GI – Rate change monitor Overall fairly stable, but with some pockets of pricing pressure Q1-15 ZURICH RATE CHANGE ASSESSMENT Business Assessment Rate increases are generally at adequate levels but we see some market pressure, particularly in Group US property lines and across our Global Corporate m
Slide 22: GI – Natural catastrophe reinsurance
GI – Natural catastrophe reinsurance Program further benefitted from lower reinsurance prices NATURAL CATASTROPHE REINSURANCE TREATIES1 (USDm) 10 10 10 10 150 150 10 500 500 150 10 10 500 10 10 Single global USD 150m treaty, which can be applied to any region2 10 650 150 10 930 300 500 Single global
Slide 23: GL – New business by pillar
GL – New business by pillar NBV impacted by interest rate reductions and product mix effects Q1-15 KEY FINANCIALS1,2 APE (USDm) CLP single 1,192 NBM PVNBP 1,042 1,101 premium 328 398 443 381 362 388 19.2% USD 13.8bn USD 1.2 bn 334 341 361 Q1-13 Q1-14 Q1-15 KEY DRIVERS NBV (USDm) 263 240 204 CLP pr
Slide 24: GL – Net inflows & Assets under management
GL – Net inflows & Assets under management Higher net inflows and asset growth offset by currency impacts NET INFLOWS BY REGION (USDbn)1,2 AUM DEVELOPMENT (USDbn) 1.8 0.1 266 14 262 2 -19 31 32 0.5 0.2 112 109 0.6 0.1 0.4 1.0 0.0 0.0 0.3 122 121 0.2 0.1 0.1 0.0 -0.2 -0.4 0.0 Balance Net inflows Mark
Slide 25: 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%) 241 -21 -20 -18 -19 -18 -18 -18 -17 -16 163 163 173 177 -6 -5 155 135 171 174 -12 -11 -8 -7 -7 165 159 156 170 163 169 -16 -13 123 132 127
Slide 26: Farmers Exchanges – GWP and PIF/VIF
Farmers Exchanges1 – GWP and PIF/VIF2 PIF/VIF back to growth DEVELOPMENT OF GWP (USDm) DEVELOPMENT OF PIF/VIF (000’s) +2.3% +0.3% 4,679 19,041 19,094 4,575 2,141 2,182 +1.9% 9,710 9,733 +0.2% 1,074 1,089 +1.4% -0.0% 4,796 4,794 437 457 +4.6% 415 414 -0.0% 982 1,009 257 293 +14.2% +2.8% 556 579 +4.2%
Slide 27: Farmers Exchanges – Combined ratio
Farmers Exchanges – Combined ratio Loss ratio drives strong improvement in Q1 2015 combined ratio COMBINED RATIO BY BUSINESS LINE (%)1 101.3% 100.2% Auto Auto 99.5% 97.6% 97.2% 83.2% Home Home 100.8% 93.7% 98.2% 97.0% EA Business Insurance EA Business Insurance 105.4% 98.4% 101.8% 104.1% Bristol Wes
Slide 28: Farmers Exchanges – Combined ratio history
Farmers Exchanges – Combined ratio history Catastrophe losses drive volatility in quarterly combined ratio QUARTERLY COMBINED RATIO (%) Incl. Incl. 17 Catastrophe Incl. 120 Ike & Gustav Events 13 Catastrophe Events Incl. 115 13 Catastrophe Incl. Events 13 Catastrophe 110 Incl. Events Incl. Irene Exc
Slide 29: Other Operating Businesses
Other Operating Businesses USD 50m currency gains in H&F in Q1-15 QUARTERLY BOP SPLIT (USDm) -3 20 -7 -43 -51 -64 -113 -143 -137 -191 -82 -219 -224 -188 -171 -146 -167 -172 -149 -221 -232 -230 -213 -222 -280 -286 -356 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Headquarters Holding & Finan
Slide 30: Group Investments – Asset allocation
Group Investments – Asset allocation Zurich’s sources of investment risk and return are balanced ASSET ALLOCATION1 RISK DIVERSIFICATION2 RISK DRIVERS2,3 Total Group Investments: USD 203bn 4% 5% 1% 8% 6% 1% 100% 6% 6% 29% 41% 30% 40% 16% 78% Sum of single Investment Investment security risks risks ri
Slide 31: Group Investments – Debt securities portfolio
Group Investments – Debt securities portfolio Debt securities portfolio is of a high quality BY CATEGORY BY RATING Total debt securities: USD 148bn 2% 13% 20% 24% 45% 42% 18% 37% Government and government related bonds MBS/ABS1 AAA AA A BBB Non-investment grade Corporate bonds 1 MBS = Mortgage backe
Slide 32: Group Investments – Investment income yield
Group Investments – Investment income yield1 Higher risk premium offset by lower yields and USD appreciation GENERAL INSURANCE GLOBAL LIFE GROUP 0.44% 0.60% 0.50% Equity 0.41% Equity 0.38% Equity 0.36% 0.56% Trade Yield 0.55% 0.48% Trade Yield 0.59% at ~2.0%2 0.72% at ~1.8%2 0.66% Debt 0.64% Debt 0.
Slide 33: Group – Economic capital models
Group – Economic capital models Continued strong solvency position Z-ECM RATIO DEVELOPMENT (%) SST1 RATIO DEVELOPMENT (%) 4% -4% 5% -5% 215% -8% 6% -5% 126% -4% -2% 0% -9% -1% 122% 196% HY-14 Business Ins. Market Market Model Cap. FY-14 HY-14 Business Ins. Market Market Model Cap. FY-14 profit Risk2
Slide 34: Group – Z-ECM components
Group – Z-ECM components Well diversified capital base by risk type FY-14 AFR COMPOSITION (USDbn) RBC BY RISK TYPE AND BUSINESS Market risk Shareholders equity 35 8% Re-ins credit risk 4% 3% P&R risk1 10% Dividend accrual 3 Natural cat risk 50% Life insurance risk 18 23% Operational risk Net intangi
Slide 35: Group – Solvency ratio sensitivities
Group – Solvency ratio sensitivities1 Solvency ratios resilient to market movements SOLVENCY RATIO IMPACT2 122% Actual value as of FY-14 196% 126% Interest rate +100 bps 200% 117% Interest rate -100 bps 190% 126% Equities +20% 201% 119% Equities -20% 191% 108% Credit spreads +100 bps3 167% 112% CS e
Slide 36: Group – EPS, BVPS and ROE calculations
Group – EPS, BVPS and ROE calculations1 EPS AND BVPS (CHF) BOPAT ROE AND ROE (%) No., CHF FY-14 Q1-15 USDm, % FY-14 Q1-15 Common shares issued 149.63m 150.32m SHE 34,735 35,410 Treasury shares 1.29m 1.27m Net URGL / CF hedges 4,374 5,328 Common shares outst. 148.34m 149.05m Adj. SHE 30,362 30,082 WA
Slide 37: Group – Currency impact
Group – Currency impact Move in currency is mainly translational Q1-15 KEY RESULTS KPI USDm reported at constant currency BOP 1,295 -6% -2% Group NIAS 1,219 -4% 0% GWP 10,103 -5% +5% NEP 6,951 -6% +2% General Net underwriting result 230 -25% -26% Insurance Investment income 475 -11% -4% BOP 706 -20%
Slide 38: 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
Slide 39: Calendar
Calendar: - May 21, Investor Day, Zurich - June 2 - 3, DB Global Financials Conference 2015, New York - June 15 - 17, GS 19th Annual European Financials Conference, Rome - August 6, Half year results 2015 - September 29 - October 1, BoAML Conference, London - November 5, Results for the nine months
Zurich Insurance Group — Q1 2015 Earnings Presentation on 6ix