Zurich Insurance Group Ltd · SIX:ZURN

Zurich Insurance — Q1 2020 Earnings Presentation

26 slides from Zurich Insurance's earnings presentation, May 14, 2020

  1. Slide 1: Q1-20 Interim management statement

    Q1-20 Interim management statement May 14, 2020

  2. Slide 2: Key messages

    Q1-20 INTERIM MANAGEMENT STATEMENT Key messages Solid Q1-20 performance Solid top-line performance in the first quarter with further increase in rate changes in P&C Immediate response Our operations have proven resilient and we have continued to support our customers and the to COVID-19 communities

  3. Slide 3: Solid P&C top-line performance with further increase in rate changes

    Q1-20 INTERIM MANAGEMENT STATEMENT In P&C solid top-line performance in the first quarter with further increase in rate changes, strong Q1-19 comparative in life P&C LIFE GWP like-for- Rate Q1-20 highlights North America rate change (%)2 Q1-20 highlights like growth (%)1 change (%)2 EMEA 8% 3% APE l

  4. Slide 4: Operations resilient while supporting customers, employees and communities

    Q1-20 INTERIM MANAGEMENT STATEMENT Our operations have proven resilient and we have continued to support our customers, employees and the communities CUSTOMERS EMPLOYEES COMMUNITIES >90% of employees shifting to remote Z Zurich Foundation donating CHF 20m to >60 >USD 70m working across all geographi

  5. Slide 5: Well positioned for future success

    Q1-20 INTERIM MANAGEMENT STATEMENT Well positioned for future success A balanced Industry Stable, Focus on customers and diverse leading capital consistent and and underwriting global business levels with conservatively discipline strong liquidity managed balance sheet Focus on the customer + Simpli

  6. Slide 6: Resilient capital position and strong liquidity

    Q1-20 INTERIM MANAGEMENT STATEMENT Resilient capital position and strong liquidity GROUP SOLVENCY (%) Capital 240% 221% 222% • 100% Z-ECM is calibrated to an ‘AA’ 216% financial strength 204% 198% 200% 186% Cash remittances and liquidity • Very cash generative business with ~94% 160% of net income r

  7. Slide 7: Stable capital structure with moderate leverage

    Q1-20 INTERIM MANAGEMENT STATEMENT Stable capital structure with moderate leverage; 2020 debt refinancing already completed in February 2020 GROUP CAPITAL STRUCTURE (%)1 MOODY’S LEVERAGE (%) & COVERAGE (x) BALANCED REFINANCING NEEDS (USDbn)2 2.2 9% 2.0 12% 11% 25.8% 0.6 0.2 16% 23.7% 1.8 16% 15% 22.

  8. Slide 8: Conservative investment portfolio with low exposure to energy and transportation

    Q1-20 INTERIM MANAGEMENT STATEMENT Conservative investment portfolio with low exposure to energy and transportation Q1-20 GROUP INVESTMENTS (%)1 Q1-20 ASSET QUALITY (%) Q1-20 NON-FINANCIAL CREDIT BY SECTOR (%) USD 69bn USD 88bn Transportation 3% 0% 2% Technology Other 6% 5% 5% Energy 5% 4% 2% 25% 19

  9. Slide 9: Balance sheet and large loss volatility managed through reinsurance

    Q1-20 INTERIM MANAGEMENT STATEMENT Balance sheet and large loss volatility well managed through reinsurance GROUP CATASTROPHE REINSURANCE PROTECTION (USDm) GLOBAL SURETY EXCESS OF LOSS • Designed to manage earnings volatility 200 • North America: USD 350m coverage per customer in excess of 115 USD 5

  10. Slide 10: We have a range of levers to support profitability

    Q1-20 INTERIM MANAGEMENT STATEMENT We have a range of levers to support profitability Productivity Expense plans adapted to reflect new economic reality Portfolio quality Continue recent actions aimed at improving terms & conditions and overall portfolio quality Rate adequacy Unchanged focus on achi

  11. Slide 11: Actions to prepare for a changed future

    Q1-20 INTERIM MANAGEMENT STATEMENT We are taking actions to prepare for a changed future ACCELERATING ACTIONS AROUND CUSTOMER FOCUS, DIGITALIZATION AND PROTECTION OFFERING Adapt products and distribution models to meet changed customer demands Further expand protection and wellbeing offerings Develo

  12. Slide 12: COVID-19 impact

    COVID-19 impact © Zurich

  13. Slide 13: Business interruption claims expected to be contained to specific portfolios

    COVID-19 IMPACT Business interruption claims expected to be contained to a few specific portfolios FY-19 PROPERTY GWP BY REGION (%) KEY FEATURES POTENTIAL IMPACT BY REGION USD 5.4bn • Limited event cancellation exposure Region Expected FY-20 impact 9% 6% • Standard commercial wording requires Modera

  14. Slide 14: U.S. workers compensation presumption of coverage not expected to be material

    COVID-19 IMPACT U.S. Workers compensation presumption of coverage not expected to have a material impact EXPOSURE TO CRITICAL WORKERS EXPOSURE BY STATE MITIGATING FACTORS • Definition of critical workers varies widely FY-19 Net written premium by customer type (%) FY-19 Net written premium by state

  15. Slide 15: Travel business impacted by lower sales and increased claims

    COVID-19 IMPACT Travel business impacted by lower sales and increased claims COVER-MORE PERSPECTIVE ZURICH’S UNDERWRITING PERSPECTIVE FY-19 illustrative P&L (USDbn) FY-19 Travel GWP split (%) Australia/New Zealand 20% Latin America UK Rest of World 0.3 7% USD 0.6bn 55% 18% Gross sales UW premium Net

  16. Slide 16: Impact of financial markets depends on development over the year

    COVID-19 IMPACT Impact of financial markets will depend on development over the year IMPAIRMENT RULES INVESTMENT PERFORMANCE LIFE BUSINESS Hedge fund returns (%) Q1-20 Unit-linked investments by asset class (%) Equities 13% 3% 8% Equities • Significant decline of ~30-45% -3% Fixed income below cost

  17. Slide 17: 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). Fo

  18. Slide 18: Appendix

    Appendix © Zurich

  19. Slide 19: Solvency ratios resilient to market movements

    Q1-20 INTERIM MANAGEMENT STATEMENT Solvency ratios resilient to market movements FY-19 Z-ECM SENSITIVITY IMPACT (ppts)1,2 FY-19 SST SENSITIVITY IMPACT (ppts)1,2 Actual value Actual value Interest rate +50bps +5ppts Interest rate +50bps +5ppts Interest rate -50bps -14ppts Interest rate -50bps -10ppts

  20. Slide 20: FINMA standard yield curves applied to SST calculation

    Q1-20 INTERIM MANAGEMENT STATEMENT Going forward FINMA standard yield curves are applied to SST calculation EUR RISK-FREE YIELD CURVES1 USED FOR SST AND Z-ECM (%) DETAILS RISK-FREE YIELD CURVES 4.0% Last liquid point Ultimate Currency Risk-free yield curve 3.5% (years) forward rate (%) 3.0% EUR EIOP

  21. Slide 21: Additional commentary

    Q1-20 INTERIM MANAGEMENT STATEMENT Additional commentary SLIDE 2 • The first quarter showed solid growth in P&C top-line with little impact from the COVID-19 outbreak, life and the Farmers Exchanges saw first quarter development impacted by the initial impacts of the outbreak. • Post the outbreak of

  22. Slide 22: Additional commentary

    Q1-20 INTERIM MANAGEMENT STATEMENT Additional commentary SLIDE 3 P&C • P&C GWP rose 7% in Q1-20 on a like-for-like basis. • Growth came primarily from EMEA and North America. • Growth was supported by higher premium rates, with increases achieved in most regions compared to the previous year. Rate i

  23. Slide 23: Additional commentary

    Q1-20 INTERIM MANAGEMENT STATEMENT Additional commentary SLIDE 6 • The Group’s capital remains strong. • The Group’s internal Z-ECM ratio of 101%, remained within the Group’s 100-120% target range as of March 31. The Z-ECM is calibrated such that 100% is approximately equivalent to an ‘AA’ financial

  24. Slide 24: Additional commentary

    Q1-20 INTERIM MANAGEMENT STATEMENT Additional commentary SLIDE 16 • The Group determines that there is objective evidence of impairment of an available-for-sale- equity security, if at the reporting date • its fair value is below the weighted-average cost by an amount significantly exceeding the vol

  25. Slide 25: For further information

    For further information CALL US VISIT OR FOLLOW US Investor Relations and Rating Agency Management Richard Burden +41 44 628 96 40 Francesco Bonsante +41 44 628 00 68 Samuel Han +41 44 625 32 57 Michèle Matlock +41 44 625 28 50 Gianni Vitale +41 44 625 48 26 Events Patricia Heina +41 44 625 38 44 

  26. Slide 26: Calendar

    CALENDAR • August 13, Half year results 2020 • November 12, Update for the nine months ended September 30, 2020 • February 11, 2021, Annual Results 2020 © Zurich Insurance Company Ltd

Zurich Insurance Group — Q1 2020 Earnings Presentation on 6ix