Zurich Insurance Group Ltd · SIX:ZURN
Zurich Insurance — Zurich Financial Services — Investor Day (May 2007)
100 slides from Zurich Insurance's investor day presentation, May 23, 2007
Slide 1: Strategy Update
Strategy Update Investors‘ Day Zurich, May 23, 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 for the day
Agenda for the day Group strategy • Introduction and overview James J. Schiro • Operational transformation Dieter Wemmer • Growth Office Patrick O’Sullivan Q&A Booths and lunch Global Life strategy Paul van de Geijn General Insurance strategy John Amore Farmers strategy Paul Hopkins Q&A Wrap up of t
Slide 4: Group strategy Introduction and overview
Group strategy Introduction and overview James J. Schiro Chief Executive Officer Zurich, 23 May 2007
Slide 5: Our aspiration
Our aspiration We aspire to become the leading global insurance group in our chosen general and life insurance markets, consistently delivering top-tier results for our shareholders. By so doing, we will create strong relationships with customers, agents and brokers and rewarding opportunities for e
Slide 6: Strategic transformation
Strategic transformation Capital ROE Margin 16%1 Volume Operational Transformational Transformation Growth Enhanced service Platforms Customer delivery Scale Data quality Product Cost advantage Larger data set Expense base Distribution Customer insight 1 Business operating profit (after tax) return
Slide 7: Strategic objectives
Strategic objectives • Become a top-five insurer globally • Strengthen our market leadership positions • Expand capital light and fee income businesses • Position Zurich as the employer of choice in the insurance industry globally • Generate a consistent mid-term BOPaT-ROE1 of 16% 1 Business operati
Slide 8: A track record of performance improvements
A track record of performance improvements Business Operating Profit BOPaT-ROE1 (in USD millions) 2 6,000 5,996 20% 19.4%2 5,000 3,947 15% 13.6% 4,000 12.6%2 2 2,988 3,000 2,316 10% 9.8% Q1 2007 2,000 1,175 5% 5.1% • BOP USD 1,000 1,734m 0 0% 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 • BOPaT
Slide 9: Zurich's focus on emerging markets
Zurich’s focus on emerging markets Russia Greater China (incl. Hong Kong and Taiwan) South East Asia (excl. Greater Latin America China) Middle East • Argentina • Chile • Mexico • Venezuela • Bolivia • Brazil South Africa © Zurich Financial Services - Investors' Day, May 23, 2007 9
Slide 10: 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 11: Agenda for the day
Agenda for the day Group strategy • Introduction and overview James J. Schiro • Operational transformation Dieter Wemmer • Growth Office Patrick O’Sullivan Q&A Booths and lunch Global Life strategy Paul van de Geijn General Insurance strategy John Amore Farmers strategy Paul Hopkins Q&A Wrap up of t
Slide 12: The Zurich Way – shift from expense savings to operational improvements
The Zurich Way – shift from expense savings to operational improvements to foster profitable growth Global Profit The Zurich Way Improvement Program USD 1bn Total planned benefits Legend: Growth / 2007 to 2009: USD 2 billion Distribution USD 700m Claims USD 540m USD 500m USD 500m Pricing / Underwrit
Slide 13: Operational Transformation to take The Zurich Way into the next stage
Operational Transformation to take The Zurich Way into the next stage Operational Global Profit Transformation Improvement The Zurich Way powered by Program The Zurich Way Operational transformation is aiming to take a holistic view on overall operational development – combining, for example, TZW re
Slide 14: Operational Transformation sharpens business processes to create competitive advantage
Operational Transformation sharpens business processes to create competitive advantage Product Sales/ Service Factory Marke- IT Support develop- ting Distrib- Under- Servi- functions ment ution writing cing Claims Operational efficiency Operational transformation Customer experience Competitive adva
Slide 15: Identifying areas with greatest potential in Operational Transformation
Identifying areas with greatest potential in Operational Transformation along the value chain Illustrative Product Marke- Sales/ Service Factory Support develop- ting Distrib- IT Under- Servi- Claims functions ment ution writing cing People Technology Ownership Process Configuration Potential: Low M
Slide 16: Example – Farmers ServicePoint transformation
Example – Farmers ServicePoint transformation Scope A major transformation of Farmers’ service operations to create a competitive service advantage by delivering a superior level of service to their agents and customers through a new service model Objectives Qualitative Quantitative • Improved custo
Slide 17: Example – German business model 2007
Example – German business model 2007 Scope Transformation of the GI business model in Germany to manage by function throughout value chain, from the current regional model Objectives Qualitative Quantitative • Industrialization of process, separating • USD 135 million cost savings1 simple and comple
Slide 18: Example - North America Shared Services platform
Example - North America Shared Services platform Scope Leverage the economies of scale that come from the combined size, knowledge and technologies of Farmers Group and Zurich North America Objectives Qualitative Quantitative • Provide IT, Accounting, Finance, HR, • Cost savings of USD 93m1 a Commun
Slide 19: Example - Transactional finance and accounting processes
Example - Transactional finance and accounting processes Scope Restructuring transactional accounting processes from currently six business units in Europe and the US onto one multi-lingual outsourced shared service platform. Objectives Qualitative Quantitative • Underpins service excellence goals:
Slide 20: Operational Transformation sharpens business processes to create competitive advantage
Operational Transformation sharpens business processes to create competitive advantage Product Sales/ Service Factory Marke- IT Support develop- ting Distrib- Under- Servi- functions ment ution writing cing Claims Operational efficiency Operational transformation Customer experience Competitive adva
Slide 21: Agenda for the day
Agenda for the day Group strategy • Introduction and overview James J. Schiro • Operational transformation Dieter Wemmer • Growth Office Patrick O’Sullivan Q&A Booths and lunch Global Life strategy Paul van de Geijn General Insurance strategy John Amore Farmers strategy Paul Hopkins Q&A Wrap up of t
Slide 22: Growth program makes profitable growth a top priority across the Group
Growth program makes profitable growth a top priority across the Group Align the organization for profitable growth Mission Make profitable Leverage growth growth a top opportunities priority across the Group Energize growth at the front line / BU level © Zurich Financial Services - Investors' Day,
Slide 23: Growth targets defined through nuanced top line targets
Growth will be defined through nuanced top line targets while maintaining the margin Market conditions (volume and pricing trends) High Long-term industry growth prospects Base Medium case target Low Soft Moderate Hard Pricing / Margin © Zurich Financial Services - Investors' Day, May 23, 2007 23
Slide 24: Profitable Growth started already
Profitable Growth started already © Zurich Financial Services - Investors' Day, May 23, 2007 24
Slide 25: Zurich's focus on emerging markets
Zurich’s focus on emerging markets Russia Greater China (incl. Hong Kong and Taiwan) South East Asia (excl. Greater Latin America China) Middle East • Argentina • Chile • Mexico • Venezuela • Bolivia • Brazil South Africa © Zurich Financial Services - Investors' Day, May 23, 2007 25
Slide 26: Growth targets
Growth targets 5% CAGR GWP growth1 over the cycle, maintaining a pre tax General Insurance BOP ROE of greater than 25% Double digit APE growth taking the New Business Value to Global Life USD 850m by 2010 GWP of USD 21bn by 2010, not exceeding a combined ratio of Farmers 98% Passion, Speed and Growt
Slide 27: James J. Schiro Chief Executive Officer
James J. Schiro Chief Executive Officer Zurich, 23 May 2007
Slide 28: Agenda for the day
Agenda for the day Group strategy • Introduction and overview James J. Schiro • Operational transformation Dieter Wemmer • Growth Office Patrick O’Sullivan Q&A Booths and lunch Global Life strategy Paul van de Geijn General Insurance strategy John Amore Farmers strategy Paul Hopkins Q&A Wrap up of t
Slide 29: Agenda for the day
Agenda for the day Group strategy • Introduction and overview James J. Schiro • Operational transformation Dieter Wemmer • Growth Office Patrick O’Sullivan Q&A Booths and lunch Global Life strategy Paul van de Geijn General Insurance strategy John Amore Farmers strategy Paul Hopkins Q&A Wrap up of t
Slide 30: Agenda for the day
Agenda for the day Group strategy • Introduction and overview James J. Schiro • Operational transformation Dieter Wemmer • Growth Office Patrick O’Sullivan Q&A Booths and lunch Global Life strategy Paul van de Geijn General Insurance strategy John Amore Farmers strategy Paul Hopkins Q&A Wrap up of t
Slide 31: Discussion Agenda – Global Life
Discussion Agenda – Global Life Story so far Strategic Roadmap and Major Initiatives Strategic Commitments and Summary © Zurich Financial Services - Investors' Day, May 23, 2007 31
Slide 32: Transformation of Global Life situation and achievements
Transformation of Global Life situation and achievements Global Life has successfully managed a significant turnaround and established a stable platform for growth Performance metrics have improved significantly over the • Exited 11 non-core markets/segments past six years • Focused on high-margin p
Slide 33: Significant improvement of financial metrics over the past 6 years
Significant improvement of financial metrics over the past 6 years New business APE New business margin in USD millions in % CAGR 2,403 Up 17.6 21.7%EEV 3% 2,368 points 2,303 * 17.7%EEV 2,134 11.4% 2,082 9.0% 2,008 6.1% 4.1% Q1 2007 • APE USD628m 2001 2002 2003 2004 2005 2006 2001 2002 2003 2004 200
Slide 34: Well diversified portfolio & growing share in emerging markets and Germany
Well diversified portfolio & growing share in emerging markets and Germany New Business APE New Business APE by region, 2001 by region, Q1 2007 Other Other markets UK markets UK 29% 30% 31% 46% 8% Germany 22% 17% 17% Emerging Markets Emerging Markets Germany New Business Value UK by region (Q1 2007)
Slide 35: Global Life rebalanced distribution and depends less on tied agents
Global Life rebalanced distribution and depends less on tied agents Zurich’s distribution channels USD 2,368m in % 30% USD 1,570m Includes Farmers 5% Direct/other 3% Includes Openwork 10% 26% Tied agents 55% Banks 3% 3 44% Brokers 39% 2001 2006 Note: - Based on New Business APE - 2001 excl. USD 438m
Slide 36: Discussion Agenda – Global Life
Discussion Agenda – Global Life Story so far Strategic Roadmap and Major Initiatives Strategic Commitments and Summary © Zurich Financial Services - Investors' Day, May 23, 2007 36
Slide 37: Strategic Roadmap: Cornerstones of the Global Life Strategy
Strategic Roadmap: Cornerstones of the Global Life Strategy Five cornerstones of the Global Life Strategy Key thrusts Shift focus to volume Growing new business volume while maintaining 11 growth high margin Focus on multi-niche Identifying profitable niches and achieve 2 strategy leadership positio
Slide 38: Volume growth – Plan growth rate 2007-10
1 Volume growth – Plan growth rate 2007-10 averaging double digit growth rates p.a. Five cornerstones of the Global Life Strategy New business APE Shift focus to volume in USD millions 11 growth CAGR 2,403 Focus on multi-niche 2,368 2 strategy 3% 2,303 Leverage network/ 3 globalization models 2,134
Slide 39: Volume growth – Strong growth opportunities in different territories
1 Volume growth – Strong growth opportunities in different territories • Switzerland unit-linked • Risk products through brokers • Ireland SSIA reinvestment • New pension savings limit • Italy pension reform • E-enablement • US Farmers Simple Term Other markets UK Emerging markets Germany • Expatria
Slide 40: Volume growth – Where will the growth come from
1 Volume growth – Where will the growth come from UK Germany Other Emerging markets markets UK product UL and FNWL niches protection Tied Agent Sales Excellence Broker / IFA Broker channel blueprint ZIS expansion Bancassurance • Bancassurance Europe (retail) • Private Banks © Zurich Financial Servic
Slide 41: Volume growth – What is Zurich International Solution (ZIS) about?
1 Volume growth – What is Zurich International Solution (ZIS) about? ZIS sustained a CAGR above 20% over the last 10 years, mainly built around Asian (Indian, Chinese) customers ZIS APE New ZIS customers USD million, 2006 Out of every 10 new ZIS customers: +29% 360 Asian / Chinese Western 298 208 dd
Slide 42: ZIS market opportunity: The expat market is large
1 Volume growth – ZIS market opportunity: The expat market is large Europe Middle East Japan and China Total # of target expats: 1.0 m Total # of target expats: 100 k Total # of target expats: 120k Liquid assets: USD 230 billion Liquid assets: USD 21 billion Liquid assets: USD 25 billion Existing lo
Slide 43: Multi-niche – Two-thirds of sales in unit-linked and protection
2 Multi-niche – Two-thirds of sales in unit-linked and protection Five cornerstones of the Global Life Strategy in USD millions Shift focus to volume 2,368 11 growth 142 Focus on multi-niche 166 2 strategy 3 Leverage network/ 450 globalization models 1,570 4 State-of-art capital management Individua
Slide 44: Multi-niche – Rationale for chosen niches
2 Multi-niche – Rationale for chosen niches Why unit-linked? • Fee based business/low capital requirement/attractive returns • Flexible and attractive customer propositions • Growing share of most markets • Guarantees (where included) are explicitly priced and hedged Why protection? • Exceptionally
Slide 45: Multi-niche – Market positions: Our main niches by market (2006)
2 Multi-niche – Market positions: Our main niches by market (2006) Overall Market Market share/rank in targeted segments market UK • IHT whole of life protection 17% share share 2.3% • Unit-linked bonds 10% share Germany • Unit-linked savings 14.8% share (#2) 5.5%1 • Credit life 9.2% share (N/A) • P
Slide 46: Multi-niche – Proposition management: The UK as an example
2 Multi-niche – Proposition management: The UK as an example Careful segmentation of the market • Total market sub-divided into 37 defined segments • Ranked by growth potential, profitability and potential to differentiate • 22 segments, representing 63% of total market, defined as target • 11 segme
Slide 47: UK example: Benchmarking our value proposition
2 How do we grow our niche – UK example: Benchmarking our value proposition 2006 2007 Competitive Bond Pricing and death benefit Weak/not competitive (0) Price changes Strong/competitive (4) Features ‘Clean’ factory gate priced Bond Commission Improved Bond commission flexibility E-capability eaZy t
Slide 48: UK example: Benchmarking our value proposition
2 How do we grow our niche – UK example: Benchmarking our value proposition ZURICH Sterling Competitors Q4-06 Q1-07 1 2 3 4 5 6 7 General Strong IFA Broad Strong IFA Leading Passive fund Strong IFA Strong Consumer Emerging Strategy Brand distribution brand. multi-manager. manag’t. Brand. brand with
Slide 49: Leverage network – Leverage our strength using the proven TZW methodology
3 Leverage network – Leverage our strength using the proven TZW methodology Five cornerstones of the Global Life Strategy Shift focus to volume Tied agent • Sales excellence: 2600 agents retrained 11 growth resulted in 20% productivity increase. distribution Focus on multi-niche • Leverage GI and Fa
Slide 50: Leverage network – Leverage cross border platforms and products
3 Leverage network – Leverage cross border platforms and products Isle of Man Leverage IoM, Platform for Global Expats Business Piloting Ireland as product provider for Continental broker market Become a low cost producer regardless of market share Leverage platforms • Eliminate unnecessary steps, f
Slide 51: TZW Service management & Administration
3 TZW Service management & Administration Continuous improvement is key Operations Metrics Continuous Improvement Scorecard Improvement Program (OIP) • Common metrics created • Cross-country • Operations Officers' across countries improvements: Council established • Widely varying operations • VSL p
Slide 52: Driving growth in Switzerland & Germany with cross border platform
3 Leverage network – Driving growth in Switzerland & Germany with cross border platform and products From several local …to cross-border, highly systems… automated platform • Complex systems and manual interfaces • Standardized platform and • Local product variances Paperless workflow • Cross-border
Slide 53: Leverage network – Platform convergence
3 Leverage network – Platform convergence Current View Zurich International Farmers New Switzerland Germany Ireland Italy UK Solutions Spain World Life Sales Underwriting Front End Bus. process & integration Data warehouse Policy admin Admin Policy Payable/ receivables Group Life Enterprise support
Slide 54: Capital management – Further optimization of balance sheet
4 Capital management – Further optimization of balance sheet Five cornerstones of the Global Life Strategy Capital • Vita – off balancing of group life business in Switzerland Shift focus to volume 11 growth release and • Consolidation of UK operations 2 Focus on multi-niche de-risking • ALM hedging
Slide 55: Talent management – Develop intellectual capital
5 Talent management – Develop intellectual capital Five cornerstones of the Global Life Strategy 11 Shift focus to volume growth Proposition Focus on multi-niche Management 2 strategy • A strategic workforce 3 Leverage network/ globalization models planning implemented – State-of-art capital 2010 Ta
Slide 56: Discussion Agenda – Global Life
Discussion Agenda – Global Life Story so far Strategic Roadmap and Major Initiatives Strategic Commitments and Summary © Zurich Financial Services - Investors' Day, May 23, 2007 56
Slide 57: Wrap up & Target
Wrap up & Target We have turned our business around and now we are growing, with specific 1 initiatives in three growth waves 1 Promising niches identified and aligned with distribution, and… 2 • Actively adding new niches to capture the growing markets • Active proposition management to maintain co
Slide 58: Agenda for the day
Agenda for the day Group strategy • Introduction and overview James J. Schiro • Operational transformation Dieter Wemmer • Growth Office Patrick O’Sullivan Q&A Booths and lunch Global Life strategy Paul van de Geijn General Insurance strategy John Amore Farmers strategy Paul Hopkins Q&A Wrap up of t
Slide 59: Discussion Agenda – General Insurance
Discussion Agenda – General Insurance General Insurance segment overview Strategic roadmap and initiatives Strategic commitments and summary © Zurich Financial Services - Investors' Day, May 23, 2007 59
Slide 60: Significant performance improvement over the past 5 years
Significant performance improvement over the past 5 years Business Operating Profit Combined Ratio In USD billions 3.8 111.4% CAGR 75% 101.6% BOP-ROE1 97.9% 100.8% 2.1 32% 1.9 Reduction 94.2% 1.2 4pts p.a. Q1 2007 0.4 GWP: USD 10.2bn 2002 2003 2004 2005 2006 NEP: USD 7.2bn 2002 2003 2004 2005 2006 G
Slide 61: The Zurich Way: change in strategic operating characteristics
Complemented with significant change in strategic operating characteristics Strategic Operating Characteristics Best Practice Global Talent Today GI Core Functions and Governance Today The Zurich Way Cost Leadership Today IT driven Customer Insight/Experience Today 2002 Product/Distribution Manageme
Slide 62: Zurich is the 3rd largest global GI business
Zurich is the 3rd largest global GI business with leading market positions in chosen markets Europe General Insurance (EGI) North America Commercial (NAC) GWP 2006: USD 12.4 bn GWP 2006: USD 11.9 bn • Major positions in the UK: • 3rd largest commercial insurer in the US • Largest commercial liabilit
Slide 63: We have proven our global execution capabilities through The Zurich Way
We have proven our global execution capabilities through The Zurich Way Benefit1 by function Benefit1 by business division USD 525m2 USD 525m2 Other IB Expenses Global Growth/ Corporate Distribution USD 350m USD 350m USD 300m Claims USD 300m Europe General Insurance U/W North America Commercial 2005
Slide 64: Our balanced global portfolio contributes to competitive position
Our balanced global portfolio contributes to competitive position through capital efficiency A balanced risk landscape… 1% 17% 22% Market/ALM risk Business risk Operational risk 6% 5% Premium & Reserving risk Re-ins credit risk 5% Natural cat risk Investment credit risk 44% … and a balanced business
Slide 65: Our business model allows us to respond to the cyclicality of the insurance industry
Our business model allows us to respond to the cyclicality of the insurance industry • Global underwriting discipline, globally standardized RBC based pricing models and micro-segmentation technology • Diversity of markets with varying cycles or cyclicality • Cost leadership through The Zurich Way •
Slide 66: Zurich General Insurance operating model
Zurich General Insurance operating model leverages global operations for local delivery Group Value Added Global Talent Base General insurance Global global functions Global Risk Underwriting Engineering The Zurich Brand The Zurich Way Market facing business divisions Global Corporate North Europe I
Slide 67: Discussion Agenda – General Insurance
Discussion Agenda – General Insurance General Insurance segment overview Strategic roadmap and initiatives Strategic commitments and summary © Zurich Financial Services - Investors' Day, May 23, 2007 67
Slide 68: The General Insurance strategic objectives
The General Insurance strategic objectives Grow revenue organically through superior execution of customer 1 relationship, product and distribution management capabilities Target specific acquisitions to further diversify, focusing on consumer, 2 small business and key emerging markets Sustain top t
Slide 69: Our GI objectives drive our business division strategies
Our GI objectives drive our business division strategies Europe General Insurance North America Commercial • Generate continuous profitable growth ahead • Drive bottom line profitability through organic of the competition, both organically and growth while managing cyclicality through acquisitions i
Slide 70: Strategic focus on growth in International, EGI, Personal Lines, Direct and P&A
Strategic focus on growth in International, EGI, Personal Lines, Direct and P&A business GWP Breakdown 2006 Growth Focus IB Business Global 8% Division NAC Corporate 21% 35% • International Businesses 36% • Europe General Insurance EGI Sub-Segment Corporate Personal 21% 25% • Personal Commercial 54%
Slide 71: Organic Growth: Global cross sell expected to deliver USD 1bn GWP
1 Organic Growth: Global cross sell expected to deliver USD 1bn GWP between businesses Pitched by… Europe Global North America International General Corporate Commercial Businesses Caught by… Insurance Europe General Insurance Global Corporate 2005: GWP USD 82m North America Commercial 2006: GWP USD
Slide 72: Organic Growth: Zurich Connect platform expected to deliver USD 1bn GWP
1 Organic Growth: Zurich Connect platform expected to deliver USD 1bn GWP across Europe • Generates significant profitable growth for Europe General Insurance with a target in excess of USD 1 billion of gross written premiums by 2011 • New internet based distribution of General Insurance products fo
Slide 73: Organic Growth: Micro-segmentation across GI
1 Organic Growth: Micro-segmentation across GI expected to deliver USD 1bn GWP • Micro-segmentation prevalent UK, US, Italy, Switzerland and Germany. Expected benefits of USD 1bn GWP across General Insurance from global application of this technique Example: German Motor Segmentation • Market leader
Slide 74: Target Acquisitions: Zurich Expanding in Russian Emerging Market
2 Target Acquisitions: Zurich Expanding in Russian Emerging Market • Market consolidation and more than 30% growth in Zurich personal lines Opportunity • Enlarged Russian operations through Nasta acquisition with increased regional presence • 2007 GWP USD 350m (no. 5-6 market position in Motor) • 3,
Slide 75: Top Tier Performance: The Zurich Way will continue to leverage our global position
3 Top Tier Performance: The Zurich Way will continue to leverage our global position Not applicable No TZW initiatives started GI TZW initiatives partially rolled out NAC EGI GC IB TZW init. rolled out, full value not yet captured First wave TZW init. fully rolled out, full value UW – Commercial and
Slide 76: Discussion Agenda – General Insurance
Discussion Agenda – General Insurance General Insurance segment overview Strategic roadmap and initiatives Strategic commitments and summary © Zurich Financial Services - Investors' Day, May 23, 2007 76
Slide 77: Our global platform will unlock local business performance
Our global platform will unlock local business performance to deliver strong results General Insurance FY 2002 FY 2006 Strategic Goals GWP USD 28.6 bn USD 34.2 bn > 5% growth1 BOP ROE2 nm 32% > 25% 1 From a strategic perspective we measure growth as CAGR over market cycle 2 BOP ROE is before tax © Z
Slide 78: The General Insurance strategic objectives
The General Insurance strategic objectives Grow revenue organically through superior execution of customer 1 relationship, product and distribution management capabilities Target specific acquisitions to further diversify, focusing on consumer, 2 small business and key emerging markets Sustain top t
Slide 79: Break
Break Investors‘ Day Zurich, May 23, 2007
Slide 80: Agenda for the day
Agenda for the day Group strategy • Introduction and overview James J. Schiro • Operational transformation Dieter Wemmer • Growth Office Patrick O’Sullivan Q&A Booths and lunch Global Life strategy Paul van de Geijn General Insurance strategy John Amore Farmers strategy Paul Hopkins Q&A Wrap up of t
Slide 81: Farmers strategy
Farmers strategy Farmers segment overview Strategic roadmap and major initiatives Strategic commitments © Zurich Financial Services - Investors' Day, May 23, 2007 81
Slide 82: U.S. market overview
U.S. market overview Total U.S. P&C market1 Top 10 U.S Personal Lines Insurers1 Market Company share (%) Mid & Large Auto State Farm Mutual Group 18.9 Commercial 34.4% Allstate Insurance Group 11.6 31.8% Farmers Insurance Group 5.6 Progressive Group 5.6 Small Nationwide Mutual Group 4.7 Commercial H
Slide 83: Farmers unique structure insulates management company from underwriting volatility
Farmers, unique structure insulates the management company from volatility of underwriting results creating a history of reliable and steady earnings growth… US P&C Industry Income1 Farmers Management Services Underlying Business Operating Profit in USD billions in USD millions 85 1,400 70 1,200 55
Slide 84: The Farmers Exchanges' surplus grew strongly in 2006
The Farmers Exchanges’3 surplus grew strongly in 2006, and through March 2007 in USD millions in USD millions Highest in our History 5,500 2) 1) 5,500 5,000 44.0% 5,250 4,500 5,000 42.0% 4,000 4,750 3,500 40.0% 4,500 3,000 38.0% 4,250 2,500 4,000 36.0% 2,000 3,750 34.0% 1,500 3,500 1,000 3,250 32.0%
Slide 85: Gross written premiums of the Farmers Exchanges
Gross written premiums of the Farmers Exchanges1 6% 5.0% 4% 3.2% 3.3% 2.2% 2% 1.4% 0% 3 months Half year 9 months Full year 3 months 2006 2006 2006 2006 2007 GWP growth 1 Zurich Financial Services has no ownership interest in the Farmers Exchanges. Farmers Group, Inc., a wholly owned subsidiary of t
Slide 86: Policy growth momentum is accelerating
Policy growth momentum is accelerating • 2006 added 657,000 policies • 2007 on track to add 1 million new policies • 2007 on pace of an annual growth rate of 6% 1000,000 120% 18.5 million 800,000 policies 115% 600,000 110% 400,000 200,000 105% ,0 100% -200,000 95% -400,000 90% -600,000 -800,000 85%
Slide 87: A tough environment… industry premium growth
A tough environment… industry premium growth Total US P&C Industry Premium Growth U.S. P&C Industry 2005 2006E 2007F 2008F Weighted for Farmers, LOBs3 NWP Growth By Year(%) Auto 1.1 0.3 -2.0 1.0 9.0% Home 6.1 3.5 3.4 2.5 Commercial1 1.3 4.1 -0.6 1.0 5.2% Specialty Personal lines2 2.0 2.5 2.5 2.0 2.1
Slide 88: Competitor Analysis – Overall as of YTD March 2007
Competitor Analysis – Overall as of YTD March 2007 Growth vs. Combined ratio1 - March 2007 Growth NPW, % Industry3 Peer Averages4 6.0 97.9% NPW growth = -1.3% 5.0 Farmers CR = 87.1% 4.0 3.0 2.0 1.0 0.0 Hartford Industry3 -1.0 Progressive2 -0.6% Allstate -2.0 Safeco -3.0 70 75 80 85 90 95 100 105 110
Slide 89: Already a market leader in core states
Already a market leader in core states…with plans to be a leading player nationally… Farmers All Lines Market Share 0.5% market share (ECE1 states) 4.9% market share (Core states) Non-operating states Top 5 Top 10 Top 25 ECE1 Independent agent states 1 East Coast Expansion Source: AM Best 2005 © Zur
Slide 90: Farmers strategy
Farmers strategy Farmers segment overview Strategic roadmap and major initiatives Strategic commitments © Zurich Financial Services - Investors' Day, May 23, 2007 90
Slide 91: Farmersfuture 2010 Strategy
We have developed and launched our Farmersfuture 2010 Strategy Key Growth Initiatives Farmersfuture 2010 Market Leadership Customer Product Distribution Experience Management Excellence Excellence Excellence ServicePoint Next Gen Auto iLead Billing Next Gen Home Emerging Markets Customer Insight S.B
Slide 92: Plus, our initiatives drive Profitable Growth
Plus, our 108 initiatives drive Profitable Growth… © Zurich Financial Services - Investors' Day, May 23, 2007 92
Slide 93: We Have Built A Robust Profitable Growth Portfolio
We Have Built A Robust Profitable Growth Portfolio © Zurich Financial Services - Investors' Day, May 23, 2007 93
Slide 94: Farmers strategy
Farmers strategy Farmers segment overview Strategic roadmap and major initiatives Strategic commitments © Zurich Financial Services - Investors' Day, May 23, 2007 94
Slide 95: Farmers aspiration is to achieve 21bn in GWP by 2010
Farmers, aspiration is to achieve 21bn in GWP by 2010 while maintaining current levels of profitability which positions it to be of the fastest growing personal and small business insurers in America! Growth initiative pipeline: • Achieve double digit growth by 2010 2007-2010 net incremental GWP • M
Slide 96: Our strategy is working
Our strategy is working Customer • Recognized by JD Power’s 2006 Home Insurance survey for most improved customer satisfaction score Product • Planned acquisition of Bristol West to expand product portfolio and distribution footprint. • Agency development continues at record levels with 1,951 new Di
Slide 97: Agenda for the day
Agenda for the day Group strategy • Introduction and overview James J. Schiro • Operational transformation Dieter Wemmer • Growth Office Patrick O’Sullivan Q&A Booths and lunch Global Life strategy Paul van de Geijn General Insurance strategy John Amore Farmers strategy Paul Hopkins Q&A Wrap up of t
Slide 98: Agenda for the day
Agenda for the day Group strategy • Introduction and overview James J. Schiro • Operational transformation Dieter Wemmer • Growth Office Patrick O’Sullivan Q&A Booths and lunch Global Life strategy Paul van de Geijn General Insurance strategy John Amore Farmers strategy Paul Hopkins Q&A Wrap up of t
Slide 99: 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 100: Strategic objectives
Strategic objectives • Become a top-five insurer globally • Strengthen our market leadership positions • Expand capital light and fee income businesses • Position Zurich as the employer of choice in the insurance industry globally • Generate a consistent mid-term BOPaT-ROE1 of 16% 1 Business operati