Zurich Insurance Group Ltd · SIX:ZURN
Zurich Insurance — Debt Investor Presentation (November 2019)
26 slides from Zurich Insurance's debt investor presentation, November 2019
Slide 1: Credit investor update
Credit investor update November 2019 Zurich Insurance Group
Slide 2: Our proposition to investors
Our proposition to investors HIGHLY CASH GENERATIVE BUSINESS MODEL, SUPPORTED BY: A balanced Industry leading Stable, consistent Consistent growth and diverse capital levels and conservatively with scope to global business managed balance enhance returns sheet through capital re-deployment © Zurich
Slide 3: We have fully delivered on 2017–2019 targets and have ambitious new targets for 2020–2022
We have fully delivered on 2017 – 2019 targets and have ambitious new targets for 2020 – 2022 2017 – 2019 DELIVERED 2020 – 2022 AMBITION BOPAT ROE1 in excess of 12% and increasing BOPAT ROE1 in excess of 14% and increasing Cumulative cash remittances in excess of USD Cumulative cash remittances in e
Slide 4: We will use all levers to drive further ROE expansion
We will use all levers to drive further ROE expansion ILLUSTRATIVE BOPAT ROE DEVELOPMENT (%) ~15% ~0.5% ~1.0-1.5% 13.5% ~0.75-1.5% ~1.5-2.0% ~2.0-2.5% ~1.0-1.5% HY-191 Growth in Investment income Business growth Productivity Portfolio quality Capital FY-22 equity base allocation / other illustrative
Slide 5: Genuinely global franchise with distinct capabilities
Genuinely global franchise with distinct capabilities NORTH AMERICA #5 in commercial insurance #2 in crop insurance EMEA #7 in US personal lines ASIA PACIFIC through Farmers Exchanges1 #4 insurance company overall Top 3 #6 in P&C, #3 in life3,4 #10 in P&C cross-border #12 in P&C, #9 in life insurer
Slide 6: Our strategy and flexible operating model position us to take advantage of industry change
Our strategy and flexible operating model position us to take advantage of industry change EXTERNAL ENVIRONMENT OUR STRATEGY OUR OPERATING MODEL COMMERCIAL RETAIL Focus on the Customer revolution customer GROUP Brand Geopolitical and Go to market Go to market Products Products economic uncertainty C
Slide 7: Continuing to grow our access to customers through new bank and non-bank partners
Continuing to grow our access to customers through new bank and non-bank partners ACCESS TO OVER 66 MILLION CUSTOMERS IN 201 WE CONTINUE TO BUILD ON OUR SUCCESS WITH NON-BANK COUNTRIES THROUGH OVER 70 BANK AGREEMENTS PARTNERS GERMANY SWEDEN SWITZERLAND UK JAPAN 11 banks MEXICO SPAIN HONG KONG VENEZU
Slide 8: We have strengthened our businesses and extracted capital from non-core portfolios
We have strengthened our businesses and extracted capital from non-core portfolios MAIN DIVESTMENTS AND MAIN ACQUISITIONS TYPE OF BUSINESS STRATEGIC RATIONALE CAPITAL ACTIONS DEAL Skills Distribution Scale Sale of P&C business in Middle East Cover-More / Halo M&A P&C Retail - Travel Sale of P&C busi
Slide 9: A well diversified business with high quality sources of earnings
A well diversified business with high quality sources of earnings A TRULY COMPOSITE INSURER BALANCED P&C FOOTPRINT HIGH QUALITY LIFE EARNINGS MIX HY-19 Business Operating Profit by business (%)1 HY-19 P&C GWP by region (%)2 HY-19 Life gross margin breakdown (%)3 7% 12% 8% 22% 43% 21% 51% Group = Tot
Slide 10: The P&C strategy is working with improved profitability and reduced volatility
The P&C strategy is working with improved profitability and reduced volatility P&C BUSINESS MIX (% NEP) AY COMBINED RATIO EXCLUDING LARGE LOSS VOLATILITY (ppts)2 CATASTROPHES (%)1 -4.3ppts 99.1% 15% 22% 94.8% COMMERCIAL 8ppts 27% 28% 28% 26% FY-16 HY-19 Q1-14 Q4-15 21% 15% -1.7ppts 10% 9% 94.8% FY-1
Slide 11: We have a growing Life business with less reliance on investment margins
We have a growing Life business with less reliance on investment margins LIFE BOP (USDbn) SHARE OF REVENUES FROM FEES, LOADINGS AND TECHNICAL MARGINS (%, AVERAGE FY16-18)2 +10%1 760 88% 701 650 173 74% 75% 130 562 149 78 71 63% 121 78 12 524 507 448 438 -19 -16 1 -17 2 -6 0 HY-16 HY-17 HY-18 HY-19 P
Slide 12: Farmers is delivering consistent growth and progressing on key strategic priorities
Farmers is delivering consistent growth and progressing on key strategic priorities FARMERS EXCHANGES GWP (USDm)1 NPS3 AND RETENTION4 EASTERN EXPANSION Established state +3% ME 47.9 Eastern expansion state 10,233 10,449 VT NH 9,775 45.3 Eastern expansion state + NY MA Commercial rideshare CTRI 42.7
Slide 13: Strong capital position and cash generation
Strong capital position and cash generation VERY STRONG FINANCIAL STRENGTH Z-ECM AND SST RATIO1 (%) AA- (very strong) / outlook ‘positive’ 240% 217% 221% 216% Aa3 (excellent) / outlook ‘stable’ 204%2 200% 196% 185% 189% A+ (superior) / outlook ‘stable’ 160% 113% Q3-19e3 132% 127% 125% 124% HIGHLY CA
Slide 14: Proven balance sheet flexibility through leverage and coverage at Aa levels
Proven balance sheet flexibility through leverage and coverage at Aa levels GROUP CAPITAL STRUCTURE (%)1 MOODY’S LEVERAGE & COVERAGE FINANCIAL LEVERAGE: Aa = 15-30% 13% 12% 11% 10% 9% 12% 26.8% 26.4% 25.8% 24.3% 24.1% 23.7% 13% 14% 17% 16% 14% 16% EARNINGS COVERAGE: Aa = 8-12x 72% 76% 76% 73% 75% 72
Slide 15: Low cost of risk, strong ratings and balanced maturity profile
Low cost of risk, strong ratings and balanced maturity profile CDS SPREAD AMONG BEST OF PEERS (bps)1 BALANCED REFINANCING NEEDS (USDbn)2 600 400 2.2 200 2.0 0.2 0.6 1.8 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 1.6 Zurich Axa Generali Allianz 0.5 0.8 1.1 CONSISTENT
Slide 16: ALM-focused and lower risk strategy delivering consistent and sustainable excess returns
ALM-focused and lower risk strategy delivering consistent and sustainable excess returns ASSET ALLOCATION ASSET QUALITY DURATION1 FY-18 TOTAL GROUP INVESTMENTS OF USD 195bn FY-18 GROUP DEBT INVESTMENTS (USDbn) FY-18 (#years) 68 86 10.0 3% 8% 22.4% 8.4 5% 33.5% 2% 14.9% 5% 38.3% 24.3% 4.4 4.5 2.8% 31
Slide 17: The Group's focus and achievements on sustainability is widely recognized by external bodies
The Group’s focus and achievements on sustainability is widely recognized by external bodies OUR RATINGS1 OUR LONG TERM COMMITMENT ‘AA’ rating1 #2 in insurance group2 Leader, #4 in insurance group3 Absolute Score of 4.2 (out of 5.0)4 1 MSCI ESG Rating Report, April 2019. 2 RobecoSAM Company Benchmar
Slide 18: Zurich embeds environmental, social and governance issues in all aspects of the business
Zurich embeds environmental, social and governance issues in all aspects of the business An independent and diverse Board ensuring effective corporate governance and strategic Corporate oversight, and fostering ESG integration in the business governance A remuneration architecture ensuring outcomes
Slide 19: Appendix
@ ZURICH Appendix
Slide 20: Z-ECM and SST are more conservative than Solvency II
Z-ECM and SST are more conservative than Solvency II PRIMARY DIFFERENCES – REQUIRED CAPITAL Most onerous Z-ECM SST Solvency II (Pillar 1) impact on ratio VaR 99.95% (~AA) ES 99% (~BBB) VaR 99.5% (~BBB), RISK MEASURE usually < ES 99% • Market Risk (including • Market Risk (including Internal model (Z
Slide 21: Z-ECM and SST are more conservative than Solvency II
Z-ECM and SST are more conservative than Solvency II PRIMARY DIFFERENCES – YIELD CURVES AND TRANSITIONALS Most onerous Z-ECM / SST1 Solvency II (Pillar 1) impact on ratio BASE RISK-FREE Swaps Swaps YIELD-CURVE ENTRY-POINT TO Use all available market data CHF: 25 years EXTRAPOLATION CHF: 30 years EUR
Slide 22: Z-ECM and SST are more conservative than Solvency II
Z-ECM and SST are more conservative than Solvency II PRIMARY DIFFERENCES – OTHER KEY ELEMENTS Most onerous Z-ECM SST Solvency II (Pillar 1) impact on ratio Available capital (since Q2-18, excluding net Liability Liability SENIOR DEBT new issued senior debt) Pre-tax Pre-tax Post-tax TAX Management vi
Slide 23: Other important information
Other important information
Slide 24: 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 25: For further information
For further information CALL US VISIT OR FOLLOW US Investor Relations & 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 Group Treasury & Capital Management Christi
Slide 26: Calendar
CALENDAR: • February 13, 2020, Annual results 2019 • April 1, 2020, Annual General Meeting • May 14, 2020, Update for the three months ended March 31, 2020 • May 19, 2020, Zurich Insights – Investor Event • August 13, 2020, Half year results 2020 November © 2019 Zurich Insurance Company Ltd Credit i
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