Zurich Insurance Group Ltd · SIX:ZURN
Zurich Insurance — 9M 2014 Earnings Presentation
37 slides from Zurich Insurance's earnings presentation, Nov 6, 2014
Slide 1: Results for the nine months to September 30, 2014
Results for the nine months to September 30, 2014 Analysts and Media Presentation November 6, 2014 Zurich Insurance Group
Slide 2: Key messages
Key messages General Continued improvement in accident year profitability Insurance Global Life Strong progress in bank distribution Farmers Farmers Exchanges back to growth Capital Very strong solvency capital on all key metrics Overall Solid results – capacity to cope with challenging environment
Slide 3: Group – Business operating profit
Group – Business operating profit Continued solid performance BOP BY SEGMENT (USDm) RECONCILIATION (USDm) +7% -6% 61 3,826 1,279 1,206 3,567 305 3,510 88 491 998 2,376 755 724 2,085 2,124 68 449 51 308 318 331 33.4% tax rate 966 978 965 1,206 928 394 412 398 991 1,108 1,153 25 24 118 41 6 -178 -222
Slide 4: General Insurance – Topline
General Insurance – Topline Broadly stable, but with some competitive pressures GWP GROWTH IN LC1 (%) RATE CHANGE2 (%) Q3-13 Q2-14 Q3-14 -2% GC 9% 4% 1% 2% 13% -2% NAC -1% 4% 2% 0% 3% 1% EMEA -1% 3% 2% 2% -2% 4% IM 20% 3% 3% 5% 39% 1% Total3 4% 3% 2% 2% 6% Q3-14 Q3-13 Q3-12 1 In local currency. 2 GW
Slide 5: General Insurance – Combined ratio
General Insurance – Combined ratio Improved accident year profitability, lower PYD COMBINED RATIO SPLIT (%) COMBINED RATIO BY REGION (%) 101.3% 97.4% 97.7% 2.2% 3.7% 3.0% 97.7% GC 98.3% 96.3% NAC 99.0% 99.1% 95.6% 96.8% 95.4% EMEA 94.0% 107.1% IM 102.9% 97.7% Total 0.0% -3.1% -0.6% 97.4% Q3-12 Q3-13
Slide 6: General Insurance – BOP components
General Insurance – BOP components Investment income up on the prior year BOP BREAK DOWN (USDm) KEY DRIVERS (USDm) -4% 755 724 42 755 53 449 196 177 20 5 16 724 627 575 586 -9 -8 -25 -14 -93 -71 -13 Q3-13 UWR Investment RCG NTR NCI Q3-14 Q3-121 Q3-13 Q3-14 Income Underwriting result Investment inc.
Slide 7: Global Life – New business
Global Life – New business Good progress in the US, Santander and Spain APE (USDm)1 NBM & NBV1 NET INFLOWS & AUM2 NBM (%) Net inflows (USDbn) 17.5 23.5 24.1 1.0 0% 0.2 1,180 1,148 1,153 -0.6 41 35 13 110 113 142 0% +3% 26 37 NBV (USDm) AuM (USDbn) 55 243 242 260 267 281 278 17 11 245 500 203 30 31 4
Slide 8: Global Life – BOP by region
Global Life – BOP by region Stable life result, ‘other’ costs reflect management initiatives BOP BY REGION (USDm) KEY DRIVERS (USDm) +4% 331 331 8 1 3 318 -29 33 308 318 31 33 8 38 8 30 47 30 47 46 46 65 85 65 58 58 42 208 208 177 177 160 -18 -21 -21 Q3-12 Q3-13 Q3-14 Q3-13 Europe Latin North APME O
Slide 9: Farmers Exchanges – KPIs
Farmers Exchanges1 – KPIs Return to top-line growth GWP GROWTH (%) COMBINED RATIO (%)3 SURPLUS (USDbn)4 0.6% 101.2% 36.6% 36.7% 1.5% 98.6% 33.3% 97.2% 3.7% 3.2% -0.9% 99.7% -2.1% 94.9% 94.0% 4.6 5.0 5.0 -2.6% -3.7%2 1.0 1.0 1.0 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q3-12 Q3-13 Q3-14 FY-12 FY-13 9m-14 Surplu
Slide 10: Farmers – KPIs
Farmers – KPIs Slightly lower FMS margin, good Farmers Re result BOP (USDm) MGEP MARGIN (%)1 FARMERS RE CR (%)2 412 7.5% 394 398 99.3% 98.5% 1.4% 97.1% 7.2% 3.7% 3.0% 7.0% 352 363 336 97.9% 94.8% 94.1% 42 49 62 Q3-12 Q3-13 Q3-14 Q3-12 Q3-13 Q3-14 Q3-12 Q3-13 Q3-14 Catastrophes 3 FMS FRe CR (excl. ca
Slide 11: Group – Balance sheet and capital
Group – Balance sheet and capital Strong solvency capital on all key metrics SHAREHOLDERS’ EQUITY (USDm) SOLVENCY RATIOS (%) 226 -932 261% 278% 285% 928 258% 217% 206% 215% 185% 83 34,098 127% 94 121% 126% 114% 33,699 HY-14 NIAS Net CTA Pensions Other 9m-14 Z-ECM SST1 Solvency I URG/L FY-12 HY-13 FY
Slide 12: Key messages
Key messages General Continued improvement in accident year profitability Insurance Global Life Strong progress in bank distribution Farmers Farmers Exchanges back to growth Capital Very strong solvency capital on all key metrics Overall Solid results – capacity to cope with challenging environment
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 AY loss ratio further improved, ~1% increase in the ER LOSS RATIO (%) EXPENSE RATIO (%) 70.3% 68.3% 70.3% 67.4% 30.4% 30.3% 31.0% 30.9% 29.7% 30.0% 4.4% 3.2% 2.2% 3.7% 66.8% 66.3% 13.6% 13.6% 14.3% 13.7% 13.9% 2.4% 3.0% 13.5% 68.0% 67.5% 64.5% 68.2% 66.8% 64.4% 16.8% 16.2
Slide 16: GI – Loss ratio details
GI – Loss ratio details Continued improvement in accident year profitability LOSS RATIO (%) 75.5% 69.4% 67.5% 67.6% 70.3% 9.7% 67.4% 68.6% 3.0% 67.7% 5.8% 1.6% 66.3% 66.8% 2.2% 2.2% 3.7% 65.9% 1.6% 1.9% 3.0% 2.3% 67.2% 67.9% 68.2% 68.5% 66.4% 67.8% 66.8% 69.0% 65.6% 63.6% 64.4% -1.9% -3.3% 0.0% -2.7
Slide 17: GI Global Corporate – KPIs
GI Global Corporate – KPIs Results modestly impacted by adverse PYD 9m-14 KEY FINANCIALS GWP Zurich rate Combined USD 645m USD 563m Growth1 change2 Ratio 2% 2% 96% 94.3% 96.4% 20.7% 21.6% KEY DRIVERS 73.6% 74.9% Growth driven by strong new business, partly off-set by impact of selected re-underwri
Slide 18: GI North America Commercial – KPIs
GI North America Commercial – KPIs Growth in selected pockets, with improved combined ratio 9m-14 KEY FINANCIALS GWP Zurich rate Combined USD 565m USD 703m Growth1 change2 Ratio 2% 2% 96% 99.4% 96.3% 29.6% 30.8% KEY DRIVERS 69.9% 65.6% Modest growth from rate tiering strategies and execution on st
Slide 19: GI EMEA – KPIs
GI EMEA – KPIs Brighter top-line outlook, good overall profitability 9m-14 KEY FINANCIALS GWP Zurich rate Combined USD 760m USD 975m Growth1 change2 Ratio 0% 2% 95% 97.3% 95.0% 30.2% 30.7% KEY DRIVERS 67.2% 64.4% Growth in the UK and Germany, in Switzerland personal lines and Spain commercial line
Slide 20: GI International Markets – KPIs
GI International Markets – KPIs Reduced growth partly driven by focus on profitability 9m-14 KEY FINANCIALS GWP Zurich rate Combined USD 159m USD 121m Growth1 change2 Ratio 9% 5% 102% 102.0% 102.3% 42.2% 41.5% KEY DRIVERS 59.7% 60.8% Higher rate increases due to actions to improve profitability in
Slide 21: GI – Rate change monitor
GI – Rate change monitor Overall fairly stable, but with some pockets of pricing pressure ZURICH RATE CHANGE ASSESSMENT Business Assessment Rate increases are generally at adequate levels but we see some market pressure, mainly in US Group property lines. Modest rate increases in all regions apart f
Slide 22: GI – Natural catastrophe reinsurance
GI – Natural catastrophe reinsurance Program further benefitted from lower reinsurance prices NATURAL CATASTROPHE REINSURANCE TREATIES1 (USDm) 30 20 30 150 150 30 500 500 20 150 20 30 10 20 500 150 Single global USD 150m treaty, which can be applied to any region2 10 10 930 750 300 500 Single global
Slide 23: GL – New business by pillar
GL – New business by pillar Strong growth in all pillars, led by bank & retail 9m-14 KEY FINANCIALS APE (USDm) CLP single 3,525 NBM PVNBP 2,973 3,230 premium 1,087 1,156 1,296 1,135 1,258 24.4% USD 33.8bn USD 3.5bn 592 1,084 1,008 1,111 9m-12 9m-13 9m-14 NBV (USDm) KEY DRIVERS 790 757 604 216 232 21
Slide 24: GL – Net inflows & Assets under management
GL – Net inflows & Assets under management Overall positive net inflows NET INFLOWS BY REGION (USDbn) AUM DEVELOPMENT (USDbn) 1.9 0.1 267 14 -16 267 1.1 2 31 31 0.5 1.5 0.3 0.6 0.6 0.3 0.1 0.7 114 114 0.3 0.3 -0.1 -0.6 -0.4 -3.1 122 122 -1.8 Balance Net inflows Market FX Balance as of Jan movements
Slide 25: Farmers Exchanges – GWP
Farmers Exchanges1 – GWP Return to top-line growth DEVELOPMENT OF GWP BY BUSINESS LINE (USDm) -0.8% +0.6% 14,276 14,163 4,799 4,828 6,613 6,361 -3.8% 2,222 2,158 -2.9% 3,624 3,708 +2.3% 1,286 1,330 +3.4% +3.6% +4.9% 1,264 1,309 405 425 726 762 +4.9% 231 266 +14.9% 1,619 1,724 +6.5% 532 562 +5.7% 431
Slide 26: Farmers Exchanges – PIF/VIF
Farmers Exchanges – PIF/VIF1 PIF trends also much more positive DEVELOPMENT OF PIF/VIF1 BY BUSINESS LINE (THOUSANDS) -1.2% -0.2% 19,298 19,075 19,114 19,075 9,962 9,715 -2.5% 9,765 9,715 -0.5% -1.4% 4,820 4,809 -0.2% 4,875 4,809 414 417 +0.6% 416 417 +0.2% 886 977 +10.3% 944 977 +3.4% 2,941 2,984 +1
Slide 27: Farmers Exchanges – Combined ratio
Farmers Exchanges – Combined ratio Continued improvement helped by lower catastrophe losses COMBINED RATIO BY BUSINESS LINE (%)1 100.9% 100.9% Auto Auto 99.3% 98.7% 100.9% 90.7% Home Home 106.8% 98.3% 100.3% 97.2% EA Business Insurance EA Business Insurance 108.3% 102.6% 102.3% 104.7% Bristol West2
Slide 28: Farmers Exchanges – Combined ratio history
Farmers Exchanges – Combined ratio history Catastrophe losses drive volatility in quarterly combined ratio QUARTERLY COMBINED RATIO (%) Catastrophes impact1 Incl. Incl. Incl. 17 Catastrophe California 13 Catastrophe 120 Events wildfires Events Incl. 115 13 Catastrophe Events Incl. 13 Catastrophe 110
Slide 29: Other Operating Businesses
Other Operating Businesses One-off items create quarter-to-quarter volatility in HQ BOP YTD BOP SPLIT (USDm) QUARTERLY BOP SPLIT (USDm) 20 -3 -7 -53 -43 -51 -145 -113 -191 -219 -224 -188 -171 -630 -529 -172 -167 -221 -230 -222 -232 -280 -683 -674 Q1-13 Q2-13 Q3-13 Q1-14 Q2-14 Q3-14 9m-13 9m-14 Headq
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 207bn 4% 5% 0% 5% 15% 1% 100% 4% 34% 7% 40% 24% 27% 80% 18% Sum of single Investment Investment security risks risks r
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 155bn 2% 12% 21% 23% 47% 41% 18% 37% Government and government related bonds MBS/ABS AAA AA A BBB Non-investment grade Corporate bonds November 6, 201
Slide 32: Investment income yield
Investment income yield1 Portfolio yields are flattening out GENERAL INSURANCE GLOBAL LIFE GROUP 1.54% 2.32% 1.81% Equity 1.38% Equity 2.20% Equity 1.56% 1.60% 2.71% 2.15% 1.98% 2.60% 2.28% Debt 1.97% Debt 2.63% Debt 2.29% 2.38% 2.92% 2.60% 4.00% 4.17% 4.25% Real estate 4.02% Real estate 4.15% Real
Slide 33: Group – Economic capital models
Group – Economic capital models Very strong capital position Z-ECM RATIO DEVELOPMENT (%) SST1 RATIO DEVELOPMENT (%) 6% -4% 9% -6% -8% -11% 5% 6% 127% 217% 126% 215% FY-13 Business Market Capital Other2 HY-14 FY-13 Business Market Capital Other2 HY-14 Profit change movements Profit change movements 1
Slide 34: Group – Z-ECM components
Group – Z-ECM components Well diversified capital base by risk type HY-14 AFR COMPOSITION (USDbn) RBC BY RISK TYPE AND BUSINESS ALM / Market risk Shareholders equity 34 10% Operational risk 15% Business risk Dividend accrual 1 39% P&R risk1 2% 4% Re-ins credit risk Net intangibles 19 8% Life insuran
Slide 35: Group – Solvency ratio sensitivities
Group – Solvency ratio sensitivities Solvency ratios resilient to market movements SOLVENCY RATIO IMPACT1 126% Actual value as of HY-14 215% 285% 125% Interest rate +100 bps 217% 242% 123% Interest rate -100 bps 212% 329% 130% Equities +20% 219% 303% 121% Equities -20% 210% 267% 107% Credit spreads
Slide 36: 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 37: Calendar
Calendar: - December 5, Investor update, London - February 12, 2015, Annual results 2014 - April 1, 2015, Annual General Meeting 2015, Zurich - May 7, 2015, Results for three months to March 31, 2015 - May 21, 2015, Investor Day, Zurich © Zurich Insurance Company Ltd
Zurich Insurance Group — 9M 2014 Earnings Presentation on 6ix