Zurich Insurance Group Ltd · SIX:ZURN
Zurich Insurance — FY2015 Earnings Presentation
94 slides from Zurich Insurance's earnings presentation, Feb 11, 2016
Slide 1: Annual results 2015
Annual results 2015 Investor presentation February 11, 2016 Zurich Insurance Group
Slide 2: Content
Content Use symbols to navigate through the document MAIN SECTION APPENDIX Key highlights General Insurance Group BOP BOP Global Life General Insurance Farmers Exchanges Global Life Other Operating Businesses Farmers Effective tax rate Group Balance sheet and ca
Slide 3: Key highlights
@ ZURICH Key highlights
Slide 4: Key financials
Key financials Disappointing ROE, strong Z-ECM and cash remittances FY-15 KEY RESULTS TARGET METRICS OVER STRATEGIC PERIOD FY-15 Target BOP BOPAT ROE1 6.4% 12 - 14% USD 2.9bn (-37%) Q3-15 Target Z-ECM2 114% 100 – 120% NIAS Cumulative FY-15 Net cash 3-year target USD 1.8bn (-53%) remittances USD 3.9b
Slide 5: Report card – Group
Report card – Group Clear priorities for next 12 months GROUP STRATEGY FY-15 KEY ACTIONS 2016 PRIORITIES Prioritizing Acquisition of Rural Community Further investments in technology, Insurance Services including in data and analytics investment in 1 Stepped up investments in data Targeted i
Slide 6: Report card – General Insurance
Report card – General Insurance Further actions required on underperforming portfolios PRIORITY MARKETS1 MANAGE FOR VALUE GWP (USDm) BOP (USDm) Continued actions in our turnaround markets with 36,333 37,335 2,979 underlying improvement in all markets Exited various non-strategic positions such a
Slide 7: Report card – Global Life
Report card – Global Life On track to deliver sustainable BOP improvement INVESTOR DAY BUCKETS (USDm)1 MANAGE FOR VALUE APE NBV BOP 1,478 Exit of annuity book in UK 5,203 5,544 965 1,031 55 100 Beginning to see BOP uplift from in-force 344 1,273 367 77 100 280 management actions 1,604 235 1,865
Slide 8: Report card – Farmers Exchanges
Report card – Farmers Exchanges1 Continued progress in strategic execution NET PROMOTER SCORE2 RETENTION3 78.0% 78.1% 78.0% 78.0% 37.6 38.7 39.7 40.3 77.5% 35.0 FY-14 Q1-15 HY-15 9m-15 FY-15 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 NET GAIN / LOSS OF AGENTS4 NEW BUSINESS COUNT GROWTH5 18.5% 208 233 13.7% 77 44
Slide 9: 2015 performance
@ ZURICH 2015 performance
Slide 10: Group – Business Operating Profit
Group – Business Operating Profit Disappointing GI results, other businesses on track BOP BY SEGMENT (USDm)1 BOP TO NIAS WALK (USDm) -37% 4,680 4,638 1,113 -48% -865 887 812 324 2,859 2,979 736 2,916 511 -1,183 864 422 -32 205 294 308 299 1,272 1,273 1,300 2,916 36.6% tax rate 408 420 351 1,842 1,51
Slide 11: General Insurance – Topline
General Insurance – Topline Rate environment consistent with previous quarters GWP GROWTH IN LC1 (%) RATE CHANGE2 (%) Q4-14 Q3-15 Q4-15 0% GC 3% 1% 0% 1% 8% 7% NAC -1% 1% 1% 0% 2% -1% EMEA 0% 2% 1% 2% -2% 9% IM 3% 4% 6% 5% 12% 3% Total3 2% 2% 2% 2% 3% FY-15 FY-14 FY-13 1 In local currency. 2 GWP dev
Slide 12: General Insurance – Combined ratio
General Insurance – Combined ratio Poor results in Global Corporate COMBINED RATIO SPLIT (%)1 COMBINED RATIO BY REGION (%)1 103.6% 98.0% 96.8% 3.2% 3.5% 0.9% 2.3% 113.9% GC 95.7% 98.2% NAC 96.5% 101.3% EMEA 97.2% 95.6% 99.1% 95.1% 103.3% IM 104.6% 103.6% Total 96.8% -2.4% -1.1% 0.1% 80% 85% 90% 95%
Slide 13: General Insurance – BOP components
General Insurance – BOP components Reduction in BOP driven by UW loss in Q3 and Q4 BOP BREAK DOWN (USDm)1 KEY DRIVERS (USDm)1 2,979 -71% 2,979 2,859 605 947 864 -1,949 2,384 2,239 2,002 -147 864 -57 -112 -89 83 -13 -72 -95 -1,002 -108 -29 FY-13 FY-14 FY-15 FY-14 UWR Investment RCG NTR NCI FY-15 Inco
Slide 14: General Insurance – Status update
General Insurance – Status update 2015 results driven by combination of factors KEY FACTORS Growing in a softening market – e.g. in Global Corporate in North America Execution of planned portfolio actions not delivered consistently Growing interconnectivity of risk not sufficiently accounted f
Slide 15: General Insurance – Focus in 2016
General Insurance – Focus in 2016 It will take time to adjust, but early signs for 2016 are positive ADDRESSING KEY ISSUES TIERING AND RATE INCREASES Prioritizing technical excellence by: Encouraging results from rate in Global – Reinforcing underwriting culture by Corporate in Europe emphasizin
Slide 16: Global Life – New business & Net Inflows
Global Life – New business & Net Inflows APE growth offset by currency impacts with overall higher margin APE (USDm)1,2 NBM & NBV1,2,3 NET INFLOWS & AUM4,5 NBM (%) Net inflows (USDbn) -8% 25.6 20.8 21.6 6.0 7.2 5,203 57 208 127 4,772 4,418 57 90 179 157 -2.7 162 149 1,160 NBV (USDm) AuM (USDbn) -5%
Slide 17: Global Life – BOP by region
Global Life – BOP by region BOP increase across all regions, offset by currency impacts BOP BY REGION (USDm)1 KEY DRIVERS (USDm)1 +2% 1,273 1,300 1,273 37 1 51 1,300 1,272 28 -178 52 43 52 89 43 42 141 173 178 141 178 222 195 222 245 195 917 892 917 892 812 -1 -59 -8 -59 -8 FY-13 FY-14 FY-15 FY-14 E
Slide 18: Global Life – Source of earnings
Global Life – Source of earnings Growth in local currency revenues and new business investment BOP BY SOURCE OF EARNINGS (USDm) REGIONAL BOP & KPI (USDm) D FY-141 Reported BOP by region (%s D vs. FY-14 reported) 26% -12% -3% -18% N/M Loadings & fees 3,106 837 3,943 5% 892 Inv. margin 480 648 6% 168
Slide 19: Farmers Exchanges – KPIs
Farmers Exchanges1 – KPIs Continued growth, Capital remitted by Farmers Reinsurance Co. GWP GROWTH (%)3 COMBINED RATIO (%)3 SURPLUS4 (USDbn) 101.9% 38.5% 100.5% 36.6% 36.6% 3.1% 99.4% 6.0% 6.0% 5.2% 2.4% 6.3 2.3% 2.3% 5.9 6.0 1.9% 94.5% 95.9% 5.0 5.4 94.2% 5.5 1.0 0.9 0.5 Q4-142 Q1-15 Q2-15 Q3-15 Q4
Slide 20: Farmers – KPIs
Farmers – KPIs Stable FMS results, Farmers Re results down due to higher CR BOP (USDm) MGEP MARGIN (%)1 FARMERS RE CR (%)2 1’573 7.2% 7.2% 101.2% 1’516 100.2% 1’421 7.1% 98.3% 5.3% 5.6% 4.9% 1'383 1'390 1'360 94.6% 95.9% 93.4% 125 190 61 FY-13 FY-14 FY-15 FY-13 FY-14 FY-15 FY-13 FY-14 FY-15 Catastro
Slide 21: Group – Balance sheet and capital
Group – Balance sheet and capital Strong capital position across all metrics SHAREHOLDERS’ EQUITY (USDm) SOLVENCY RATIOS (%) 34,735 217% 196% 203% -2,705 1,842 -1,524 127% 122% 123% 114% -2,012 31,178 842 FY-14 Dividend1 NIAS Net CTA (excl. Pension FY-15 Z-ECM SST3 URG/L Dividend) plans & other2 FY-
Slide 22: Group – Cash remittances & dividend proposal
Group – Cash remittances & dividend proposal Overall good cash remittance, dividend maintained NET CASH REMITTANCES (USDbn) CUMULATIVE DIVIDEND (USDbn)1 3.7 3.9 19.8 2.9 17.3 1.7 2.4 14.6 2.4 0.9 11.8 0.9 0.6 1.5 9.1 1.2 0.9 0.1 0.5 6.3 -0.6 -1.1 -1.0 3.6 FY-13 FY-14 FY-15 1.4 2008 2009 2010 2011 20
Slide 23: Factors influencing 2016
Factors influencing 2016 General OUE ratio expected to be broadly stable Significant improvement in loss ratio, weighted to second half Insurance Lower volatility, in part due to greater tactical use of reinsurance Continued growth and investment in Bancassurance and CLP Global Life Expect
Slide 24: Key messages
Key messages Disappointing 2015 but comprehensive remediation plans now GI results being implemented Expect to see a progressive improvement in profitability GI outlook during 2016, with a reduction in volatility Life and Global Life and Farmers are on track Farmers Cash and Very strong Z-ECM ratio
Slide 25: 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 26: Appendix
@ ZURICH Appendix
Slide 27: GI – Q4 BOP components
GI – Q4 BOP components BOP again significantly lower than PY BOP BREAK DOWN (USDm) KEY DRIVERS (USDm) 511 736 nm 129 511 52 627 518 501 657 -18 -3 -39 7 -20 -605 -23 3 2 19 45 -120 -120 Q4-14 UWR Investment RCG NTR NCI Q4-15 Q4-13 Q4-14 Q4-15 Income Underwriting result Investment inc. / Realized cap
Slide 28: GI – Q4 Combined ratio
GI – Q4 Combined ratio Large losses and UK floods lead to higher CR COMBINED RATIO SPLIT (%)1 COMBINED RATIO BY REGION (%)1 108.6% 98.3% 99.3% 6.7% 115.2% 1.6% 1.9% GC 95.4% 98.5% NAC 96.9% 113.6% EMEA 102.5% 98.9% 98.7% 98.2% 104.2% IM 111.9% 108.6% Total 99.3% -2.0% -0.8% -0.5% 80% 90% 100% 110% 1
Slide 29: GI – Combined ratio details
GI – Combined ratio details Higher AY loss ratio mainly due to large losses LOSS RATIO (%)1 EXPENSE RATIO (%)1 75.7% 32.8% 31.7% 31.2% 29.7% 30.5% 29.7% 71.8% 6.7% 68.3% 0.9% 68.6% 14.0% 1.7% 68.1% 14.0% 13.9% 3.2% 3.5% 13.5% 13.7% 13.2% 66.4% 1.9% 2.3% 67.5% 67.3% 68.9% 67.0% 69.5% 16.9% 17.7% 17.3
Slide 30: GI – Loss ratio details
GI – Loss ratio details In 2015 AY LR is trending upwards LOSS RATIO (%)1 77.7% 75.7% 69.4% 3.7% 67.4% 68.6% 68.4% 2.3% 6.7% 67.7% 5.8% 65.7% 68.1% 3.7% 1.7% 65.9% 65.8% 65.3% 1.6% 1.9% 1.9% 3.4% 2.3% 3.0% 1.4% 67.8% 68.9% 68.0% 69.5% 66.4% 66.8% 65.6% 63.7% 64.4% 67.0% 65.4% 66.3% 3.7% -0.3% -3.1%
Slide 31: GI – Prior year development (PYD) by region
GI – Prior year development (PYD) by region Q3-15 was an exceptional quarter PYD (% OF NET EARNED PREMIUM)1 -0.3% -4.2% -3.1% -2.0% -1.8% -0.1% -1.6% -0.8% -1.5% -1.3% 3.7% -0.5% Unfavorable PYD 2.8% 1.3% 1.6% 1.0% 0.2% 0.8% 0.1% -0.1% 0.2% 0.4% 0.2% 0.4% 0.1% -0.4% -0.4% -0.1% -0.4% -0.1% -0.7% 0.0
Slide 32: GI – Loss and paid to ultimate triangles
GI – Loss and paid to ultimate triangles Consistent reserving approach over time for the group ULTIMATE NET LOSS AND PAID TO ULTIMATE RATIOS (%) KEY TAKEAWAYS AY 2008 2009 2010 2011 2012 2013 2014 2015 In the year 76.6% 74.5% 75.8% 76.1% 72.4% 70.7% 67.4% 71.8% Initial 2015 AY 1 year later 76.2% 7
Slide 33: GI – GC Loss and paid to ultimate triangles
GI – GC Loss and paid to ultimate triangles Recent accident year loss ratios reflect strengthening in 2015 ULTIMATE NET LOSS AND PAID TO ULTIMATE RATIOS (%) KEY TAKEAWAYS AY 2008 2009 2010 2011 2012 2013 2014 2015 In the year 96.3% 80.2% 83.7% 92.8% 81.7% 79.4% 73.5% 87.6% Reserve 1 year later 95.
Slide 34: GI – NAC Loss and paid to ultimate triangles
GI – NAC Loss and paid to ultimate triangles Regional views highlight different mix of business by region ULTIMATE NET LOSS AND PAID TO ULTIMATE RATIOS (%) KEY TAKEAWAYS AY 2008 2009 2010 2011 2012 2013 2014 2015 In the year 72.5% 70.3% 73.0% 73.0% 74.1% 67.8% 66.6% 67.0% NAC strengthened 1 year l
Slide 35: GI – EMEA Loss and paid to ultimate triangles
GI – EMEA Loss and paid to ultimate triangles EMEA continues to see positive PYD development ULTIMATE NET LOSS AND PAID TO ULTIMATE RATIOS (%) KEY TAKEAWAYS AY 2008 2009 2010 2011 2012 2013 2014 2015 In the year 74.6% 76.7% 75.0% 72.4% 71.0% 71.0% 66.7% 71.1% EMEA saw 1 year later 75.2% 78.1% 76.2
Slide 36: GI – Catastrophes split by region
GI – Catastrophes split by region Last three years have been below our plan assumption CATASTROPHES (% OF NET EARNED PREMIUM)1 6.7% 5.8% 1.9% 1.4% 0.5% 3.7% 1.6% 3.4% 1.1% 3.0% Ø 3.0% 0.7% 1.4% 2.3% 2.3% 1.9% 4.3% 1.7% 0.3% 1.9% 1.6% 1.3% 0.0% 0.7% 0.6% 0.1% 0.3% 0.5% 1.4% 0.8% 0.3% 2.6% 0.2% 1.2% 0
Slide 37: GI Global Corporate – KPIs
GI Global Corporate – KPIs Clear set of actions identified to address performance issues FY-15 KEY FINANCIALS1 GWP Zurich rate Combined USD 783m USD -345m Growth2 change3 Ratio 0% 0% 114% 113.9% 95.7% 22.7% 21.8% KEY DRIVERS 73.9% 91.2% Flat growth reflecting continued market pressure, and underwr
Slide 38: GI North America Commercial – KPIs
GI North America Commercial – KPIs Continued growth, uptick in combined ratio FY-15 KEY FINANCIALS GWP Zurich rate Combined USD 923m USD 768m Growth1 change2 Ratio 7% 1% 98% 96.5% 98.2% 30.1% 31.2% KEY DRIVERS 66.4% 67.0% Modest growth with continued execution of strategic growth initiatives (incl
Slide 39: GI EMEA – KPIs
GI EMEA – KPIs Combined ratio impacted by floods and large losses in the UK FY-15 KEY FINANCIALS1 GWP Zurich rate Combined USD 1,223m USD 404m Growth2 change3 Ratio -1% 2% 101% 101.3% 95.1% 32.1% 31.1% KEY DRIVERS 64.1% 69.1% 1% growth excluding Russia Retail4 and some other one-offs, expansion in
Slide 40: GI International Markets – KPIs
GI International Markets – KPIs Lower AY loss ratio offset by turnaround actions FY-15 KEY FINANCIALS GWP Zurich rate Combined USD 40m USD 82m Growth1 change2 Ratio 9% 5% 103% 104.6% 103.3% 42.9% 46.8% KEY DRIVERS 61.7% Growth mainly driven by the new extended 56.5% warranty distribution agreement
Slide 41: GI – Rate change monitor
GI – Rate change monitor Increased pricing pressure in most regions Q4-15 ZURICH RATE CHANGE ASSESSMENT Business Assessment Moderate rate increases at prior year levels with market pressure, particularly in US property Group lines. Higher rates in the US and in international markets despite competit
Slide 42: GI – Natural catastrophe reinsurance
GI – Natural catastrophe reinsurance Program further benefitted from lower reinsurance prices NATURAL CATASTROPHE REINSURANCE TREATIES1 (USDm) 10 10 200 10 10 200 10 10 10 500 200 500 500 Single global USD 200m treaty, which can be applied to any region2 10 10 10 650 200 300 10 747 500 Single global
Slide 43: GL – Q4 BOP by region
GL – Q4 BOP by region Strong local currency growth in EMEA and Latin America BOP BY REGION (USDm) KEY DRIVERS (USDm) -3% 294 36 -19 3 -10 308 299 308 299 8 9 19 -37 43 8 9 57 38 38 57 65 46 28 28 46 212 215 216 215 216 -1 -1 -10 -1 -10 (25) Q4-13 Q4-14 Q4-15 Q4-14 EMEA Latin North APAC Other FX Q4-1
Slide 44: GL – New business by pillar
GL – New business by pillar Higher NBV benefitting from favorable CLP and Retail mix Q4-15 KEY FINANCIALS1,2 APE (USDm) CLP single 1,678 NBM PVNBP premium 1,189 752 1,201 307 393 449 483 24.9% USD 13.3bn USD 1.2bn 424 433 443 384 Q4-13 Q4-14 Q4-15 KEY DRIVERS NBV (USDm) CLP protection and pensions
Slide 45: 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)1,2,3 AUM DEVELOPMENT (USDbn)3 7.2 6.0 0.5 267 3 7 -23 254 0.7 2.1 32 35 2.2 0.7 0.8 112 103 3.9 0.0 2.5 0.5 0.0 0.4 -0.1 -0.3 122 116 -3.6 -2.7 Balance as Net inflo
Slide 46: GL North America – Key financials
GL North America – Key financials Slight deterioration in BOP, adjusted for distorting impacts BOP BY SOURCE OF EARNINGS (USDm) KEY FINANCIALS & KPI (USDm) D FY-141 173 178 Loadings & fees 392 1 394 160 4% 141 109 111 100 Inv. margin 30 -31% 21 Technical margin 113 -9% -42 Operating costs -134 3% FY
Slide 47: GL Latin America – Key financials
GL Latin America – Key financials Local currency BOP growth BOP BY SOURCE OF EARNINGS (USDm) KEY FINANCIALS & KPI (USDm) D FY-141 245 229 222 Loadings & fees 648 30 678 6% 195 164 142 Inv. margin 135 119 125 31% 63 Technical margin 179 -6% Operating costs -230 FY-13 FY-14 FY-15 -16% Acquisition cost
Slide 48: GL EMEA – Key financials
GL EMEA – Key financials Growth in Loadings & fees and Technical margin BOP BY SOURCE OF EARNINGS (USDm) KEY FINANCIALS & KPI (USDm) D FY-141 917 920 892 881 Loadings & fees 1,643 758 2,401 3% 812 168 510 546 526 Inv. margin 255 422 3% 384 Technical margin 871 11% Operating costs -1,167 FY-13 FY-14
Slide 49: GL APAC – Key financials
GL APAC – Key financials Volume driven growth offset by acquisition costs BOP BY SOURCE OF EARNINGS (USDm) KEY FINANCIALS & KPI (USDm) D FY-141 112 Loadings & fees 145 27 172 10% 88 67 42 52 43 Inv. margin 51 -7% -10 Technical margin 87 13% -53 -77 Operating costs -164 -13% FY-13 FY-14 FY-15 Acquisi
Slide 50: GL – Embedded value result
GL – Embedded value result Positive new business and profit release offset by FX EMBEDDED VALUE DEVELOPMENT1 (USDm) -129 -136 672 -1,166 912 -1,339 18,823 17,637 Opening New business Expected Operating Economic & Dividends, Foreign currency Closing embedded value contribution variances other non- in
Slide 51: GL – MCEV free surplus roll-forward
GL – MCEV free surplus roll-forward1 Overall decrease due to dividends and foreign currency translation FREE SURPLUS DEVELOPMENT (USDm) -43 -133 364 -1,186 -1,408 1,584 -271 2,696 1,603 Opening free Cash strain Expected Expected Operating Economic & Dividends, Foreign Closing free surplus FY-14 from
Slide 52: 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%) 239 176 -19 -18 -18 -18 -17 -16 -15 -13 -13 163 173 177 -4 -3 163 181 -6 -5 -4 171 159 156 170 174 163 168 147 -11 -8 -7 -7 142 127 131 Q4-
Slide 53: Farmers Exchanges – Q4 KPIs
Farmers Exchanges1 – Q4 KPIs Continued growth primarily driven by rate increases GWP GROWTH (%)3 COMBINED RATIO (%)3 SURPLUS4 (USDbn) 3.1% 106.6% 38.5% 36.6% 36.6% 6.7% 2.4% 2.3% 2.3% 95.4% 95.7% 6.3 5.9 6.0 1.9% 1.8% 2.0% 99.9% 5.0 5.4 5.5 93.6% 93.7% 1.0 0.9 0.5 Q4-142 Q1-15 Q2-15 Q3-15 Q4-15 Q4-1
Slide 54: Farmers – Q4 KPIs
Farmers – Q4 KPIs Farmers Re CR deterioration driven by cat and underlying losses BOP (USDm) MGEP MARGIN (%)1 FARMERS RE CR (%)2 420 7.2% 7.2% 104.2% 408 7.1% 351 5.8% 96.7% 95.2% 1.6% 1.8% 340 345 355 98.4% 95.1% 93.4% 68 75 -4 Q4-13 Q4-14 Q4-15 Q4-13 Q4-14 Q4-15 Q4-13 Q4-14 Q4-15 3 Catastrophes FM
Slide 55: Farmers Exchanges – GWP
Farmers Exchanges1 – GWP Growth primarily driven by rate DEVELOPMENT OF GWP BY BUSINESS LINE (USDm) +2.4% +3.1% 18,635 19,077 4,472 4,611 6,709 7,151 +6.6% 1,655 1,790 8.2% +2.5% -1.6% 1,010 1,035 248 244 593 595 +0.3% 143 145 +1.6% 4,873 5,013 +2.9% 1,165 1,224 +5.1% 2,208 2,292 +3.8% 484 501 +3.6%
Slide 56: Farmers Exchanges – PIF/VIF
Farmers Exchanges – PIF/VIF VIF growth in Auto business slowing down in Q4-15 DEVELOPMENT OF PIF/VIF1 BY BUSINESS LINE (THOUSANDS) -0.1% -0.3% 19,041 19,016 19,066 19,016 7,843 8,109 8,054 8,109 +3.4% +0.7% -7.4% 982 909 936 909 -2.9% 754 757 +0.3% 756 757 +0.1% 4,796 4,800 +0.1% 4,797 4,800 +0.1% +
Slide 57: Farmers Exchanges – Combined ratio
Farmers Exchanges – Combined ratio Continued impact of unfavorable claim trends on Auto business COMBINED RATIO BY BUSINESS LINE (%)1 Auto 108.2% Auto 116.2% 100.1% 102.2% 106.1% 106.9% Bristol West2 101.8% Bristol West2 100.5% 21st Century 98.7% 21st Century 109.9% cont.3 99.2% cont.3 101.1% 97.9%
Slide 58: Farmers Exchanges – Combined ratio history
Farmers Exchanges – Combined ratio history Severe December weather impacting Q4-15 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 Excl. 105 California Fogel/
Slide 59: Other Operating Businesses
Other Operating Businesses Lower than expected Headquarters expenses in Q4-15 QUARTERLY BOP SPLIT (USDm) 20 -7 -51 -51 -48 -38 -64 -113 -143 -137 -191 -82 -133 -224 -134 -171 -171 -146 -167 -171 -172 -149 -184 -230 -213 -222 -219 -280 -286 -356 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q
Slide 60: Group - Shareholders effective tax rate
Group - Shareholders effective tax rate Special events drive 2015 effective tax rate to 37% SHAREHOLDERS EFFECTIVE TAX RATE (ETR) WALK 37% 3% 3% 3% 25% 1% 2% 2015 expected ETR Accounting and Goodwill DTA write-down Specific losses Other 3 2015 ETR restructuring impairment1 and loss charges developem
Slide 61: 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 191bn 3% 6% 6% 1% 6% 6% 100% 2% 5% 36% 41% 25% 42% 78% 8% Sum of single Investment Investment security risks risks ris
Slide 62: Group Investments – Debt securities portfolio
Group Investments – Debt securities portfolio1 Debt securities portfolio is of a high quality BY CATEGORY BY RATING Total debt securities: USD 138bn 12% 1% 3% 21% 24% 46% 42% 17% 34% Government and government related bonds MBS/ABS2 AAA A Non-rated Corporate bonds AA BBB Non-investment grade 1 Accoun
Slide 63: Group Investments – Bond portfolio
Group Investments – Bond portfolio1 High quality and well diversified BY SEGMENT BY RATING BY COUNTRY Total bonds: USD 122bn 25% USA 7% 3% 11% United Kingdom 17% 9% France 35% 28% 9% Italy Bond 8% Germany securities 8% Switzerland 6% Spain 64% 58% 33% 3% Netherlands 19% 3% Australi
Slide 64: Group Investments – Government bonds & Other
Group Investments – Government bonds & Other1 High quality and well diversified BY SEGMENT BY RATING BY COUNTRY Total government bonds: USD 64bn 21% USA 9% 3% 13% Italy 22% 25% 11% Germany 33% 9% United Kingdom Bond 9% Switzerland securities 3% 8% France 64% 7% Spain 58% 3% Belgium
Slide 65: Group Investments – Corporate bonds
Group Investments – Corporate bonds1 High quality and well diversified BY SEGMENT BY RATING BY INDUSTRY Total corporate bonds: USD 58bn 50% Financial Institutions 7% 3% o/w 85% Banks 13% o/w 10% Insurance Bond 37% 33% 14% 18% Manufacturing securities 9% Utilities 5% Oil & Gas 64% 4% Teleco
Slide 66: 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 2.41% 3.02% 2.67% Equity 1.95% Equity 2.64% Equity 2.16% 1.80% 2.51% Trade Yield 1.91% Trade Yield 2.49% at ~2.2%2 3.10% at ~2.0%2 2.81% Debt 2.56% Debt 3.
Slide 67: Group – Economic capital models
Group – Economic capital models Strong capital position across all metrics Z-ECM RATIO DEVELOPMENT (%) SST1 RATIO DEVELOPMENT (%) 10% 1% -8% 5% -1% -2% 209% 10% 1% -5% 203% 196% 122% -6% 114% FY-14 Business Ins. Risk2 Market Market Cap. 9m-15 FY-14 Business Ins. Market Market Cap. HY-15 HY-15 profit
Slide 68: Group – Z-ECM components
Group – Z-ECM components Well diversified capital base by risk type 9M-15 AFR COMPOSITION (USDbn) RBC BY RISK TYPE AND BUSINESS1 9% Market risk Shareholders equity 32 4% Re-ins credit risk 3% 8% P&R risk2 Dividend accrual 2 52% Natural cat risk 22% Life insurance risk Net intangibles 17 Operational
Slide 69: Group – Solvency ratio sensitivities
Group – Solvency ratio sensitivities1 Solvency ratios resilient to market movements SOLVENCY RATIO IMPACT2 123% Actual value as of HY-15 203% 124% Interest rate +100 bps 203% 121% Interest rate -100 bps 200% 127% Equities +20% 208% 120% Equities -20% 197% 111% Credit spreads +100 bps3 176% 113% CS e
Slide 70: Group – EPS, BVPS and ROE calculations
Group – EPS, BVPS and ROE calculations1 EPS AND BVPS (CHF) BOPAT ROE AND ROE (%) No., CHF FY-14 FY-15 USDm, % FY-14 FY-15 Common shares issued 149.64m 150.40m SHE 34,735 31,178 Treasury shares 1.29m 1.24m Net URGL / CF hedges 4,374 2,850 Common shares outst. 148.34m 149.16m Adj. SHE 30,362 28,328 WA
Slide 71: Group – Currency impact
Group – Currency impact Move in currency is mainly translational FY-15 KEY RESULTS KPI USDm reported at constant currency BOP 2,916 -37% -34% Group NIAS 1,842 -53% -64% GWP 34,020 -6% +3% NEP 28,051 -7% +2% General Net underwriting result -1002 nm nm Insurance Investment income 2’002 -7% +1% BOP 864
Slide 72: Commentary
@ ZURICH Commentary
Slide 73: Page 4: Key financials
Page 4: Key financials Zurich’s results for 2015 are very disappointing. While it is important to understand the starting point for 2016, the focus is on making sure that all necessary steps are taken to return the group to the required level of profitability as soon as possible. The issues are conc
Slide 74: Page 5: Report card – Group
Page 5: Report card – Group Progress has been made in executing the group’s strategy in a number of key areas. In terms of investing in priority markets, the life business has continued to show good momentum in Bancassurance and Corporate Life and Pensions. General Insurance continues to make invest
Slide 75: Page 6: Report card – General Insurance
Page 6: Report card – General Insurance 2015 was a disappointing year for General Insurance. In particular, results for Q3 and Q4 were impacted by a very high level of large individual losses, with Q3 also impacted by reserve charges in North America relating to commercial auto liability and a sub-p
Slide 76: Page 7: Report card – Global Life
Page 7: Report card – Global Life Global Life has delivered on expectations in 2015, despite market headwinds and the challenges of a low yield environment. An increase in new business value of 7% in local currency is due to success in bank joint ventures as well as investments in a number of develo
Slide 77: Page 8: Report card – Farmers Exchanges
Page 8: Report card – Farmers Exchanges There has also been very good progress in the execution of Farmers Exchanges’ strategy, evident in a continued improvement in customer satisfaction as measured by the Net Promoter Score, and an increase in customer retention. The Farmers Exchanges also saw con
Slide 78: Page 10: Group – Business Operating Profit
Page 10: Group – Business Operating Profit Zurich has reported Business Operating Profit of $2.9bn and Net Income Attributable to Shareholders of $1.8bn for 2015. The weak performance from the General Insurance business has led to the group reporting sharply lower earnings in comparison to the prior
Slide 79: Page 11: General Insurance – Topline
Page 11: General Insurance – Topline For the full year 2015 gross written premiums grew by 3% in local currency and were down 6% in US dollars. In Q4 the top-line was flat in local currency and down 7% in US dollars, driven by some one-off items in EMEA and a small decline in the Global Corporate bu
Slide 80: Page 12: General Insurance – Combined ratio
Page 12: General Insurance – Combined ratio GI’s combined ratio of 108.6% for Q4 discrete is 9.3 percentage points higher than in Q4 2014 and 6.7 percentage points higher than in the first nine months of 2015. The increase in Q4 compared to the rest of the year is mainly due to higher natural catast
Slide 81: Page 13: General Insurance – BOP components
Page 13: General Insurance – BOP components The decline in the GI underwriting result is reflected in the increase of the combined ratio of almost 7 percentage points. Investment income declined by $147m on a reported basis but is slightly up compared to last year in local currency. In Q4 investment
Slide 82: Page 14: General Insurance – Status Update
Page 14: General Insurance – Status Update Clearly, GI results in the second half of 2015 have fallen far short of what was expected. Some of this is due to likely one-off items, but there are a number of other factors relevant to the results, with some of the key ones explained below. First, while
Slide 83: Page 15: General Insurance – Focus in 2016
Page 15: General Insurance – Focus in 2016 In the second half of 2015, following the appointment of new members in the GI management team, a detailed review was performed leading to the identification of a comprehensive set of actions, centering around four themes – restoring technical excellence, f
Slide 84: Page 16: Global Life – New business
Page 16: Global Life – New business Global Life new business APE volumes for the full year 2015 increased 7% in local currency compared to 2014, driven by good performance in most regions. EMEA increased local currency new business volumes by 6%, with growth in most countries, primarily driven by in
Slide 85: Page 17: Global Life – BOP by region
Page 17: Global Life – BOP by region Global Life Business Operating Profit increased 16% in local currency, or 2% compared to the prior year period in dollars, to $1.3bn. This is a strong result in a challenging environment. In EMEA, earnings decreased by 3%, while local currency BOP grew by 10% wit
Slide 86: Page 18: Global Life – Source of earnings
Page 18: Global Life – Source of earnings Adjusting for various one-off factors, and as explained in the updated Sources of Earnings briefing document, revenues grew 6% in local currency in 2015. The main driver was 5% local currency growth in loadings and fees, where volumes in Zurich Santander, EM
Slide 87: Page 19: Farmers Exchanges – KPIs
Page 19: Farmers Exchanges – KPIs Zurich does not own the Farmers Exchanges, but the following points are relevant to the performance of the Farmers business segment. Premium growth in 2015 was 2.4% overall and 3.6% for continuing operations. There was some acceleration in the fourth quarter with co
Slide 88: Page 20: Farmers – KPIs
Page 20: Farmers – KPIs Farmers BOP decreased by 10% largely driven by Farmers Re while Farmers Management Services continued to be a stable and reliable source of profit. At Farmers Management Services the gross management result remained virtually unchanged with flat management fees and expenses.
Slide 89: Page 21: Group – Balance sheet and capital
Page 21: Group – Balance sheet and capital Shareholders’ equity decreased by over $3.6 billion in 2015, mainly due to a reduction in unrealized investment gains and the impact of continued strengthening of the US dollar against most major currencies. The Z-ECM ratio dropped by 9 points to 114% in th
Slide 90: Page 22: Cash remittances & dividend proposal
Page 22: Cash remittances & dividend proposal Cash remittances of $3.9bn for 2015 are in line with the indication given at half year, and are again well ahead of the run rate needed to achieve the cumulative $9bn target for 2014 to 2016. There were a number of one-off items in 2015, including $485m
Slide 91: Page 23: Factors influencing 2016
Page 23: Factors influencing 2016 General Insurance has a comprehensive plan to improve profitability, focused on reducing the loss ratio in absolute terms, and also reducing volatility. Actions under way to reinforce technical disciplines, reprice lower tier business and exit some lines of business
Slide 92: Page 24: Key messages
Page 24: Key messages The last 12 months has brought many challenges to the group, and there is a lot to do to restore confidence and to get the General Insurance business back on track. The group expects to see the benefits of the comprehensive action plan now being implemented emerge progressively
Slide 93: 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 Investor Relations website Financial results an
Slide 94: Calendar
Calendar: - March 30, 2016, Annual General Meeting 2016 - May 12, 2016, Results for the three months to March 31, 2016 - August 11, 2016, Half year results 2016 - November 10, 2016, Results for the nine months to September 30, 2016 - December 1, 2016, Investor Day © Zurich Insurance Company Ltd
Zurich Insurance Group — FY2015 Earnings Presentation on 6ix