Zurich Insurance Group Ltd · SIX:ZURN
Zurich Insurance — Investor Day (November 2019)
120 slides from Zurich Insurance's investor day presentation, Nov 14, 2019
Slide 1: Simple execution, higher ambition
Simple execution, higher ambition November 14, 2019 London Zurich Insurance Group
Slide 2: Agenda
Agenda TIME TOPIC SPEAKER 09:30 – 10:00 Strategic update Mario Greco 10:00 – 10:30 Operational simplicity Kristof Terryn 10:30 – 11:00 Coffee break 11:00 – 11:20 Driving customer excellence Conny Kalcher 11:20 – 11:55 Customer-led retail transformation Giovanni Giuliani 11:55 – 12:15 Make the differ
Slide 3: 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 4: Simple execution, higher ambition
Simple execution, higher ambition Mario Greco, Group Chief Executive Officer
Slide 5: Key messages
SIMPLE EXECUTION, HIGHER AMBITION Key messages We have delivered on all our 2017 – 2019 targets, reduced volatility and achieved superior Execution returns to shareholders, while executing an industry-leading simplification program Strong Our strong retail and commercial franchise and flexible opera
Slide 6: We have delivered on our targets and created significant value for shareholders
SIMPLE EXECUTION, HIGHER AMBITION We have delivered on our targets and created significant value for shareholders TOTAL SHAREHOLDER RETURN IN USD (SINCE JAN 1, 2016)1 2017 – 2019 TARGETS TOTAL (%) CAGR (%) TARGET HY-19 200% 96% 19% BOPAT ROE >12% 15.0% 150% 35% 8% EXPENSE SAVINGS USD 1.5bn USD 1.3bn
Slide 7: Our growth has been reinvigorated, with continued low earnings volatility
SIMPLE EXECUTION, HIGHER AMBITION Our growth has been reinvigorated, with continued low earnings volatility 2016 – 2018 EPS CAGR (%)1 2007 – 2018 NET INCOME COEFFICIENT OF VARIATION (%)2 8.0% 53% 7.3% 43% 5.1% 3.9% 34% 30% 27% 24% -2.2% -5.0% Zurich Peers3 Zurich Peers3 1 Basic earnings per share. A
Slide 8: We have delivered on an industry-leading simplification program
SIMPLE EXECUTION, HIGHER AMBITION We have delivered on an industry-leading simplification program WE HAVE SIMPLIFIED OUR BUSINESS AND OPERATIONS... ...DRIVING COST SAVINGS AHEAD OF PEERS SIMPLIFIED ORGANIZATION P&C OTHER UNDERWRITING EXPENSES (OUE), FY-18 VS. FY-15 CHANGE (%)3 Organization de-layere
Slide 9: We have improved our competitive profile and customer focus
SIMPLE EXECUTION, HIGHER AMBITION We have improved our competitive profile and customer focus while building a culture of innovation and empowerment STRENGTHENED MARKET POSITION SHARPENED CUSTOMER FOCUS DRIVING A CULTURE OF INNOVATION AND EMPOWERMENT ACQUISITION CHANGE IN RANKING NPS CHANGE2 Crop n.
Slide 10: Our strategy and flexible operating model position us to take advantage of industry change
SIMPLE EXECUTION, HIGHER AMBITION Our strategy and flexible operating model position us to take advantage of industry change EXTERNAL ENVIRONMENT OUR STRATEGY OUR OPERATING MODEL COMMERCIAL RETAIL Customer revolution Focus on the customer GROUP Brand Geopolitical and Go to market Go to market econom
Slide 11: In commercial we have differentiated ourselves from peers
SIMPLE EXECUTION, HIGHER AMBITION In commercial we have differentiated ourselves from peers and have opportunities to further improve earnings COMMERCIAL STRATEGIC FOCUS 2017 TO 2019 P&C COMMERCIAL AY COMBINED RATIO EXCLUDING CATASTROPHES HY-19 VS. FY-16 (ppts) Reduced results volatility 6.7ppts Cha
Slide 12: In commercial we have differentiated ourselves versus peers: large loss volatility
SIMPLE EXECUTION, HIGHER AMBITION In commercial we have differentiated ourselves versus peers and have opportunities to further improve earnings COMMERCIAL STRATEGIC FOCUS 2017 TO 2019 P&C COMMERCIAL LARGE LOSS VOLATILITY (ppts)1 Reduced results volatility 13ppts 5ppts Changed business mix Lowered e
Slide 13: In commercial we have differentiated ourselves versus peers: business mix
SIMPLE EXECUTION, HIGHER AMBITION In commercial we have differentiated ourselves versus peers and have opportunities to further improve earnings COMMERCIAL STRATEGIC FOCUS 2017 TO 2019 P&C COMMERCIAL BUSINESS MIX (% NEP) Reduced results volatility 26% 27% 31% 31% Changed business mix 23% 22% 24% 26%
Slide 14: In commercial we have differentiated ourselves versus peers: expense ratio
SIMPLE EXECUTION, HIGHER AMBITION In commercial we have differentiated ourselves versus peers and have opportunities to further improve earnings COMMERCIAL STRATEGIC FOCUS 2017 TO 2019 P&C COMMERCIAL OTHER UNDERWRITING EXPENSE RATIO (%) -1.4ppts Reduced results volatility 15.4% 14.6% Changed busines
Slide 15: In commercial we have differentiated ourselves versus peers: customer satisfaction
SIMPLE EXECUTION, HIGHER AMBITION In commercial we have differentiated ourselves versus peers and have opportunities to further improve earnings COMMERCIAL STRATEGIC FOCUS 2017 TO 2019 HY-19 P&C COMMERCIAL CUSTOMER SATISFACTION Reduced results volatility Changed business mix Lowered expenses T-NPS s
Slide 16: In commercial we have differentiated ourselves versus peers: key initiatives
SIMPLE EXECUTION, HIGHER AMBITION In commercial we have differentiated ourselves versus peers and have opportunities to further improve earnings COMMERCIAL STRATEGIC FOCUS 2017 TO 2019 KEY COMMERCIAL INITIATIVES Reduced results volatility Deployed technology and analytics Changed business mix Lowere
Slide 17: We have built a solid foundation in retail
SIMPLE EXECUTION, HIGHER AMBITION We have built a solid foundation in retail SHARPENED CUSTOMER FOCUS RETAIL TOP-LINE2 Deepened customer insights +2% p.a. 18.6 19.4 Leads generation capability established with ZCAM1 P&C GWP BROADENED ACCESS TO CUSTOMERS (USDbn) New distribution partnerships started
Slide 18: Farmers Exchanges drives growth by executing on its customer-centered strategy
SIMPLE EXECUTION, HIGHER AMBITION Farmers Exchanges1 drives growth by executing on its customer-centered, agent-powered strategy ACCELERATING EXECUTION ON KEY ...WHILE INNOVATING AND FARMERS EXCHANGES GWP (USDbn)1 FOCUS AREAS… EXPANDING INTO NEW SEGMENTS +3% p.a. 20.2 Improve customer experience Mil
Slide 19: Over 2020 – 2022 we will continue our journey to create the leading customer-oriented insurer
SIMPLE EXECUTION, HIGHER AMBITION Over 2020 – 2022 we will continue our journey to create the leading customer-oriented insurer OUR AMBITION FOCUS ON THE • Develop transactional buyers into long-term Zurich customers CUSTOMER • Balance our commercial customer segment mix • Become the preferred insur
Slide 20: We want to be known as one of the most responsible and impactful businesses
SIMPLE EXECUTION, HIGHER AMBITION We want to be known as one of the most responsible and impactful businesses in the world OUR LONG-TERM COMMITMENT OUR AREAS OF FOCUS WORK SUSTAINABILITY Providing support to our employees and customers as we navigate together the impact of the changing nature of wor
Slide 21: We will pull all levers to further lift Zurich's performance
SIMPLE EXECUTION, HIGHER AMBITION We will pull all levers to further lift Zurich’s performance and drive higher levels of profitability LEVERS TO IMPROVE 2020 – 2022 BOPAT ROE (ppts)1 Business Portfolio Capital Productivity growth quality allocation ~0.75-1.5ppts ~2-2.5ppts ~1-1.5ppts ~0.5ppts © Zur
Slide 22: We are stepping up our financial targets for 2020 – 2022
SIMPLE EXECUTION, HIGHER AMBITION We are stepping up our financial targets for 2020 – 2022 and we will disclose additional customer KPIs FINANCIAL TARGETS CUSTOMER KPIs 2017 – 2019 DELIVERED 2020 – 2022 AMBITION BOPAT ROE1 in excess of 12% BOPAT ROE1 in excess of 14% and Net new retail customers and
Slide 23: Key messages
SIMPLE EXECUTION, HIGHER AMBITION Key messages We have delivered on all our 2017 – 2019 targets, reduced volatility and achieved superior Execution returns to shareholders, while executing an industry-leading simplification program Strong Our strong retail and commercial franchise and flexible opera
Slide 24: Operational simplicity
Operational simplicity Kristof Terryn, Group Chief Operating Officer
Slide 25: Key messages
OPERATIONAL SIMPLICITY Key messages Execution We have delivered on all our 2017 – 2019 targets by building simpler, leaner operations Simplification We have simplified our operations and continue to do so with focus shifting from infrastructure and applications towards products and front-end process
Slide 26: Three years ago we set clear ambitions on which we have delivered
OPERATIONAL SIMPLICITY Three years ago we set clear ambitions on which we have delivered SIMPLIFICATION TECHNICAL EXCELLENCE EFFICIENCY FROM TO >70 Data Centers 13 Straight-through processing 85% of personal lines underwriting IT network >140 providers 1 Straight-through processing 37% of claims ~US
Slide 27: We have simplified our operations and continue to do so
OPERATIONAL SIMPLICITY We have simplified our operations and continue to do so with focus towards products and front-end processes OPERATING PLATFORM Transformation Focus 2017 – 2019 execution: Focus on 2020 – 2022 priorities: Continue modernization of simplifying our operating landscape operating m
Slide 28: We have consolidated our data centers from over 70 to 13
OPERATIONAL SIMPLICITY We have consolidated our data centers from over 70 to currently 13 and replaced over 140 IT network providers with a single one FROM TO BENEFITS • Reduction in complexity and risk • Enhanced network stability and quality • Improved capabilities and service uplift • Easier inte
Slide 29: We are transferring our technical depth to the cloud
OPERATIONAL SIMPLICITY We are transferring our technical depth to the cloud to reduce complexity and cost while improving stability and time-to-market FROM TO BENEFITS • Reduction of significant outages by >60% • Shorter time-to-market for new propositions • Reduction of private cloud costs by >30%
Slide 30: We have simplified our application landscape by decommissioning over 550 applications
OPERATIONAL SIMPLICITY We have simplified our application landscape by decommissioning over 550 applications FROM TO BENEFITS • Reduced complexity • Greater flexibility with 34% of applications on cloud-based solutions … • Reduced expenses allowing investments in new capabilities • Net savings of US
Slide 31: We have enhanced our IT capabilities through insourcing and selective crowdsourcing
OPERATIONAL SIMPLICITY We have enhanced our IT capabilities through insourcing and selective crowdsourcing FROM TO BENEFITS • Significant leaps in agility, optionality and quality • Access to a huge breadth of internal and external talent e.g. to new areas of design, data science • Best quality outp
Slide 32: We have simplified the life of our underwriters by halving pricing tools
OPERATIONAL SIMPLICITY We have simplified the life of our underwriters by halving the number of pricing tools while adding new functionalities FROM TO BENEFITS • Faster time to market • Greater pricing flexibility • More accurate data capture • Increased consistency of underwriting • Improved risk a
Slide 33: We have significantly improved motor claims customer journeys through digitalization
OPERATIONAL SIMPLICITY We have significantly improved motor claims customer journeys through digitalization FROM TO BENEFITS • Improved customer satisfaction with T-NPS increase of +9 pts • Time for customers to receive payment reduced from 10 to 3 days • Lower claims costs with 20% increase in stee
Slide 34: We have streamlined the UK product set to offer a superior SME customer experience
OPERATIONAL SIMPLICITY We have streamlined the UK product set to offer a superior SME customer experience FROM TO BENEFITS • Targeted coverage for brokers with clearly conveyed risk appetite • Increased customer satisfaction with T-NPS increase of +28 pts • Up to 25% reduction in variable costs thro
Slide 35: Our focus will be on further improving the customer experience
OPERATIONAL SIMPLICITY Our focus will be on further improving the customer experience and investing in capabilities to support our growth… OPERATING PLATFORM PRIORITIES 2020 – 2022 Flexible propositions with increased coverage through continued product rationalization Products & Services At-scale ro
Slide 36: ... while continuing the efficiency journey
OPERATIONAL SIMPLICITY ... while continuing the efficiency journey P&C OTHER UNDERWRITING EXPENSE RATIO DEVELOPMENT (%) -2.4ppts 16.1% 15.4% 14.2% 14.1% 13.7% FY-15 FY-16 FY-17 FY-18 HY-19 © Zurich November 14, 2019 Investor Day 36
Slide 37: Improved customer experience through innovative products using automated underwriting and claims
OPERATIONAL SIMPLICITY Improved customer experience through innovative products using fully automated underwriting and claims settlement EXAMPLE: PARAMETRIC INSURANCE (EARTHQUAKE INSURANCE JAPAN) Implemented capability: • Parametric earthquake insurance with pre-agreed payout trigger • Granular risk
Slide 38: Automation has potential to reduce underwriting cost base by up to 15%
OPERATIONAL SIMPLICITY Automation has potential to reduce underwriting cost base by up to 15% EXAMPLE: AUTOMATED STRUCTURING OF GEO-LOCATION DATA (LOCATION ROBOTS) Implemented capability: • Natural language processing to automatically structure address data on EMEA property broker submissions to all
Slide 39: Automation has potential to reduce claims handling cost base by up to 15%
OPERATIONAL SIMPLICITY Automation has potential to reduce claims handling cost base by up to 15% EXAMPLE: SELF-LEARNING ALGORITHM IN SWITZERLAND COMMERCIAL LINES (‘MEDEYE’) Implemented capability: • Algorithm developed and trained with historical data from last 10 years for hospital liability (medic
Slide 40: Further efficiencies to improve net OUE ratio by 1 percentage point
OPERATIONAL SIMPLICITY Further efficiencies to improve net OUE ratio by 1 percentage point and support investments in new capabilities and growth KEY PRIORITIES AND OBJECTIVES FOR 2020 – 2022 At scale roll-out of intelligent automation 1ppt of OUE ratio improvement program to all core insurance func
Slide 41: Key messages
OPERATIONAL SIMPLICITY Key messages Execution We have delivered on all our 2017 – 2019 targets by building simpler, leaner operations Simplification We have simplified our operations and continue to do so with focus shifting from infrastructure and applications towards products and front-end process
Slide 42: Driving customer excellence
Driving customer excellence Conny Kalcher, Chief Customer Officer
Slide 43: Key messages
DRIVING CUSTOMER EXCELLENCE Key messages Transforming In 2016 we chose to become a customer-led company; the change is well underway and more Zurich is to come Customer We understand what drives customer loyalty and we are acting upon customer feedback to loyalty improve satisfaction and thereby inc
Slide 44: We are transforming Zurich into a customer-centric company
DRIVING CUSTOMER EXCELLENCE We are transforming Zurich into a customer-centric company FROM TO Policy oriented Customer led Standardized Modular and personalized Owning the customer Serving their needs & society Opaque Transparent Company led Community and co-creation Complex Intuitive and convenien
Slide 45: Changing from 'Product Brand' to 'Experience Brand'
DRIVING CUSTOMER EXCELLENCE Changing from ‘Product Brand’ to ‘Experience Brand’ EXPERIENCE BRANDS Focus on understanding customers Create distinct and seamless experience Create moments of dialogue Continuously improve customer experience © Zurich November 14, 2019 Investor Day 45
Slide 46: We will redefine our customer value proposition
DRIVING CUSTOMER EXCELLENCE We will redefine our customer value proposition and transform the way we service and engage with customers CUSTOMER FOCUSED OPERATING MODEL STRATEGIC INTENT 5 BRAND PROMISES Purpose • Customer driven • Protection • Partner • Substance brand • People • Planet Vision Values
Slide 47: We continue to gain deep customer knowledge through our NPS program
DRIVING CUSTOMER EXCELLENCE We continue to gain deep customer knowledge and insights through our NPS program PROGRAM KPIs (FY-19e) GLOBAL DRIVERS OF LOYALTY Responses expected ~1m Detractor close the loop calls ~70,000 Ease Speed Product STRONG GOVERNANCE Cross-functional teams reviewing customer fe
Slide 48: Our efforts are yielding positive results across the Group
DRIVING CUSTOMER EXCELLENCE Our efforts are yielding positive results across the Group NPS CHANGE (9m-19 vs. FY-18) T-NPS change T-NPS change T-NPS change +2pts -1pts +16pts EMEA2 NORTH AMERICA ASIA PACIFIC T-NPS change R-NPS change +5pts +1pts 3 LATIN AMERICA1 1 Does not include the joint venture w
Slide 49: Customer loyalty leads to higher profits
DRIVING CUSTOMER EXCELLENCE Customer loyalty leads to higher profits PROMOTERS BUY MORE MULTI-LINE CUSTOMERS STAY LONGER 1.3x 2x AVERAGE # OF CUSTOMER POLICIES PER RETENTION CUSTOMER (%) Detractors Promoters Motor-only Multi-line customers customers PROMOTERS ARE MORE LOYAL RETAINING CUSTOMERS IS CO
Slide 50: Continuously solving customer pain points improves satisfaction and loyalty
DRIVING CUSTOMER EXCELLENCE Continuously solving customer pain points improves satisfaction and loyalty WE TOOK ACTIONS BASED ON NPS THAT SHOW WE ARE ON …AND WE WILL KEEP ENHANCING OUR NPS PROGRAM THE RIGHT PATH… PAIN POINT ACTION T-NPS IMPACT1 2019 2022 Unclear claims status, Introduced digitalized
Slide 51: We have an opportunity to grow in the millennial and Gen Z segments
DRIVING CUSTOMER EXCELLENCE We have an opportunity to grow in the sizeable millennial and Gen Z segments MILLENNIALS/GEN Z ARE CURRENTLY UNDERSERVED BY INSURERS Other 38% (age: 39+) ~80% Millennials 24% (age: 23-38) Gen Z 38% (age: <23) <20% ~1% World population1 Zurich2 © Zurich 1 Estimate based on
Slide 52: Millennials follow a radically different lifestyle
DRIVING CUSTOMER EXCELLENCE Millennials follow a radically different lifestyle TRADITIONAL LIFESTYLE Live with parents Get an education Start a career Get married and have babies Buy a house Kids leaving house MILLENNIAL LIFESTYLE Live with parents Get an education Move back home Travel the world St
Slide 53: Four strategic initiatives to guide customer engagement and drive growth
DRIVING CUSTOMER EXCELLENCE Four strategic initiatives to guide customer engagement, transform the way we work and drive growth DRIVE GROWTH CUSTOMER CUSTOMER EXPERIENCE VALUE INNOVATION PROPOSITION Deepen relationship with our existing customers CUSTOMER CORPORATE BRAND Attract millennials INSIGHTS
Slide 54: Going forward we will disclose two additional customer KPIs
DRIVING CUSTOMER EXCELLENCE Going forward we will disclose two additional customer KPIs BRAND CONSIDERATION NET NEW CUSTOMERS Awareness 13% Net new customers Consideration 15 markets1 8 businesses in scope 53% (~65% of Retail BOP2) 33% Preference Ownership Customer Acquisitions/ Churn Gross new Cust
Slide 55: Key messages
DRIVING CUSTOMER EXCELLENCE Key messages Transforming In 2016 we chose to become a customer-led company; the change is well underway and more Zurich is to come Customer We understand what drives customer loyalty and we are acting upon customer feedback to loyalty improve satisfaction and thereby inc
Slide 56: Customer-led retail transformation
Customer-led retail transformation Giovanni Giuliani, Group Head of Strategy, Innovation and Business Development
Slide 57: Key messages
CUSTOMER-LED RETAIL TRANSFORMATION Key messages Strong Retail is an attractive market and we have a large, profitable and growing franchise foundation Positioned for Our open architecture distribution and simplified operating model position us well for the future the fundamental changes driven by te
Slide 58: Retail Insurance is a large and growing market
CUSTOMER-LED RETAIL TRANSFORMATION Retail Insurance is a large and growing market 2018 INSURANCE MARKET (%)1 RETAIL GWP (USDtn)1 INDIVIDUALS +5% p.a. 25% USD 5.5tn SMALL & MEDIUM ENTERPRISES (SMEs) 75% FY-18 FY-22e Retail Commercial Life Non-Life © Zurich 1 Source: McKinsey’s Global Insurance Pools
Slide 59: Retail is fundamentally changing, propelled by new technology and shifting demographics
CUSTOMER-LED RETAIL TRANSFORMATION Retail is fundamentally changing, propelled by new technology and shifting demographics A NEW MODEL IS EMERGING LARGE AND VERY DIFFERENT CUSTOMER SEGMENTS ARE ENTERING NEW LIFE STAGES % of world population1 Customer proximity 38% Customer New model Gen Z intimacy &
Slide 60: Our Retail business is large, profitable and growing
CUSTOMER-LED RETAIL TRANSFORMATION Our Retail business is large, profitable and growing RETAIL TOPLINE (USDbn) AVERAGE 2016 – 2018 RETAIL BOP SPLIT (%) +2% p.a. 18.6 19.4 P&C GWP 34% 39% +2% p.a. USD 4.3bn 3.0 3.1 +5% p.a. Life APE1 +3% p.a. 18.9 20.2 27% Farmers Exchanges GWP2 FY-16 FY-18 P&C Life
Slide 61: Our portfolio delivers healthy performance
CUSTOMER-LED RETAIL TRANSFORMATION Our portfolio delivers healthy performance, further benefiting from recently simplified operating model HIGH QUALITY LIFE BUSINESS MIX ENHANCED P&C PROFITABILITY FURTHER IMPROVED EFFICIENCY LIFE RETAIL APE BUSINESS MIX (USDbn, %)1 P&C RETAIL COMBINED RATIO (%) P&C
Slide 62: We have a focused yet geographically diversified footprint
CUSTOMER-LED RETAIL TRANSFORMATION We have a focused yet geographically diversified footprint, which has been further strengthened through targeted M&A AVERAGE 2016 – 2018 RETAIL BOP (USDbn, %) STRENGTHENED MARKET POSITION 1.1 4.3 ACQUISITION CHANGE IN RANKING 27% 3.2 Cover-More, Travel Ace, Travel
Slide 63: We have an open distribution architecture ensuring wide customer reach
CUSTOMER-LED RETAIL TRANSFORMATION We have an open distribution architecture ensuring wide customer reach which positions us well for the future AGENTS BANK DISTRIBUTION >45,000 Access to >100m customers through 1 >70 banks >45,0002 DIRECT AFFINITIES & PLATFORMS Access to >100m ~3m customers custome
Slide 64: Over the past three years we have validated solutions with clear business impact
CUSTOMER-LED RETAIL TRANSFORMATION Over the past three years we have validated solutions with clear business impact and know what works and why INCREASE RETENTION INCREASE PRODUCT DENSITY We know how to serve our customers We know how to identify and better so they stay longer PROVEN SOLUTIONS addre
Slide 65: Happier customers stay longer, buy more and cost less to serve
CUSTOMER-LED RETAIL TRANSFORMATION Happier customers stay longer, buy more and cost less to serve EXPANDED NPS GLOBAL PROGRAM CONTINUOUS WORK HIGHER NPS DRIVES PROFITS ON PAIN POINTS Countries in scope 25 PAIN POINT Motor product offering RETENTION not matching customer’s Promoters vs. detractors +1
Slide 66: ZCAM provides our distribution partners with deeper insights into customers
CUSTOMER-LED RETAIL TRANSFORMATION ZCAM1 provides our distribution partners with deeper insights into customers unmet needs DISTINCTIVE CAPABILITIES STRONG RESULTS AFTER FIVE UNITS IN DEPLOYMENT PHASE ONLY 12 MONTHS AND MORE WILL FOLLOW +5% 360° customer view One view of overall customer value with
Slide 67: We can now identify more specific customer needs, leading to much longer tenure
CUSTOMER-LED RETAIL TRANSFORMATION We can now identify more and specific customer needs, leading to much longer tenure and increasing customer value WE CAN TARGET UNMET CUSTOMER NEEDS TO INCREASE … AND WE HAVE LEARNED THEIR EXPONENTIAL PRODUCT DENSITY… IMPACT ON CUSTOMER TENURE CUSTOMER TIME 19 ON B
Slide 68: We have developed connected propositions enriched by services
CUSTOMER-LED RETAIL TRANSFORMATION We have developed connected propositions enriched by services to improve customer experience MOBILITY SMART PROPERTY 1 NEXT NEXT PLAY TRAVEL VIDEO WELLCARE NEXT © Zurich 1 For all references to Farmers Exchanges see the disclaimer and cautionary statement. November
Slide 69: Increased agent productivity through enhanced digital tools
CUSTOMER-LED RETAIL TRANSFORMATION Increased agent productivity through enhanced digital tools FLEXIBLE CRM TOOL DESIGNED BY AGENTS FOR AGENTS Freed-up time per ~0.5 day1 agent per week Additional customer +20%1 visits per year Above average new +56%1 business production Digital, easy-to-use solutio
Slide 70: Distribution partnerships are a growing channel
CUSTOMER-LED RETAIL TRANSFORMATION Distribution partnerships are a growing channel and enable us to reach customers across different moments of their lives PARTNERING WITH AFFINITIES TO ACCESS CUSTOMERS EXAMPLE BANCASSURANCE IN DIFFERENT MOMENTS OF THEIR LIVES Protect family/goods… Take a mortgage,
Slide 71: We will continue to build out this model giving us even greater customer access
CUSTOMER-LED RETAIL TRANSFORMATION We will continue to build out this model giving us even greater customer access DISTINCTIVE CAPABILITIES A KEY DISTRIBUTION CHANNEL FOR …CONTINUOUSLY EXPANDING OUR RETAIL BUSINESS… CUSTOMERS (millions) Unique global footprint 1 Banks 6 Comprehensive product offerin
Slide 72: We are also well prepared to attract new customer segments: SMEs and millennials
CUSTOMER-LED RETAIL TRANSFORMATION We are also well prepared to attract new customer segments: SMEs and millennials CURRENT CUSTOMERS SMEs MILLENNIALS + + • Increase retention • Simplify propositions • Scale up innovative solutions • Increase product density • Increase service components … more to c
Slide 73: We have end-to-end initiatives in place to better serve the SME market
CUSTOMER-LED RETAIL TRANSFORMATION We have end-to-end initiatives in place to better serve the growing SME market A LARGE AND GROWING BUSINESS END-TO-END SET OF INITIATIVES IN PLACE FY-18 P&C SME GWP BY OUR MAIN MARKETS (USDbn) Product simplification Better risk prevention Stronger agency CRM 1 >USD
Slide 74: A simpler and more intuitive SME product offering to support growth
CUSTOMER-LED RETAIL TRANSFORMATION A simpler and more intuitive SME product offering to support growth WE HAVE SIMPLIFIED THE SME …WITH CLEAR WIN-WIN BENEFITS FURTHER ROLL-OUT PLANNED PRODUCT OFFER IN THE UK… • T-NPS +28pts • Service response reduced 108 from days to minutes Deployment in 2020 CUSTO
Slide 75: We are supporting our agents with specific SME insights and simplified brokers' access
CUSTOMER-LED RETAIL TRANSFORMATION We are supporting our agents with specific SME insights and have simplified brokers’ access AGENTS SUPPORTED TO ADDRESS LOCAL SMEs SIMPLIFIED ACCESS FOR BROKERS Doctor Hairdresser Individual AGENCY 1 broker platforms Veterinarian Bakery AGENCY 2 Florist Fish shop B
Slide 76: Our collaboration with CoverWallet provides greater access to digitally savvy SMEs
CUSTOMER-LED RETAIL TRANSFORMATION Our collaboration with CoverWallet provides greater access to digitally savvy SMEs DISTINCTIVE CAPABILITIES STRONG RESULTS EXCLUSIVE COLLABORATION IN EUROPE 4 products launched: • Accident • Accident plus Live since 2018 • Accident for owners • Workers compensation
Slide 77: New and innovative solutions already launched in the market
CUSTOMER-LED RETAIL TRANSFORMATION New and innovative solutions already launched in the market, with more to come 1 • Extended gadget insurance • Renters insurance, with add- • Home insurance • Motor insurance • Launched in Spain in Q3-18 on for pet & content • Launched in Italy in Q2-19 • Launched
Slide 78: Key messages
CUSTOMER-LED RETAIL TRANSFORMATION Key messages Strong Retail is an attractive market and we have a large, profitable and growing franchise foundation Positioned for Our open architecture distribution and simplified operating model position us well for the future the fundamental changes driven by te
Slide 79: Make the difference: regions and countries engaged
2,000+ 22 Global Events Nominees 700+ ideas submitted 1,250+ Co-creation Session 4 REGIONS employees engaged 60 28 COUNTRIES © Zurich Initiatives i
Slide 80: Make the difference: plain language and streamlining
Plain Language - From 40 pages to 4 pages SteerCo Streamlining 33% reduction of meetings Fast Track Renewals 15% time reduction © Zurich 48h Referral - From 7 days to less than 48h
Slide 81: Optimizing commercial insurance
Optimizing commercial insurance James Shea, CEO Commercial Insurance
Slide 82: Key messages
OPTIMIZING COMMERCIAL INSURANCE Key messages Leading market We are one of the leading global commercial insurers position Profitability We have differentiated ourselves from peers, reducing our accident year combined ratio excl. improved catastrophes by 4ppts since 2016, and have reduced results vol
Slide 83: We have earned our strong position with actions taken
OPTIMIZING COMMERCIAL INSURANCE We have earned our strong position with actions taken, will continue on this path to build an even stronger foundation WHERE WE CAME FROM (2016) WHAT WE HAVE ACHIEVED SO FAR (2019) Overweight in volatile large corporate and long-tailed Portfolio liability risks Re-bal
Slide 84: Strong improvement in accident year combined ratio and BOP
OPTIMIZING COMMERCIAL INSURANCE Strong improvement in accident year combined ratio and BOP, driven by underlying improvements in loss ratio and efficiency P&C COMMERCIAL AY COMBINED RATIO EXCLUDING CATASTROPHES (%) P&C COMMERCIAL BOP (USDm) -4.3ppts 100.8% 99.1% 99.5% 99.1% 94.8% 94.8% 1,694 1,168 1
Slide 85: Better risk selection and focus on rate increases have improved quality of risk
OPTIMIZING COMMERCIAL INSURANCE Better risk selection and focus on driving rate increases have led to an improved quality of risk RISK SELECTION P&C COMMERCIAL RATE CHANGES (%) Zurich Market (Marsh market index) Consistent global risk appetite NORTH AMERICA 6.1% 3.6% 3.0% EMEA Focus on improvement 3
Slide 86: We have made progress in shifting our portfolio mix towards property and specialty
OPTIMIZING COMMERCIAL INSURANCE We have made progress in shifting our portfolio mix towards property and specialty lines of business EXAMPLES OF PORTFOLIO ACTIONS P&C COMMERCIAL BUSINESS MIX (% NEP) NEP CHANGE FY-18 vs FY-16 (%)1 26% 27% NORTH AMERICA LIABILITY -31% 31% 31% 23% 22% U.S. PROPERTY +7%
Slide 87: We have a leading global commercial franchise
OPTIMIZING COMMERCIAL INSURANCE We have a leading global commercial franchise RANKING (FY-18 NEP, USDbn)1 A LEADER IN COMMERCIAL SPACE FULL PRODUCT SUITE AND A WELL DIVERSIFIED BUSINESS FY-18 GWP BY LINE OF BUSINESS (%) Specialty #3 Largest global player1 28% 34% Property Casualty Cross-border insur
Slide 88: We have strong capabilities in place and have made investments to enhance them
OPTIMIZING COMMERCIAL INSURANCE We have strong capabilities in place and have made investments to further enhance them KEY CAPABILITIES KEY INVESTMENTS Leader in complex international programs • Upgraded and rationalized underwriting platforms • Enhanced data and data analytics tools for underwriter
Slide 89: We are well positioned to succeed in evolving market conditions
OPTIMIZING COMMERCIAL INSURANCE We are well positioned to succeed in evolving market conditions COMMERCIAL INSURANCE INDUSTRY ENVIRONMENT DISTRIBUTION LANDSCAPE EVOLVING HIGHER NATURAL CATASTROPHES Broker consolidation, increased placement of homogenous Weather related catastrophe losses increasing;
Slide 90: We focus on further expansion of our global leadership and underwriting discipline
OPTIMIZING COMMERCIAL INSURANCE We focus on further expansion of our global leadership and underwriting discipline in commercial insurance PRODUCTS CULTURE Scale selected propositions and Accelerate culture change make them globally consistent and greater business acumen DELIVER CUSTOMER SEGMENTS SU
Slide 91: Continued focus on risk selection aided by superior systems
OPTIMIZING COMMERCIAL INSURANCE Continued focus on risk selection aided by superior systems INSIGHT 360° – DELIVERING SUPERIOR INTELLIGENCE BENEFITS FOR UNDERWRITERS AND CUSTOMERS Analysis capabilities of customer Whole account view profitability and risk by line of business Internal and external De
Slide 92: We continue to balance our portfolio mix
OPTIMIZING COMMERCIAL INSURANCE We continue to balance our portfolio mix ONGOING PORTFOLIO ACTIONS PROPERTY & ACCIDENT & CASUALTY FINANCIAL LINES CREDIT LINES ENERGY HEALTH FY-19e GWP 5.2 5.1 1.7 1.0 0.7 (USDbn) EXPECTED GWP GROWTH EXPECTED RATE INCREASES AVG. FY-16 TO FY-18 AY CR (%)1 Catastrophes
Slide 93: We continue to complement large corporate with attractive middle market business
OPTIMIZING COMMERCIAL INSURANCE We continue to complement large corporate with attractive middle market business SIZEABLE AND GROWING MARKET1 LARGE CORPORATE ACCOUNTS FOR MIDDLE MARKET IS LESS VOLATILE MORE THAN 70% OF GLOBAL GWP GWP GLOBAL P&C COMMERCIAL CUSTOMER FY-11 TO FY-18 NORTH AMERICA CUMULA
Slide 94: Strengthen position in the middle market in the U.S.
OPTIMIZING COMMERCIAL INSURANCE Strengthen position in the middle market in the U.S. FURTHER STRENGTHEN DEEPEN U.S. FOOTPRINT INCREASED DISTRIBUTION SIMPLIFIED AND UNDERWRITING EXPERTISE AND CUSTOMER FOCUS FASTER INTERACTION 40-45% 55-60% 55-60% 40-45% Existing locations Current Future New locations
Slide 95: Scale selected specialty products; ambition to become a leading A&H global player
OPTIMIZING COMMERCIAL INSURANCE Scale selected specialty products to fully capitalize on our position; ambition to become a leading A&H global player ATTRACTIVE A&H MARKET1 WELL POSITIONED IN A&H CURRENT A&H PORTFOLIO RUNS AT LOWER COMBINED RATIO FY-18 GWP (USDbn) • Large client base U.S. 6.7 • Stro
Slide 96: Strengthen customer value proposition by expanding risk management services
OPTIMIZING COMMERCIAL INSURANCE Strengthen our customer value proposition by expanding our risk management service offering RATIONALE EXAMPLE: SUPPLY CHAIN RISK MANAGEMENT SERVICE • Sizable market with >USD 15bn revenues and growing demand • Positions Zurich beyond risk transfer • Increased customer
Slide 97: Priority of margin expansion to remain, with continued lower volatility
OPTIMIZING COMMERCIAL INSURANCE Priority of margin expansion to remain, with continued lower volatility OUR DELIVERY AND OPPORTUNITIES 5.5% 13ppts 3.1% 5ppts LARGE LOSS RATE CHANGE (%) 1.0% 1.2% VOLATILITY (ppts)2 FY-16 FY-17 FY-18 9m-19 Q1-14 Q4-15 Q2-19 27.4% 27.7% 2.9% 26.8% EXPENSE 0.6% RATIO (%
Slide 98: Key messages
OPTIMIZING COMMERCIAL INSURANCE Key messages Leading market We are one of the leading global commercial insurers position Profitability We have differentiated ourselves from peers, reducing our accident year combined ratio excl. improved catastrophes by 4ppts since 2016, and have reduced results vol
Slide 99: Increased financial ambition
Increased financial ambition George Quinn, Group Chief Financial Officer
Slide 100: Key messages
INCREASED FINANCIAL AMBITION Key messages Ambitious We target a BOPAT RoE in excess of 14% and increasing, with compound organic earnings per 2020-22 targets share growth of at least 5% p.a. Productivity to further improve, with the P&C OUE ratio expected to reduce by 1-2ppts Productivity through co
Slide 101: We delivered on all our current Group targets
INCREASED FINANCIAL AMBITION We delivered on all our current Group targets BOPAT ROE (%) Z-ECM RATIO (%) CUMULATIVE CASH REMITTANCES (USDbn) 113% 120% 12.1% >12.0% >9.5 9.2% 100% FY-17 FY-18 FY-19e Target Q3-19e1 Target range FY-17 - FY-19e 2017 - 2019 Target CUMULATIVE NET EXPENSE SAVINGS (USDm) 20
Slide 102: We have ambitious new targets for 2020 to 2022
INCREASED FINANCIAL AMBITION We have ambitious new targets for 2020 to 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 9.5bn Cumulative cash remittances in excess of USD
Slide 103: We will use all levers to drive further ROE expansion
INCREASED FINANCIAL AMBITION 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 al
Slide 104: Continued growth in retail while improving commercial profitability will improve ROE
INCREASED FINANCIAL AMBITION Continued growth in retail while focusing on improving profitability of commercial will improve ROE P&C CAPITAL INTENSITY1 P&C CAPITAL ALLOCATION (USDbn)2 P&C PROFITABILITY -1.2bn ~35% Return on capital (%)3 ~40% ~90% ~40% ~65% ~60% FY-16 FY-19e FY-16 FY-17 FY-18 FY-19e
Slide 105: Our successful life protection strategy insulates against low yields
INCREASED FINANCIAL AMBITION Our successful life protection strategy insulates against low yields and is beneficial to returns LIFE PROTECTION GWP (USDbn) LIFE BOP SOURCE OF EARNINGS (%) 2018 LIFE IRR VERSUS PAYBACK +12% 4.0 25 13% 12% +10% 20 3.5 Protection +8% 15 1.5 IRR (%) Unit-linked 10 +22% 87
Slide 106: We have significantly improved the Group's cost base and will further increase productivity
INCREASED FINANCIAL AMBITION We have significantly improved the Group’s cost base and will further increase productivity EXPENSE DEVELOPMENT (USDbn)1 P&C OTHER UNDERWRITING EXPENSE (OUE) RATIO (%) 13.7% 10.3 10.3 0.5 0.0 1.5 9.4 0.1 ~1.0% ~0-1.0% ~12-13% FY-15 FX & FY-15 M&A Savings Other FY-19e HY-
Slide 107: We will retain our portfolio quality and continue to drive improvement
INCREASED FINANCIAL AMBITION We will retain our portfolio quality and continue to drive improvement through sharpened skills P&C ACCIDENT YEAR LOSS RATIO EX-CAT (%) PRICING AND BUSINESS INTELLIGENCE -3.9ppts Focus on improvement of terms and conditions 65.7% 64.7% Global exchange of hazard and risk
Slide 108: We are continually looking at opportunities to improve our capital allocation
INCREASED FINANCIAL AMBITION We are continually looking at opportunities to improve our capital allocation CAPITAL RELEASED THROUGH OPTIMIZATION OF INDIVIDUAL ROE UPLIFT FROM COMPLETED DIVESTMENTS (USDbn) BALANCE SHEETS VIA REINSURANCE ACQUISITIONS AND DISPOSALS1 Pooling of economic capital to prefe
Slide 109: Strong conversion of earnings into distributable cash
INCREASED FINANCIAL AMBITION Strong conversion of earnings into distributable cash NET CASH REMITTANCES PAYOUT RATIO (%)1 122% 102% P&C LIFE FARMERS GROUP 3.8 3.7 FY-12 to FY-19e 103% 83% 102% 96% average FY−20 to FY−22e ~90% ~75% ~90% ~85% guidance FY-17 FY-18 FY-19e Underlying cash remittance (USD
Slide 110: We will continue to reward shareholders through our attractive dividend policy
INCREASED FINANCIAL AMBITION We will continue to reward shareholders through our attractive dividend policy ZURICH’S DIVIDEND POLICY1 DIVIDEND PER SHARE (CHF) NIAS2 payout ratio of ~75% 19 New +6% p.a. floor 18 Dividend increases based on sustainable 17 earnings growth FY-16 FY-17 FY-18 FY-19e Minim
Slide 111: Key messages
INCREASED FINANCIAL AMBITION Key messages Ambitious We target a BOPAT RoE in excess of 14% and increasing, with compound organic earnings per 2020-22 targets share growth of at least 5% p.a. Productivity to further improve, with the P&C OUE ratio expected to reduce by 1-2ppts Productivity through co
Slide 112: Biographies
Biographies © Zurich November 14, 2019 Investor Day 112
Slide 113: Mario Greco
BIOGRAPHIES Skills and experience Allianz AG’s executive board, Mario Greco joined Zurich in with responsibility for France, Italy, External appointments March 2016 as Group Chief Spain, Portugal, Greece and Turkey. Mr. Greco is a member of the Executive Officer and member In April 2005, he joined t
Slide 114: Kristof Terryn and Conny Kalcher
BIOGRAPHIES Kristof Terryn Skills and experience of the Executive Committee in 2010 upon his Kristof Terryn began his career in 1993 in the appointment as Group Head Operations. In Group Chief banking industry, where he worked in capital September 2013 he was appointed CEO Global Operating Officer m
Slide 115: Giovanni Giuliani and James Shea
BIOGRAPHIES Giovanni Skills and experience at Generali started in 2012 in Strategy, where he Giovanni Giuliani joined Zurich in 2016 as was initially in charge for Group Innovation and Giuliani Group Head of Strategy, Innovation and Business Global Partnerships, and progressively extended Group Head
Slide 116: George Quinn
BIOGRAPHIES George Quinn Skills and experience George Quinn started his career at KPMG 1988 in Group Chief London, where he held several positions working Financial Officer with the insurance and reinsurance industry. He joined Swiss Re in 1999 as Group Chief Accounting Nationality: British Officer
Slide 117: Notes
Notes © Zurich November 14, 2019 Investor Day 117
Slide 118: Notes
Notes © Zurich November 14, 2019 Investor Day 118
Slide 119: 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 Investor Relations website Patri
Slide 120: 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 © Zurich Insurance Company Ltd
Zurich Insurance Group — Investor Day (November 2019) on 6ix