Zurich Insurance Group Ltd · SIX:ZURN
Zurich Insurance — FY2012 Earnings Presentation
80 slides from Zurich Insurance's earnings presentation, Feb 14, 2013
Slide 1: Annual Results 2012 Analyst Presentation
Annual Results 2012 Analyst Presentation February 14, 2013
Slide 2: Disclaimer and cautionary statement
Disclaimer and cautionary statement Certain statements in this document are forward-looking statements, including, but not limited to, statements that are predications of or indicate future events, trends, plans or objectives of Zurich Insurance Group Ltd or the Zurich Insurance Group (the Group). F
Slide 3: FY 2012 Results Key Messages
FY 2012 Results Key Messages Strong capital and cash flows support sustainable and attractive CHF 17 per share dividend Pricing and portfolio management discipline generate strong underlying profitability Accelerated top-line growth in target markets Excellent investment performance delivering 7% to
Slide 4: Financial highlights
Financial highlights in USD millions 2012 20111 Change for the years ended December 31 Business operating profit (BOP) 4,075 4,243 -4% Net income attributable to shareholders 3,878 3,750 3% General Insurance combined ratio 98.4% 98.9% +0.5pts Global Life new business value2 1,085 980 11% Farmers Mgm
Slide 5: Proposed dividend of CHF 17.04 per share for 2012
Proposed dividend of CHF 17.04 per share for 2012 Dividends / EPS in respect of the business year (in CHF) 50 45 40 35 29.91 30 2 25 23.4 24.21 24.3 3 24.7 22.5 20 17.0 17.0 17.04 16.0 15 11.0 10 5 0 2008 2009 2010 2011 2012 © Zurich Insurance Company Ltd Dividend Diluted earnings per share 1 CHF 29
Slide 6: Business operating profit by segment
Business operating profit by segment in USD millions Q4-12 Q4-111 Change 2012 20111 Change General Insurance 21 515 -96% 2,097 2,247 -7% Global Life 380 348 9% 1,338 1,353 -1% Farmers (incl. Farmers Re) 416 390 7% 1,414 1,486 -5% Other Operating Businesses -258 -248 -4% -903 -835 -8% Total BOP Opera
Slide 7: Financial Restatement due to Germany GI
Financial Restatement due to Germany GI 2011 Group Restated a portion of the in USD millions Before Change Restated previously announced adjustments restatement in Germany GI due to a material SH Equity, Jan 1 31,905 -187 31,718 error in case reserving practices SH Equity, Dec 31 31,680 -196 31,484
Slide 8: General Insurance – key performance indicators
General Insurance – key performance indicators in USD millions 2012 20113 Change Change for the years ended December 31 in LC1 GWP and policy fees 35,610 34,572 3% 7% Rate change2 3.7% 3.5% 0.2pts Loss ratio 70.3% 72.0% +1.7pts Expense ratio 28.1% 26.9% -1.2pts Combined ratio 98.4% 98.9% +0.5pts Bus
Slide 9: General Insurance – Rate Change Monitor and GWP performance
General Insurance – Rate Change Monitor1 and GWP performance Rate Change Monitor1 2012 Discrete Q4-12 Int’l Total Int’l Total GC NAC Europe Markets GI GC NAC Europe Markets GI Personal Lines n/a n/a 3% 5% 3% n/a n/a 2% 4% 3% Commercial Lines 5% 5% 2% 4% 4% 5% 5% 4% 6% 5% Gross Written Premiums, tran
Slide 10: General Insurance – comparison of loss ratio
General Insurance – comparison of loss ratio FY-12 FY-115 Loss ratio development Discrete quarters 75% 2.9pts improvement 72.0% Underlying loss ratio 70.3% 0.6% 76.9% 75.5% 70% 71.4% 71.0% 70.3% 68.9% 67.5% 67.6% 65% 64.3% -0.1% -8.9% 61.4% -8.6% 0.1% -1.3% 60% 4.2% -3.5% 3.3% -2.5% USD USD USD USD
Slide 11: General Insurance – expense ratio walk from FY-11 to FY-12
General Insurance – expense ratio walk from FY-11 to FY-12 28.1% 26.9% Change year-over-year Expense ratio development Other tech In percentage points Discrete quarters, in percentage points 14.2% expenses1 14.5% 28.1 28.8 28.8 0.3 0.0 1.2 26.6 26.3 26.4 27.1 27.6 0.9 Other tech expenses1 14.5 14.9
Slide 12: General Insurance – BOP and Combined ratio by business
General Insurance – BOP and Combined ratio by business Business operating profit Combined ratio (%) in USD millions 2012 2011 Change CAT4 for the years ended December 31 6.8 99.1 Global CAT4 105.6 13.6 Global Corporate 496 169 nm Corporate CAT4 4.5 99.7 North America Commercial 699 1,048 -33% NA CAT
Slide 13: Global Life – key performance indicators
Global Life – key performance indicators in USD millions 2012 2011 Change Change for the years ended December 31 in LC5 GWP and policy fees (incl. insurance 30,259 27,711 9% 16% deposits)1 Net inflows to Assets under Mgmt1 1,402 2,769 -49% -47% Annual Premium Equivalent (APE)2 4,767 3,992 19% 24% Ne
Slide 14: Global Life – Business operating profit: Profit by Source
Global Life – Business operating profit: Profit by Source in USD millions New Business Business in Force Total for the years ended December 31 2012 2011 2012 2011 2012 2011 Net Expense margin -1,434 -1,541 1,398 1,443 -36 -98 Net Risk margin 769 762 769 762 Net Investment margin 661 709 661 709 Othe
Slide 15: Zurich Santander - BOP reconciliation & update
Zurich Santander - Business operating profit (BOP) reconciliation & update BOP recorded in IFRS accounts Local business performance FY-12 vs FY-11 USD million Partial Recorded GWP grew 12% to USD 2.4bn Q4112 2012 in FY12 while deposits declined by 5% to Statutory profit1 100 463 563 USD 1.5bn Adjust
Slide 16: Farmers – key performance indicators
Farmers – key performance indicators in USD millions 2012 2011 Change for the years ended December 31 Farmers Management Services Management fees and other related revenues 2,846 2,767 3% Managed gross earned premium margin1 7.3% 7.3% 0.0pts Business operating profit 1,441 1,370 5% Farmers Re2 Gross
Slide 17: Farmers Exchanges – key performance indicators
Farmers Exchanges1 – key performance indicators in USD millions 2012 2011 Change for the years ended December 31 Gross written premiums2 18,935 18,297 3.5% Net underwriting result3 -1,063 -1,178 9.8% Expense ratio3 32.9% 34.0% 1.1pts Loss ratio3 72.5% 72.4% -0.1pts Combined ratio, excl. Fogel/SoT se
Slide 18: Investment performance of Group Investments
Investment performance of Group Investments in USD millions 2012 2011 Change for the years ended December 31 Net investment income 6,711 7,185 -7% Net capital gains/(losses) on investments and 2,201 2,182 1% impairments1 of which attributable to shareholders 1,687 1,515 11% Net investment result 8,9
Slide 19: Attractive CHF 17.0 dividend for 2012 without deduction of withholding tax
Attractive CHF 17.0 dividend for 2012 without deduction of withholding tax1 Book value per share (in CHF) Dividend yield3 300 8% 1 7.0% 7.0% 7.0% 5 7% 250 5 229.4 5 5.6% 5.9% 206.6 202.2 202.2214.8 5 210.1 6% 194.5 200 5 5 5 5% 4.5% 154.3153.8 158.3 150 4% 3.1% 3% 2.6% 100 1.8% 2% 1.3% 50 1% 0 0% 03
Slide 20: FY 2012 Results Key Messages
FY 2012 Results Key Messages Strong capital and cash flows support sustainable and attractive CHF 17 per share dividend Pricing and portfolio management discipline generate strong underlying profitability Accelerated top-line growth in target markets Excellent investment performance delivering 7% to
Slide 21: Appendix
@ ZURICH Appendix
Slide 22: Business operating profit and net income by quarter
Business operating profit and net income by quarter Business operating profit – by segment in USD millions 1,287 1,369 1,117 1,140 985 997 854 835 856 617 515 773 446 569 280 21 GI 362 367 348 286 305 380 GL 277 367 Farmers 380 349 367 390 372 397 416 229 Other -168 -264 -144 -268 -145 -229 -151 -24
Slide 23: Financial Restatement due to Germany GI - Details
Financial Restatement due to Germany GI - Details in USDm Group General Insurance As reported Change Restated As reported Change Restated 2011 FY-11 BOP 4,261 -18 4,243 2,265 -18 2,247 FY-11 NIAS 3,766 -16 3,750 FY-11 CR 98.8% -0.1pts 98.9% Q4-11 BOP 1,004 -18 985 533 -18 515 Q4-11 NIAS 557 -16 540
Slide 24: Top line development by segment
Top line development by segment in USD millions 2012 2011 Change Change for the years ended December 31 in LC1 General Insurance GWP and policy fees 35,610 34,572 3% 7% Global Life GWP and policy fees and insurance 30,259 27,711 9% 16% deposits Annual Premium Equivalent (APE)2 4,767 3,992 19% 24% Fa
Slide 25: General Insurance – key performance indicators
General Insurance – key performance indicators in USD millions Q4-12 Q4-111 Change Change for the three months to December 31 in LC2 GWP and policy fees 8,301 7,525 10% 11% Rate change3 4.2% 3.7% 0.5pts Loss ratio 75.5% 71.0% -4.5pts Expense ratio 28.8% 28.1% -0.7pts Combined ratio 104.3% 99.2% -5.1
Slide 26: Global Life – key performance indicators
Global Life – key performance indicators in USD millions Q4-12 Q4-11 Change Change for the three months to December 31 in LC3 GWP and policy fees (incl. insurance 9,119 8,361 9% 13% deposits) Net inflows to Assets under Mgmt 354 1,197 -70% -74% Annual Premium Equivalent (APE)2 1,260 1,222 3% -12% Ne
Slide 27: Farmers – key performance indicators
Farmers – key performance indicators in USD millions Q4-12 Q4-11 Change for the three months to December 31 Farmers Management Services Management fees and other related revenues 712 696 2% Managed gross earned premium margin1 7.3% 7.4% -0.1pts Business operating profit 375 350 7% Farmers Re2 Gross
Slide 28: Development of shareholders’ equity in Q4-12
Development of shareholders’ equity in Q4-12 in USD millions 36,000 983 -155 73 -457 35,000 0 34,494 34,050 34,000 33,000 32,000 31,000 30,000 29,000 28,000 27,000 26,000 25,000 24,000 Balance as of Net Income Change in net Cumulative Pensions Other Balance as © Zurich Insurance Company Ltd Septembe
Slide 29: Development of shareholders’ equity in FY 2012
Development of shareholders’ equity in FY 2012 in USD millions 35,000 400 -447 34,494 1,730 212 34,000 33,000 3,878 32,000 31,484 -1,923 31,000 30,000 -840 29,000 28,000 27,000 26,000 25,000 24,000 Restated Dividends1 Cumulative Net Income Change in Cumulative Net actuarial Other Balance as balance
Slide 30: Business division BOP-ROE based on RBC-allocated IFRS equity
Business division BOP-ROE1 based on RBC-allocated IFRS equity for the years ended December 31 2012 2011 General Insurance 12.4% 12.8% Global Corporate 10.8% 3.9% North America Commercial 13.3% 18.6% Europe 14.1% 18.5% International Markets 11.8% -14.4% GI Global Functions including Group Reinsurance
Slide 31: Z-ECM Risk Based Capital by segment and risk type
Z-ECM Risk Based Capital (RBC) by segment and risk type as of July 1, 2012 Capital Allocation: Total RBC: USD 37 billion1 USD 35 billion 7% Other2 10% 8% Farmers1 ALM/Market risk General 15% 32% Operational risk Insurance Business risk 51% P&R risk3 2% Global Life 3% Re-ins credit risk 34% Life insu
Slide 32: Solvency calculations
Solvency calculations Solvency ratios in % 268 Z-ECM1 223 232 225 242 2 232 183 178 119 122 103 110 SST Solvency I 5 FY10 HY11 FY11 HY12 Z-ECM model position in USD billions 1 July 1 Jan 2012 2012 Available Financial Resources (AFR) 39.8 40.5 AFR after dividend accrual 38.5 37.8 3 Risk Based Capital
Slide 33: Capital management driven by Zurich Economic Capital Model
Capital management driven by Zurich Economic Capital Model (Z-ECM) Z-ECM capital actions SST Framework >120% Z-ECM >120% - Consider increased No action required Above target risk taking and/or remedial actions 120% 100% - 120% No actions required as within 190% AA Target range stated objective and e
Slide 34: Z-ECM ratio development
Z-ECM1 ratio development in USD billions (rounded) 126% 136% 119% 110% 40 41 40 103% 116% 38 38 39 35 37 34 35 34 Available to policyholders 95% 30 30 30 30 28 25 27 20 15 10 5 RBC AFR RBC AFR RBC AFR RBC AFR RBC AFR RBC AFR RBC AFR 0 Jan. 1 Jan. 1 Jan. 1 Jan. 1 Jan. 1 Jan. 1 Jul. 1 © Zurich Insuran
Slide 35: Estimation of Available Financial Resources as of July 1, 2012
Estimation of Available Financial Resources (AFR) as of July 1, 2012 in USD billions (rounded) 45 40 (2) 11 41 39 35 (1) 30 32 31 (17) 16 25 20 15 10 5 0 © Zurich Insurance Company Ltd Reported Value of in- Capital Distributions Net shareholders’ Net intangibles1 force business Financial Total AFR a
Slide 36: Solvency ratio sensitivities
Solvency ratio sensitivities Solvency ratio impact1 3 4 Z-ECM SST Solvency I 110% HY 2012 178% 5 268% 113% Interest rate +100 bps 183% 222% 99% Interest rate -100 bps 159% 316% 112% Equities +25% 179% 283% 107% Equities -25% 176% 254% 94% Credit spreads 2 +100 bps 157% © Zurich Insurance Company Ltd
Slide 37: Capital model developments
Capital model developments Hybrid Senior Downgr. Lower Additional bond Debt De- Other FINMA issuance issuance risking Peripheral yields states adjust. Main drivers of developments are: 103% +3% +8% -1% -1% -2% 110% Different treatment of debt 0% 0% issuances due to timing or the recognition of senio
Slide 38: Z-ECM and SST key differences
Z-ECM and SST key differences = more onerous Key parameters Z-ECM SST Impact1 VaR 99.95% Expected Shortfall 99% Calibration +++ Comparable to AA Comparable to BBB Swap-rates (without liquidity Government rates (without LP) Risk-free yield curve ++ premium (LP)) (German Bund for EUR)2 Operational ris
Slide 39: Strong cash flow generation continued in 2012
Strong cash flow generation continued in 2012 Underlying profitability and disciplined growth generated USD 4bn of cash from the segments USD bn, 2012 FY forecast USD 4.0bn of cash 0.5 4.0 -0.9 4.0 0.2 remitted from the 0.5 0.3 business segments 3.5 0.2 2.2 0.2 -0.3 USD 0.4bn of cash 3.0 0.1 -2.7 co
Slide 40: General Insurance – Rate Change Monitor for personal and commercial lines
General Insurance – Rate Change Monitor1 for personal and commercial lines FY-12 Discrete Q4-12 Int’l Total Int’l Total GC NAC Europe Markets GI GC NAC Europe Markets GI Personal Lines n/a n/a 3% 5% 3% n/a n/a 2% 4% 3% Commercial Lines 5% 5% 2% 4% 4% 5% 5% 4% 6% 5% Europe by country Europe by countr
Slide 41: General Insurance – written rate change 2008 through Q4-12
General Insurance – written rate change 2008 through Q4-12 Rate change 2008 2009 5 2010 4.2% 4.2% 3.9% 4.1% 3.6% 3.9% 3.8% 3.7% 2011 4 3.7% 2.6% 3.1% 2012 3 2.3% 2.7% 2.1% 2.0% 2 1.7% 1.2% 1 0% -1 -0.7% -2 -2.4% -3 -3.0% -4 Q1 Q2 Q3 Q4 © Zurich Insurance Company Ltd February 14, 2013 Annual Results
Slide 42: General Insurance - Gross written premiums and policy fees
General Insurance - Gross written premiums and policy fees In USD millions 2012 2011 Change Change for the years ended December 31 in LC1 Global Corporate 8,609 7,949 8% 12%2 North America Commercial 10,003 9,777 2% 2%2 Europe 11,882 12,932 -8% -2% International Markets 5,603 4,425 27% 34% GI Global
Slide 43: General Insurance – major CAT & large claims
General Insurance – major CAT & large claims Major CAT and Large Claims in USD millions 1,400 1,322 1,200 1,065 970 1,000 803 5 year quarterly average1 800 768 690 653 (USD 688m) 600 553 400 200 0 1 not weighted for volume Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Impact: Major CAT and Large C
Slide 44: Reinsurance program being further optimized
Reinsurance program being further optimized Excess of loss protection Global Cat Treaty (for natural perils), USD 150m Retention Co-Participation To be placed / renewed in Global Cat Treaty (new capacity) 2013 Targeted for 1H 2013 placement up to USD 500m Optimization based on our risk-based economi
Slide 45: Development of Reserves for Losses and LAE
Development of Reserves for Losses and Loss Adjustment Expenses (LAE) in USD millions 2012 2011 Net reserves for losses and LAE, as of January 1 55,341 56,180 Net losses and LAE paid -23,378 -22,909 Net losses and LAE incurred 23,769 22,465 - Current year 24,340 23,767 - Prior years1 -571 -1,302 For
Slide 46: Non-life ultimate loss ratios by accident year
Non-life ultimate loss ratios by accident year Cumulative incurred 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 net loss ratios1 In the year 67.1% 68.3% 73.3% 69.6% 72.7% 74.6% 72.3% 73.5% 74.2% 71.3% 1 year later 66.1% 64.2% 68.1% 66.2% 71.7% 74.1% 72.0% 73.2% 74.0% 2 years later 65.4% 63.5% 6
Slide 47: Asbestos and environmental reserves
Asbestos and environmental reserves 2012 2011 Gross 3-year Gross 3-year reserves survival reserves survival USD m ratio USD m ratio Asbestos 3,332 25.1 3,283 25.11 General Insurance 2,933 2,874 of which: US 380 9.7 346 8.3 of which: UK 2,553 28.52 2,528 30.62 Non-Core Businesses 399 22.9 409 5.61 En
Slide 48: Global Life – Regional Profit by Source (1/4)
Global Life – Business operating profit: Regional Profit by Source (1/4) in USD millions North America Latin America Europe for the years ended December 31 2012 2011 2012 2011 2012 2011 Net Expense margin 55 47 -29 -19 36 -49 Net Risk margin 97 112 52 34 494 517 Net Investment margin 70 98 46 38 501
Slide 49: Global Life – Regional Profit by Source (2/4)
Global Life – Business operating profit: Regional Profit by Source (2/4) in USD millions APME Other Total for the years ended December 31 2012 2011 2012 2011 2012 2011 Net Expense margin -78 -64 -20 -13 -36 -98 Net Risk margin 84 59 42 41 769 762 Net Investment margin 36 49 8 8 661 709 Other profit
Slide 50: Global Life – Europe Profit by Source (3/4)
Global Life – Business operating profit: Europe Profit by Source (3/4) in USD millions UK Germany Switzerland for the years ended December 31 2012 2011 2012 2011 2012 2011 Net Expense margin -9 -41 135 124 12 -4 Net Risk margin 131 148 72 70 136 143 Net Investment margin 49 55 159 143 146 143 Other
Slide 51: Global Life – Europe Profit by Source (4/4)
Global Life – Business operating profit: Europe Profit by Source (4/4) in USD millions Ireland Spain Rest of Europe for the years ended December 31 2012 2011 2012 2011 2012 2011 Net Expense margin -112 -122 61 44 -51 -50 Net Risk margin 69 74 60 62 26 20 Net Investment margin 9 15 39 56 98 104 Other
Slide 52: Global Life – new business by pillar
Global Life – new business by pillar in USD millions NBV NBV Change APE APE Change for the years ended December 31 20121 20111 in LC3 2012 2011 in LC3 Bank Distribution 114 201 -39% 419 700 -35% IFA/Brokers 184 185 4% 789 933 -11% Agents 152 130 20% 428 508 -12% International / Expats 69 83 -17% 250
Slide 53: Global Life – new business by region/country
Global Life – new business by region/country in USD millions NBV NBV Change APE APE Change for the years ended December 31 20121 20111 in LC3 2012 2011 in LC3 North America 109 60 81% 125 111 13% Latin America 99 71 50% 755 313 152% Europe 453 547 -13% 2,538 2,883 -8% United Kingdom 195 154 28% 1,19
Slide 54: Global Life – Embedded Value result
Global Life – Embedded Value result for the years ended December 31 2012 2012 2011 2011 USD m Return USD m Return Opening Embedded Value 15,846 16,472 New business value 890 980 Expected contribution1 954 740 Operating variance2 -105 -357 Total operating earnings 1,739 11.4% 1,363 8.5% Economic vari
Slide 55: Global Life - Assets under Management
Global Life - Assets under Management1 AuM have increased compared to January 1, 2012 on a US dollar basis Split of AuM Development of AuM in USD billions in USD billions Series 255 Balance as of 232 232 Jan 1, 20122 28 25 Inflows 31 113 105 Outflows -29 Market movements 113 103 16 and Other3 Curren
Slide 56: Zinszusatzreserve (ZZR) requirement in Germany
Zinszusatzreserve (ZZR) requirement in Germany What is it and how is it calculated? How does the new requirement impact IFRS? The ZZR is a local statutory requirement, applying The ZZR is a local statutory requirement and as such is across the German industry reversed under IFRS The size of the ZZR
Slide 57: Farmers Management Services – key performance indicators
Farmers: Farmers Management Services – key performance indicators in USD millions 2012 2011 Change for the years ended December 31 Management fees and other related revenues 2,846 2,767 3% Management and other related expenses 1,467 1,434 2% Gross management result 1,378 1,333 3% Managed gross earne
Slide 58: Farmers Re – key performance indicators
Farmers: Farmers Re1 – key performance indicators in USD millions 2012 2011 Change for the years ended December 31 Gross written premiums2 4,361 3,529 24% Net underwriting result -163 -23 nm Combined ratio 103.7% 100.8% -2.9pts CAT impact3 5.9% 5.7% -0.2pts Business operating profit -26 116 nm © Zur
Slide 59: Farmers Exchanges – financial highlights
Farmers Exchanges – financial highlights in USD millions 2012 2011 6,000 50.0% for the years ended December 31 48.0% 5,000 46.0% Gross written premiums1 18,935 18,297 4,000 44.0% 42.0% Net underwriting result3 -1,063 -1,178 3,000 40.0% 38.0% Beginning surplus4 5,656 5,960 2,000 36.0% 34.0% Net surpl
Slide 60: Farmers Exchanges – gross written premiums by line of business (1/2)
Farmers Exchanges – gross written premiums by line of business (1/2) in USD millions 2012 2011 Change for the years ended December 31 Auto1 9,938 9,666 2.8% of which 21st Century Direct1,2 1,991 1,920 3.7% Homeowners3 4,613 4,480 3.0% Business Insurance2 2,327 2,277 2.2% Specialty 1,919 1,744 10.1%
Slide 61: Farmers Exchanges – gross written premiums by line of business (2/2)
Farmers Exchanges – gross written premiums by line of business (2/2) in USD millions Q4-12 Q4-11 Change for the three months to December 31 Auto 2,384 2,346 1.6% of which 21st Century Direct1 477 472 1.0% Homeowners2 1,064 1,072 -0.8% Business Insurance1 553 574 -3.6% Specialty 428 374 14.4% Other 3
Slide 62: Farmers Exchanges – premium growth
Farmers Exchanges – premium growth GWP growth1 12% 10.1% 10% 9.1% 8% 6.5% 6.1% 5.7% 5.7% 6% 5.4% 5.4% 5.0% 5.1% 4.7% 4.5% 4.6% 4.2% 4.1%4.1% 3.9% 4% 3.1% 2.9% 1.8% 1.5% 2% 1.1% 0.7% 0% 3M 6M 9M FY 3M 6M 9M FY 3M 6M 9M FY 3M 6M 9M FY 3M 6M 9M FY 3M 6M 9M FY -0.4% © Zurich Insurance Company Ltd -2% ‘0
Slide 63: Farmers Exchanges – policies in force (1/2)
Farmers Exchanges – policies in force (1/2) in thousand policies 2012 Change 2011 for the years ended December 31 # % Auto 11,662 -324 -2.7% 11,986 of which 21st Century Direct1 2,381 -39 -1.6% 2,420 Homeowners 5,131 28 0.6% 5,103 Business Insurance1 627 -3 -0.5% 630 Specialty 2,881 109 3.9% 2,772 O
Slide 64: Farmers Exchanges – policies in force (2/2)
Farmers Exchanges – policies in force (2/2) in thousand policies Dec 2012 Q4-12 Sep 2012 for the three months to December 31 Change Ending Ending # % Auto 11,662 -233 -2.0% 11,895 of which 21st Century Direct1 2,381 -28 -1.2% 2,410 Homeowners 5,131 -30 -0.6% 5,161 Business Insurance1 627 -8 -1.2% 63
Slide 65: Farmers Exchanges – combined ratio (1/2)
Farmers Exchanges – combined ratio1 (1/2) for the years ended December 31 20121 20111 Change Auto2,5 105.5% 105.2% -0.3pts Homeowners 102.7% 105.6% 2.9pts Business Insurance5 110.6% 115.0% 4.4pts Specialty 95.1% 108.2% 13.1pts Total, excl. Fogel/SoT settlement6,7 105.4% 106.4% 1.0pts Total, incl. Fo
Slide 66: Farmers Exchanges – combined ratio (2/2)
Farmers Exchanges – combined ratio1 (2/2) for the three months to December 31 Q4-121 Q4-111 Change Auto2,5 104.2% 108.9% 4.7pts Homeowners 86.7% 96.5% 9.8pts Business Insurance5 103.2% 107.6% 4.4pts Specialty 91.3% 88.1% -3.2pts Total, excl. Fogel/SoT settlement6 102.4% 104.3% 1.9pts Total, incl. Fo
Slide 67: Farmers Exchanges – development of the combined ratio
Farmers Exchanges – development of the combined ratio Quarterly combined ratio CAT1 impact Incl. 17 Catastrophe 120% Incl. Events Incl. Ike & Gustav 13 Catastrophe Events 115% 110% Incl. Incl. Irene Rita & Katrina 105% Incl. California Excl. Fogel/SoT settlements wildfires 100% 95% 90% © Zurich Insu
Slide 68: Farmers Exchanges – Competitor Snapshot
Farmers Exchanges – Competitor Snapshot Growth vs. GAAP Combined Ratio – Overall P&C1, 3 Growth NPW % 10 USAA 3 December 2012 GEICO4 September 2012 8 Progressive 3 Liberty Mutual 6 American Family3 Nationwide3 Farmers 2 4 Mercury 2 Travelers State Farm 3 0 Allstate Hartford -2 Combined Ratio (% NPE)
Slide 69: Other Operating and Non-Core Businesses – BOP contribution
Other Operating and Non-Core Businesses – Business operating profit contribution in USD millions 2012 2011 Change for the years ended December 31 Other Operating Businesses - Holding and financing -736 -589 -25% - Headquarters -167 -246 32% Total Other Operating Businesses -903 -835 -8% Non-Core Bus
Slide 70: Zurich’s investment portfolio benefits greatly from diversification
Zurich’s investment portfolio benefits greatly from diversification and is balanced in terms of risk Risk Allocation of Zurich’s investment portfolio As of December 31, 2012 Asset allocation (%) Risk diversification Risk exposure (%)1 and matching (%) 100 Hedge Funds / Liquidity Real Estate Private
Slide 71: Group Investments – debt securities are of high credit quality
Group Investments – Zurich’s debt securities are of high credit quality (98.4% investment grade) As of December 31, 2012 Group Investments Debt securities USD 209bn USD 156bn credit rating: AAA 31.4% credit rating: AA 31.1% Other Debt asset securities classes 25% 75% credit rating: A 17.3% © Zurich
Slide 72: Group Investments – debt securities are well balanced
Group Investments – Zurich’s debt securities are well balanced Group Investments - USD 209bn (100%) As of December 31, 2012 Government and government related bonds: USD 76bn (36%) of which: Market/Cost: 106% 39% in General Insurance 98% inv. grade 54% in Global Life 41% AAA 37% AA 2% A
Slide 73: Group Investments – Government bonds are well diversified
Group Investments – Government & government related bonds are well diversified Group Investments - USD 209bn (100%) As of December 31, 2012 Government and government related bonds: USD 76bn1 (36%) Market/Cost: 106% of which: 98% inv. grade 39% in General Insurance 41% AAA 54% in Global Life
Slide 74: Group Investments – Eurozone government bonds are well diversified
Group Investments – Eurozone government & government related bonds are well diversified Group Investments - USD 209bn (100%) Eurozone Government and government As of December 31, 2012 related bonds: USD 34bn (16%) Market/Cost: 107% of which: Split by credit rating 27% in General Insurance 97% in
Slide 75: Group Investments – Corporate bonds are of high credit quality
Group Investments – Corporate bonds are of high credit quality Group Investments - USD 209bn (100%) As of December 31, 2012 Corporate bonds: USD 60bn (29%) Market/Cost: 107% Split by industries Split by credit rating 45% Banks, 99% inv. grade including 19.5%1 covered bonds 17% AAA 9% Utili
Slide 76: Group Investments – Banks corporate bonds
Group Investments – Banks corporate bonds are of high credit quality and well diversified Group Investments - USD 209bn (100%) As of December 31, 2012 Banks Corporate bonds: USD 27bn (13%) Market/Cost: 108% Split by seniority Split by credit rating 43% Covered bonds 99% inv. grade 47% Senior b
Slide 77: Group Investments – MBS/ABS are of high credit quality
Group Investments – MBS/ABS are of high credit quality Group Investments - USD 209bn (100%) MBS/ABS: USD 20bn (10%) As of December 31, 2012 Market/Cost: 103% 98% inv. grade 37% AAA includes: US MBS: USD 13.8bn (6.6%) Market/Cost: 105% 98% inv. grade; 21% AAA Debt securities US ABS1: USD 3.8bn
Slide 78: Group Investments – US MBS are of high credit quality
Group Investments – US MBS are of high credit quality Group Investments - USD 209bn (100%) As of December 31, 2012 US MBS: USD 13.8bn (6.6%) Market/Cost: 103% 98% inv. grade 21% AAA Debt of which: securities US “Agency” MBS: USD 9.5bn (4.6%) Market/Cost: 103% 75% § 100% AA+ USD 2.2bn backed by
Slide 79: Group Investments – net capital gains / losses
Group Investments – net capital gains / losses Net capital losses/gains on investments and impairments (in P&L) Equity investments of which: impairments Equity investments Debt investments Debt investments in USD millions Other investments in USD millions Other investments 2000 250 1,968 1500 1,005
Slide 80: Group investments – movements in net unrealized gains / losses
Group investments – movements in net unrealized gains / losses Change in net unrealized gains / losses on investments incl. in shareholders’ equity1 in USD millions 5000 4,738 4000 3000 2,467 2000 1,646 1000 720 551 606 75 13 251 2 0 Equity investments -7 -3 Debt investments -40 5 -324 Other investm
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