Results for the three months to March 31, 2014

Transcription

1 Results for the three months to March 3, 04 Analysts and Media Presentation May 5, 04 Zurich Insurance Group

2 Key messages Solid start to the year Good combined ratio, benefitting from one-off gain and low catastrophe losses; focus on continuing to improve accident year profitability Farmers transition continues, with some early positive signals Capital deployment in the business supported by strong solvency position, with 7% Z-ECM ratio above target range

3 Group Business operating profit Solid start to the year BOP BY SEGMENT (USDm) BOP/NIAS RECONCILIATION (USDm),370,35 +%, % tax rate ,38, Q BOP RCG Restructuring SH Taxes Other NIAS General Insurance Farmers NCB Non-controlling interests Global Life OOB Realized capital gains/losses. Shareholder taxes (income tax expense attributable to shareholders). 3

4 General Insurance Topline Stable rate increases with topline flat in local currency GWP GROWTH IN LC (%) RATE CHANGE (%) Q4-3 GC -% 4% 8% 4% 5% 3% NAC -% 5% 6% 5% 4% 4% EMEA -% -4% -% % 3% % IM 3% % 7% 5% 5% 4% Total 0% 3% 5% 3% 4% 3% Q- GWP development due to premium rate change as a percentage of the renewed portfolio against the comparable prior year period. Total incl. GI Global Functions, Group Reinsurance and Eliminations. 4

5 General Insurance Combined ratio Good CR, benefitting from a one-off gain and low cat losses COMBINED RATIO SPLIT (%) COMBINED RATIO BY REGION (%) 94.6%.% 94.9%.6% 93.9%.9% GC 87.0% 90.7% NAC 95.0% 99.3% 94.3% 93.6% EMEA 93.% 94.5% 93.% IM 97.% 0.0% -.9% -0.3% -.% Total 93.9% 94.9% Q- 80% 85% 90% 95% 00% 05% Catastrophes AY combined ratio (excl. catastrophes) PYD Catastrophes includes major and mid-sized catastrophes including significant weather related events. Accident year combined ratio excludes prior year reserve development. 5

6 General Insurance BOP components Good profitability benefitting from some one-offs BOP BREAK DOWN (USDm) KEY DRIVERS (USDm) % Q- UWR Investment Income RCG NTR / NCI Underwriting result Investment inc. / Realized capital gains (RCG) Non technical result (NTR) Non-controlling interest (NCI) 6

7 Global Life New business Continued growth in APE and assets under management APE (USDm) NBM & NBV NET INFLOWS & AUM NBM (%) Net inflows (USDbn) +7% , , NBV (USDm) % AuM (USDbn) % Q- Q- Q- 3rd party investments Other APME North America Latin America Europe Group investments Unit-linked Local currency. Note: 0 figures do not include Zurich Santander. APE is reported before minority interests. NBM and NBV are reported net of minority interests, with prior year figures restated accordingly. 7

8 Global Life BOP by region One-offs offset each other in operating profits BOP BY REGION (USDm) KEY DRIVERS (USDm) +4% Q- Europe Latin America North America APME Other Other APME North America Latin America Europe 8

9 Farmers Exchanges KPI Early positive signals in top-line performance GWP GROWTH (%) COMBINED RATIO (%) 3 SURPLUS 4-0.6% -0.9% 0.0% 3.4% 96.4%.0% 96.5%.5% 33.8% 34.5% 37.8% -.6% -.% 98.6% 94.4% 94.0% % Q-3 Q3-3 Q4-3 Q- Q- Catastrophe losses CR (excl. catastrophe losses) Surplus ratio 4 Farmers Exchanges surplus Farmers Re surplus Provided for informational purposes only. Zurich Insurance Group has no ownership interest in the Farmers Exchanges. Farmers Group, Inc., a wholly owned subsidiary of the Group, provides administrative and management services to the Farmers Exchanges as its attorney- in-fact and receives fees for its services. Adjusted for the impact of the Texas Department of Insurance litigation. 3 Before quota share treaties with Famers Reinsurance Company, Zurich Insurance Company Ltd and a third party reinsurer. 4 Surplus ratio excludes surplus of Farmers Reinsurance Company. 9

10 Farmers KPI Expense savings compensate for lower management fees at FMS BOP (USDm) FMS MARGIN (%) FARMERS RE CR (%) % 7.% 7.3% 0.5% 3.% 95.3%.9% 95.6%.% % 93.4% 93.4% Q- Q- Q- FMS FRe Catastrophes 3 CR (excl. catastrophes) Margin on gross earned premiums of the Farmers Exchanges. Zurich Insurance Group has no ownership interest in the Farmers Exchanges. Farmers Group, Inc. (or Farmers Management Services (FMS)), a wholly owned subsidiary of the Group, provides administrative and management services to the Farmers Exchanges as its attorney- in-fact and receives fees for its services. Farmers Re (FRe) business includes all reinsurance assumed from the Farmers Exchanges by the Group (i.e. Farmers Reinsurance Company and Zurich Insurance Company Ltd). 3 As defined by the All Lines quota share reinsurance treaty. 0

11 Group Balance sheet and capital Capital strong, supporting redeployment SHAREHOLDERS EQUITY (USDm) CAPITAL MODEL RATIO (%) ,670 78% 6% 58%,7 06% 85% 7% % 4% 7% 3,503 FY-3 NIAS Net URG/L CTA Pension plans Other Z-ECM SST Solvency I FY- HY-3 FY-3 Net actuarial gains/losses on pension plans. The Swiss Solvency Test (SST) ratio is calculated based on the Group s internal model, and both are subject to the review and approval of the Group s regulator, the Swiss Financial Market Supervisory Authority (FINMA). The ratio is filed with FINMA bi-annually.

12 Key messages Solid start to the year Good combined ratio, benefitting from one-off gain and low catastrophe losses; focus on continuing to improve accident year profitability Farmers transition continues, with some early positive signals Capital deployment in the business supported by strong solvency position, with 7% Z-ECM ratio above target range

13 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 ). Forward-looking statements include statements regarding the Group s targeted profit, return on equity targets, expenses, pricing conditions, dividend policy and underwriting and claims results, as well as statements regarding the Group s understanding of general economic, financial and insurance market conditions and expected developments. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results and plans and objectives of Zurich Insurance Group Ltd or the Group to differ materially from those expressed or implied in the forward looking statements (or from past results). Factors such as (i) general economic conditions and competitive factors, particularly in key markets; (ii) the risk of a global economic downturn, in the financial services industries in particular; (iii) performance of financial markets; (iv) levels of interest rates and currency exchange rates; (v) frequency, severity and development of insured claims events; (vi) mortality and morbidity experience; (vii) policy renewal and lapse rates; and (viii) changes in laws and regulations and in the policies of regulators may have a direct bearing on the results of operations of Zurich Insurance Group Ltd and its Group and on whether the targets will be achieved. Zurich Insurance Group Ltd undertakes no obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information, future events or circumstances or otherwise. All references to Farmers Exchanges mean Farmers Insurance Exchange, Fire Insurance Exchange, Truck Insurance Exchange and their subsidiaries and affiliates. The three Exchanges are California domiciled interinsurance exchanges owned by their policyholders with governance oversight by their Boards of Governors. Farmers Group, Inc. and its subsidiaries are appointed as the attorneys-in-fact for the Farmers Exchanges and in that capacity provide certain non-claims administrative and management services to the Farmers Exchanges. Neither Farmers Group, Inc., nor its parent companies, Zurich Insurance Company Ltd and Zurich Insurance Group Ltd, have any ownership interest in the Farmers Exchanges. Financial information about the Farmers Exchanges is proprietary to the Farmers Exchanges, but is provided to support an understanding of the performance of Farmers Group, Inc. and Farmers Reinsurance Company. It should be noted that past performance is not a guide to future performance and that interim results are not necessarily indicative of full year results. Persons requiring advice should consult an independent adviser. This communication does not constitute an offer or an invitation for the sale or purchase of securities in any jurisdiction. THIS COMMUNICATION DOES NOT CONTAIN AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES; SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR EXEMPTION FROM REGISTRATION, AND ANY PUBLIC OFFERING OF SECURITIES TO BE MADE IN THE UNITED STATES WILL BE MADE BY MEANS OF A PROSPECTUS THAT MAY BE OBTAINED FROM THE ISSUER AND THAT WILL CONTAIN DETAILED INFORMATION ABOUT THE COMPANY AND MANAGEMENT, AS WELL AS FINANCIAL STATEMENTS 3

14 Appendix

15 GI Combined ratio details AY loss ratio further improved with ER slightly deteriorating LOSS RATIO (%) EXPENSE RATIO (%) 70.3% 4.4% 68.3% 3.% 67.5%.% 67.7%.6% 66.3%.9% 8.0% 3.6% 7.% 3.5% 7.%.9% 7.% 3.7% 7.6% 3.9% 68.0% 67.5% 67.% 66.4% 65.6% -0.3% -.0% -.4% -.9% -.% 4.4% 3.7% 4.% 3.5% 3.7% FY- FY-3 Q- FY- FY-3 Q- PYD Catastrophes AY LR (excl. catastrophes) Commissions Other technical expenses Catastrophes includes major and mid-sized catastrophes including significant weather related events. 5

16 GI Loss ratio details AY loss ratio further improved LOSS RATIO (%) 75.5% 67.5%.% 67.6% 3.0% 70.3%.% 9.7% 67.7%.6% 69.4% 5.8% 67.4% 3.7% 68.6%.6% 66.3%.9% 67.% 67.9% 68.% 68.5% 66.4% 67.8% 66.7% 69.0% 65.6% -.9% -3.3% -.7% -0.3% -4.% -3.% -.0% -.% Q- Q- Q3- Q4- Q-3 Q3-3 Q4-3 PYD Catastrophes AY LR (excl. catastrophes) Catastrophes includes major and mid-sized catastrophes including significant weather related events. 6

17 GI Global Corporate KPI Combined ratio benefitting from very low catastrophe losses KEY FINANCIALS USD 64m USD 30m USD 37m GWP Growth Zurich rate change Combined Ratio 89.6% 87.0% 90.7% -% 3% 9% 9.0% 8.4% 9.5% KEY DRIVERS 70.6% Q- BOP 68.6% Expense ratio Loss ratio 7.% Growth impacted by some timing effects which should have a positive impact in the next quarters Combined ratio deteriorated mainly due to lower level of PYD and higher levels of large property losses while benefitting from lower catastrophes In local currency. GWP development due to premium rate change as a percentage of the renewed portfolio against the comparable prior year period. 7

18 GI North America Commercial KPI Growth impacted by one-offs, with improved combined ratio KEY FINANCIALS USD 68m USD 8m USD m GWP Growth Zurich rate change Combined Ratio 96.% 99.3% 95.0% -% 4% 95% 9.9% 9.5% 9.0% KEY DRIVERS 66.3% 69.7% Q- BOP Expense ratio Loss ratio 66.0% Underlying growth at +4% Stable rate increases with some market pressure on property lines Combined ratio benefitted from higher prior year reserve releases and underlying improvement off-set by higher catastrophes In local currency. GWP development due to premium rate change as a percentage of the renewed portfolio against the comparable prior year period. 8

19 GI EMEA KPI Broadly flat top-line, underlying combined ratio progress KEY FINANCIALS USD 65m USD 58m USD 3m GWP Growth Zurich rate change Combined Ratio 94.8% 94.4% 93.% -% % 93% 6.4% 6.6% 7.3% KEY DRIVERS 68.5% 67.8% Q- BOP Expense ratio Loss ratio 65.8% Solid combined ratio with some underlying improvement, even excluding the one time pension gain Growth impacted by economy in Italy but started to recover in CH personal and UK Germany on track after adjusting for some cost shift between GI and Life In local currency. GWP development due to premium rate change as a percentage of the renewed portfolio against the comparable prior year period. 9

20 GI International Markets KPI Reduced growth partly driven by focus on profitability KEY FINANCIALS USD 47m USD 79m USD 95m GWP Growth Zurich rate change Combined Ratio 97.5% 0.0% 97.% 3% 4% 97% 36.% 37.9% 36.9% KEY DRIVERS 6.4% 63.0% Q- BOP Expense ratio Loss ratio 60.3% Underlying growth at 8% Higher rate increases due to increased focus on profitability in Latin America Combined ratio benefitted from lower catastrophes and solid improvement of expense ratio In local currency. GWP development due to premium rate change as a percentage of the renewed portfolio against the comparable prior year period. 0

21 GI Rate change monitor Fairly stable increases, with some market pressure in US property ZURICH RATE CHANGE ASSESSMENT Business Assessment Group Fairly stable rate increases compared to Q 03 Global Corporate North America Commercial Modest rate increases in all regions apart from Asia Pacific; casualty lines positive, flat overall renewal pricing on property lines Continued rate increases across all lines of business; positive specialty, competitive pressure in property lines EMEA UK Germany Switzerland Italy Spain International Markets Fairly stable rate increases, inline with our expectations, but with different market dynamics Solid, if slightly lower, rate increases in our main lines of business Good rate increases in motor Renewal rates broadly flat, consistent with prior quarters Overall like for like renewal pricing broadly flat; pressure on motor reflecting high market profitability Slightly lower rate increases, mainly in motor Mid-single digit rate increases, consistent with prior quarters

22 GI Natural catastrophe reinsurance Program further benefitted from lower reinsurance prices NATURAL CATASTROPHE REINSURANCE TREATIES (USDm) Single global USD 50m treaty, which can be applied to any region Single global USD 500m treaty, which can be applied to any region Europe all perils US windstorms NA earthquakes Rest of World all perils Combined global cat treaty Global cat treaty Regional cat treaties Retention % of co-participation GLOBAL AGGREGATE CAT TREATY 950 Variable retention Reinsurance indemnification in excess of variable retention, ,400,550 All cat losses exceeding USD 35m Variable retention Global aggregate cat treaty Combined global cat treaty % of co-participation US Cat Treaty and Global Aggregate Cat Treaty renewed on January, 04; Europe Cat Treaty and Global Cat Treaty renewed on April, 04; and International Cat Treaty renewed on July, 03. This USD 50 million cover is the same combined global occurrence / aggregate treaty presiding over the global catastrophe treaty. This cover can be used only once, either for aggregated losses or for an individual event.

23 GL New business by pillar Strong first quarter production KEY FINANCIALS APE (USDm) , , NBM 6% PVNBP USD 0.3bn CLP single premium USD.3bn Q- NBV (USDm) Q- Corporate Life & Pensions Bank Other retail KEY DRIVERS Growing CLP APE due to increases in corporate savings contracts The higher volumes of lower margin business, combined with a reduction in UK protection sales, reduced the NBM and NBV Note: 0 figures do not include Zurich Santander. APE is reported before minority interests. NBM and NBV are reported net of minority interests, with prior year figures restated accordingly. 3

24 GL Net inflows & Asset under management Positive net flows and asset development NET INFLOWS BY REGION (USDbn) AUM DEVELOPMENT (USDbn) Q- 0.0 FY-3 Net inflows Market movements and other FX Other Latin America Europe 3rd party investments Unit-linked APME North America Group investments 4

25 Farmers Exchanges GWP Early positive signals in top-line performance DEVELOPMENT OF GWP BY BUSINESS LINE (USDm) -.% 4,673 4, ,3,3,057, Auto Home Business Insurance Bristol West Specialty Other Auto Home Business Insurance Bristol West Specialty Other Bristol West writes non-standard Auto business. Other includes Personal Umbrella, Miscellaneous Pools, Independent Agent personal lines business, Independent Agent Business Insurance and Discontinued Operations. 5

26 Farmers Exchanges PIF/VIF Bristol West turns the corner in terms of VIF growth DEVELOPMENT OF PIF/VIF BY BUSINESS LINE (THOUSANDS) -0.7% 9, ,64 9,653 9,53 4,875 4,843 44, , FY-3 Auto Home Business Insurance Bristol West Specialty Other 3 Auto Home Business Insurance Bristol West Specialty Other Policies-in-force (PIF) or Vehicle-in-force (VIF) for Auto businesses. Bristol West writes non-standard Auto business. 3 Other includes Personal Umbrella, Miscellaneous Pools, Independent Agent personal lines business, Independent Agent Business Insurance and Discontinued Operations. 6

27 Farmers Exchanges Combined ratio Combined ratio unchanged despite higher catastrophe losses COMBINED RATIO BY BUSINESS LINE (%).%.8% 05.7% 0.6% 0.7% 97.% 97.7% 98.8% 96.4% 96.5% 93.7% 88.6% 9.0% 89.8% Auto Home Business Insurance Bristol West Specialty Other 3 Total Combined ratio is before quota share treaties with Famers Reinsurance Company, Zurich Insurance Company Ltd and a third party reinsurer. Bristol West writes non-standard Auto business. 3 Other includes Personal Umbrella, Miscellaneous Pools, Independent Agent personal lines business, Independent Agent Business Insurance and Discontinued Operations. 7

28 Farmers Exchanges Combined ratio history Catastrophe losses drive volatility in quarterly combined ratio QUARTERLY COMBINED RATIO (%) Catastrophes impact Incl. Rita & Katrina Incl. California wildfires Incl. Ike & Gustav Incl. 7 Catastrophe Events Incl. Irene Incl. 3 Catastrophe Events Incl. 3 Catastrophe Events Excl. Fogel/SoT settlements 80 Q Q Q3 Q4 Q Q Q3 Q4 Q Q Q3 Q4 Q Q Q3 Q4 Q Q Q3 Q4 Q Q Q3 Q4 Q Q Q3 Q4 Q Q Q3 Q4 Q Farmers Exchanges adopted industry standard ISO defined catastrophes as per July 0. 8

29 Group Investments Asset allocation Balanced sources of investment risk and return ASSET ALLOCATION (%) RISK DIVERSIFICATION RISK DRIVERS (%),3 Total Group Investments: USD 4bn 5% 5% 4% % 5% 00% 8% % % 3% 37% 79% 3% 3% 6% Fixed income Mortgages Equities HF & PE 4 Sum of single security risks Investment risks diversified Investment risk relative to liabilities Equity risk Interest rate risk RE risk 4 FX risk Real estate Cash Credit spread risk Specific risk Economic view. Estimated. 3 Risk drivers of ALM/Market risk (at expected shortfall 99% based on Monte Carlo simulation) show marginal contribution to the total ALM/Market risk. 4 HE: Hedge Funds; PE: Private Equity; RE: Real Estate. 9

30 Group Investments Debt securities portfolio High quality debt securities portfolio BY CATEGORY (%) BY RATING (%) Total debt securities: USD 59bn % % % 3% 49% 39% 7% 37% Government and government related bonds MBS/ABS AAA AA A BBB Non-investment grade Corporate bonds 30

31 Group Investments Investment income yield Decline in investment income yields has slowed GENERAL INSURANCE GLOBAL LIFE GROUP 0.4% Equity 0.56% 0.56% 0.65% Debt 0.66% 0.8% Real estate 0.58% Mortgage loans 0.60% 0.6% Total (gross) 0.64% 0.66% 0.79% 0.60% Total (net) % 0.76%.3%.45%.4% 0.38% Equity 0.55% 0.53% 0.87% Debt 0.90% 0.99% Real estate 0.93% Mortgage loans 0.98% 0.97% Total (gross) 0.87% 0.9% 0.97% 0.84% Total (net) % 0.93%.4%.43%.48% 0.36% Equity 0.48% 0.5% 0.76% Debt 0.77% 0.89% Real estate 0.90% Mortgage loans 0.96%.00% Total (gross) 0.76% 0.78% 0.88% 0.73% Total (net) % 0.85%.43%.46%.50% Q- Calculated based on the asset class average assets, not annualized, accounting view before eliminations. Includes Hedge Funds and Private Equity. 3 Net of investment expenses. 3

32 Group Economic capital models Capital strong, supporting redeployment Z-ECM RATIO DEVELOPMENT (%) SST RATIO DEVELOPMENT (%) 3% -6% 6% -% 6% 7% % 3% 7% -4% % 06% HY-3 Business profits Market movements Dividend accrual Model changes & Other FY-3 Ratio expected to be temporarily above target AA range, until full execution of disciplined incremental risk taking Model changes include refined treatment of FX risk, where the USD is replaced by a basket currency for risk measurement HY-3 Business profits Market movements Dividend accrual Model changes & Other FY-3 SST ratio benefits from model changes introduced as part of model approval process Model changes include the reflection of business planned to be written but not yet earned over the next year The Swiss Solvency Test (SST) ratio is calculated based on the Group s internal model, and both are subject to the review and approval of the Group s regulator, the Swiss Financial Market Supervisory Authority (FINMA). The ratio is filed with FINMA bi-annually. 3

33 Group Z-ECM Well diversified capital base by risk type AFR DEVELOPMENT (USDbn) RBC BY RISK TYPE AND BUSINESS (%) Shareholders equity Dividend accrual Net intangibles % % 4% % % 33% 9% 3% ALM / Market risk Operational risk Business risk P&R risk Re-ins credit risk Life insurance risk Natural cat risk VIF & RBC adjustments 4 Investment credit risk Financial debt 0 7% 8% General Insurance Capital allocation to Farmers Available Financial Resources 4 30% 55% Global Life Farmers Other Premium & reserving risk. Includes Other Operating Businesses and Non-Core Businesses. 33

34 For further information CALL US VISIT OR FOLLOW US Investor Relations James Quin André Meier Michael Boardman Gianni Vitale Rating Agency Management Michèle Matlock Events Patricia Heina Download: Zurich Investors and Media App 34

35 Notes 35

36 Calendar: - May 8, Deutsche Bank Global Financial Services Investor Conference, New York - August 7, Half year results 04 - September 30 October, BoAML Annual Banking & Insurance CEO Conference - November 6, Results for nine months to September 30, 04 - February, 05, Annual results 04 Zurich Insurance Company Ltd