Introduction to Zurich - A value proposition for investors - Zurich Insurance
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Introduction to Zurich A value proposition for investors April 2021 Investor Relations and Rating Agency Management Group Finance
Content MAIN SECTIONS OTHER IMPORTANT INFORMATION (use symbols to navigate through the document) (use symbols to navigate through the document) Group overview, strategy, and financial targets Contact details and other information Property & Casualty (P&C) Disclaimer Life Farmers Investments and capital management Sustainability Back to content page © Zurich 2
GROUP OVERVIEW Our proposition to investors RESILIENT RESPONSIBLE AND BUSINESS MODEL CLEAR STRATEGY IMPACTFUL BUSINESS A balanced and diverse Focus on customer Tackling climate change global business Industry leading capital Inspiring confidence in a levels with conservatively Simplify digital society managed balance sheet Ensuring work Attractive return on equity Innovate sustainability © Zurich 3
GROUP OVERVIEW A truly global and highly diversified group KEY FACTS1 A BALANCED GLOBAL BUSINESS2 USD 50bn Total revenues (excl. result on UL investments) BOP by business (%) BOP by region (%) USD 226bn Total group investments (economic view) 8% 26% 6% 32% USD 4.2bn Business operating profit (BOP) 45% USD 3.8bn Net income attributable to shareholders (NIAS) 29% 54% 182% SST regulatory solvency ratio2 USD 38bn Shareholders’ equity Europe Property & Casualty (incl. Farmers Re) North America (incl. Farmers) CHF 56bn Market cap Life (incl. Farmers Life) Asia Pacific Farmers Management Services Latin America © Zurich 1 Values are for the full year 2020 unless otherwise noted. Investments, solvency ratios, shareholders’ equity and market cap are as of December 31, 2020. 2 Adjusted average BOP for FY-16 to FY-20. BOP split by business excludes Group Functions & Operations and Non-Core Businesses. BOP split by region excludes additionally Group Reinsurance. 4
GROUP OVERVIEW Genuinely global franchise with distinct capabilities NORTH AMERICA #4 in commercial insurance #2 in crop insurance ASIA PACIFIC #6 in US personal lines EMEA #5 in P&C, #1 in Life retail through Farmers Exchanges2 #2 in P&C direct #4 insurance company overall Top 3 #4 in P&C, #9 in Life global #6 in P&C3 commercial #4 in P&C LATIN AMERICA insurer1 #3 in P&C #4 in Life Source: Axco, Company reports and presentations, local statistics (2020 or most recent available), Dowling & Partners, SNL Financial, Strategic Insight, Zurich internal data. 1 Based on FY-20 NEP. Data includes only primary insurance and is on a more comparable basis. Zurich includes alternative markets in North America and municipal business in the UK and excludes SMEs. © Zurich 2 For all references to Farmers Exchanges see the disclaimer and cautionary statement. 3 Pro-forma for the acquisition of Adira Insurance, based on FY-19 data. 5
GROUP STRATEGY AND TARGETS Simple execution, higher ambition 2016 – 2019 ACHIEVEMENTS 2020 – 2022 AMBITION SIMPLIFIED AND FLEXIBLE ORGANIZATION Delayered structure BOPAT ROE1 >14% Simplified IT landscape Simplified products and services Cumulative cash IMPROVED EFFICIENCY remittances USD >11.5bn Over-delivered on USD 1.5bn savings program Reduced corporate center expenses STRENGTHENED BUSINESS AND CULTURE Strengthened position of our key countries SST2 >160% Improved the Commercial profitability Built culture of customer focus and innovation Reinvigorated growth with low earnings volatility Earnings per share growth3 >5% p.a. 1 Business operating profit after tax return on equity, excluding unrealized gains and losses. © Zurich 2 From FY-20 the basis for the target capitalization has been changed to the Swiss Solvency Test (SST), previously the target range was based on the Group’s internal Z-ECM basis. 3 Before capital deployment. 6
GROUP OVERVIEW Strong capital position and cash generation VERY STRONG FINANCIAL STRONG CAPITAL POSITION, GROUP HIGHLY CASH GENERATIVE, CASH STRENGTH SWISS SOLVENCY TEST 1 (%) REMITTANCE (USDbn) 3.7 3.8 AA (very strong) / 240% 3.9 3.4 3.4 outlook ‘stable’ 222% 0.2 0.1 221% 0.5 1.2 216% 2.8 1.2 220% 1.4 1.4 204% 0.1 1.5 1.1 1.1 0.9 200% 189% 0.7 Aa3 (excellent) / 182% 0.9 0.4 1.5 outlook ‘stable’ 180% 2.5 2.3 2.3 1.7 2.0 160% 1.5 -0.2 -0.1 140% -0.6 -0.8 -0.8 -1.0 A+ (superior) / -0.9 -0.9 outlook ‘stable’ 120% FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 100% 1.8 3.2 3.0 3.7 4.1 3.8 FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 Property & Casualty Group Functions Life Non-Core Businesses SST Farmers Net income attributable SST target capital of ’160% or above’ to shareholders 1 Estimated Swiss Solvency Test (SST) ratio as of January 1, 2021, has been calculated based on the Group's Internal Model, which has been approved by the Swiss Financial Market Supervisory © Zurich Authority FINMA. The SST ratio as of January 1 has to be filed with FINMA by end of April each year and is subject to review by FINMA. FINMA agreed to the use of standard yield curves for the main currencies to calculate the SST, starting end of Q1 2020. SST ratio as of January 1, 2020 has been re-calculated on the same basis for disclosure purposes in order to allow better comparison. 7
GROUP STRATEGY AND TARGETS We have adapted plans to the changed environment and expect to meet our 2020 – 2022 targets ILLUSTRATIVE BOPAT ROE DEVELOPMENT (%) ~15% ~0.0-0.5% 14.2% ~2.0-2.5% ~1.5-2.0% ~0.5-1.0% ~1.5-2.0% ~1.0-1.5% FY-19 Growth in Investment income Business growth Productivity Portfolio quality Capital FY-22 equity base allocation / other illustrative © Zurich 8
GROUP STRATEGY AND TARGETS Actions during the crisis have earned the trust and confidence of our stakeholders, while our ESG approach is well recognized STRENGTHENED CUSTOMER FOCUS HIGHER EMPLOYEE SATISFACTION INDUSTRY LEADING ESG RATINGS3 Retail NPS move2 NPS place to work ‘AA’ rating 1 +3 +22 +7 #1 in insurance group +8 #3 +13 amongst industry peers Oct-19 Jul-20 +3 Absolute score of 4.4 Support during COVID-19 crisis: +2 (out of 5.0) • Rapid move to working from home +4 • Implementation of new digital tools • Hospitalization benefits for employees ‘A-’ Management Level +3 and their families 1 For all references to Farmers Exchanges see the disclaimer and cautionary statements. © Zurich 2 FY-20 vs. FY-19. North America NPS data reflects commercial business. 3 MSCI ESG rating report July 2020, DJSI score Nov 2020, Sustainalytics ESG Risk Report Dec 2020, FTSE Industry Classification Benchmark (ICB), Dec 2020, CDP Climate Change Score 2020. 9
Property & Casualty
PROPERTY & CASUALTY P&C – our value proposition STRONG & BALANCED FRANCHISE HIGH QUALITY EARNINGS WELL PLACED TO GAIN FROM PRICING CYCLE • Leading global commercial insurer, • Consistent reserving approach • Focus on rate increases started profitable retail franchise resulting in stable reserve releases ahead of market • Equally weighted to EMEA and North • Reduced catastrophe and large loss • Strong capabilities which are not America, with growing business in volatility easily replicated APAC and Latin America © Zurich 11
PROPERTY & CASUALTY A balanced footprint and business mix leveraging an open distribution architecture FOOTPRINT BUSINESS MIX DISTRIBUTION FY-20 Gross written premiums by region (%)1 FY-20 Gross written premiums by line of business (%) FY-20 Gross written premiums by distribution channel (%) 6% 8% 7% 8% 21% 8% 18% 43% 14% USD USD USD 35.5bn 35.5bn 35.5bn 43% 16% 71% 36% EMEA APAC Motor Liability Worker Injury Brokers Banks and affinities North America Latin America Property Special lines Agents Direct © Zurich 1 The split excludes Group Reinsurance and Eliminations. 12
PROPERTY & CASUALTY Leading global commercial insurer, profitable franchise across both customer units CUSTOMER UNITS COMMERCIAL INSURANCE RANKING UNDERWRITING PROFITABILITY FY-20 Gross written premiums by customer unit (%)1 FY-20 Net earned premiums (USDbn)2 FY-20 AY CR ex Catastrophes and COVID-19 (%)3 90.9% 93.7% 34% USD 35.5bn 66% Commercial Retail and SME Commercial insurance Retail and SME 1 The split excludes Group Reinsurance and Eliminations. © Zurich 2 Source: Company reports. Data includes only primary insurance on a more comparable basis. Zurich view includes alternative markets in North America and municipal business in the UK and excludes SME. 3 Accident year combined ratio excluding Catastrophes and COVID-19 impacts (frequency benefits, Cover-More operating loss included in underwriting result, and premium refunds). 13
PROPERTY & CASUALTY Consistent reserve releases and reduced large loss volatility NET PRIOR YEAR RESERVE DEVELOPMENT (% OF NEP) LARGE LOSS VOLATILITY (ppts)1 8ppts 3ppts -1.4% -1.6% -1.8% -2.3% -2.3% Q1-14 Q4-20 Q1-16 FY-16 FY-17 FY-18 FY-19 2020 Indicated range (1-2% of NEP) © Zurich 1 Volatility is measured as difference between lowest and highest ratio for the indicated period. 14
PROPERTY & CASUALTY Balance sheet and large loss volatility well managed through reinsurance GROUP CATASTROPHE REINSURANCE PROTECTION GLOBAL SURETY EXCESS OF LOSS (USDm) • Designed to manage earnings volatility • North America: USD 325m coverage per customer in excess 200 115 of USD 75m retention 200 • Other regions: USD 362.5m coverage per customer in excess 1,000 of USD 37.5m retention 200 1,000 • Aggregate limit: USD 1.1bn 200 600 1,000 250 458 MAIN ADDITIONAL TREATIES 300 8002 499 650 200 Global property per risk Europe U.S. all perils Rest of world Global aggregate all perils1 all perils cat treaty U.S. property quota share Global aggregate cat treaty Global cat treaty 10% co-participation Combined global cat treaty3 Regional cat treaties U.S. liability quota share U.S. wind swap4 Retention 1 Europe cat treaty calculated with EUR/USD exchange rate as of March 31, 2021 (EUR 390m in excess of EUR 425m). 2 Franchise deductible of USD 45m, i.e. losses greater than USD 45m count towards erosion of the retention (annual aggregate deductible). © Zurich 3 This USD 200m cover can be used only once, either for aggregated losses or for an individual occurrence or event. 4 Only relevant for U.S. windstorm. 15
PROPERTY & CASUALTY Well placed to gain from improved pricing in commercial DISTINCTIVE CAPABILITIES P&C COMMERCIAL RATE CHANGE1 IMPROVED TERMS & CONDITIONS Leader in complex international North America Increased use of Zurich programs standard wordings 18% 18% 18% 12% Superior risk engineering and Higher deductibles and self- captive services Q1-20 Q2-20 Q3-20 Q4-20 insured retentions Strengthened customer service EMEA Exclusions for industries and for key clients, reliable partner 15% 15% coverages out of appetite for brokers 12% 5% Smaller line sizes Q1-20 Q2-20 Q3-20 Q4-20 Advanced analytics capabilities © Zurich 1 GWP development due to premium rate change as a percentage of the renewed portfolio (excl. the crop business) against the comparable prior year period. 16
PROPERTY & CASUALTY Growing at the right point of the cycle GWP GROWTH LIKE-FOR-LIKE (%)1 ACCIDENT YEAR COMBINED RATIO EXCL. CATASTROPHES AND COVID-19 (%) 8.1% 97.3% -2.6ppts 6.1% 96.5% 96.1% 95.4% 3.8% 3.8% 92.8% 2.3% 1.7% 1.2% 1.5% 0.4% -3.4% FY-16 FY-17 FY-18 FY-19 FY-20 FY-16 FY-17 FY-18 FY-19 FY-20 GWP like-for-like growth (%)1 Rate change (%)2 © Zurich 1 In local currency and after adjusting for closed acquisitions and disposals. 2 GWP development due to premium rate change as a percentage of the renewed portfolio (excl. the crop business) against the comparable prior year period. 17
Life
LIFE Life – our value proposition PROVEN TRACK RECORD IN BANK STABLE AND GROWING OPERATING FOCUS ON PROTECTION AND AND DISTRIBUTION PARTNERSHIPS EARNINGS CAPITAL LIGHT SAVINGS • ~70% of new business distributed • Annual growth in operating earnings • Major life insurer with competitive through bancassurance and CLP of more than 5% p.a. since FY-16 advantage in protection and unit- • Key enablers to access large pools of • Earnings stream with high technical linked business new customers and extend footprint margin and low market dependency • Well positioned for ongoing low yield environment © Zurich 19
LIFE Proven track record in bank and distribution partnerships, stable and growing operating earnings FOOTPRINT (%) DISTRIBUTION MIX (%) FY-20 BUSINESS OPERATING PROFIT FY-20 Annual premium equivalent region (%) FY-20 Annual premium equivalent by pillar (%) (USDm) +6% 1,554 1,486 1,597 8 1,423 6 174 1,258 319 269 4 4 28% 1,130 219 219 29% 31% 1 249 296 186 204 269 269 31 USD 76 132 3,625m 1,010 1,037 945 945 6% 63% 889 831 3% -85 -2 -30 -13 -13 40% FY-16 FY-17 FY-18 FY-19 FY-20 FY-20 excl. COVID- EMEA Latin America 19 impact EMEA Asia Pacific North America Group Re Corporate savings Banks Other North America Latin America and protection Asia Pacific COVID 19 impact © Zurich 20
LIFE Revenue streams with high technical margin and low market dependency DRIVERS OF IFRS PROFITABLITIY (USDm) SHARE OF INCOME FROM FEES, LOADINGS AND TECHNICAL MARGINS (%)1 INCOME 88% Loadings & fees 2,649 838 3,487 Policy charges and fees mainly designed to cover distribution costs 76% 75% Returns on our assets, plus share of returns on 64% Inv. margin 574 policyholder assets Revenues on mortality and other ‘risk’ products, after Technical margin 1,001 allowing for claims costs EXPENSES Operating costs -1,451 The costs we incur running the business Acquisition costs What we pay to distributors net of deferred costs -2,187 over policy terms (net of deferrals) OPERATING Peer 1 Peer 2 Peer 3 Zurich PROFIT FY-20 BOP 1,423 Unit-linked fund based fees © Zurich 1 Average of FY-16 -20 based on source of earnings disclosures. Peers: Allianz, Axa, Generali. 21
LIFE Focus on protection and unit linked business positions our life business well for ongoing low yields FY-20 GWP SPLIT (%) FY-20 NEW BUSINESS MIX (%) FY-20 SPLIT GROSS RESERVES & LIABILITIES (%) 12% 38% 20% USD FY-20 APE1 5% 3% 2% 2% 3,625m 18% 20% 21% 31% 47% 58% 14% 30% -7% 95% 100% 9% 93% 21% 82% 80% 79% 55% FY-20 NBV1 18% USD 42% 32% 788m 80% EMEA Latin Asia North Total America Pacific America Protection Corporate savings Traditional & other Protection Capital efficient Other Unit-linked Savings & annuity Unit-linked & investment contracts © Zurich 1 Annual premium equivalent (APE) is reported before non-controlling interests. New business value (NBV) is reported net of non-controlling interests. 22
Farmers
FARMERS Farmers - our value proposition LEADING U.S. PERSONAL LINES STABLE CONTRIBUTION FROM FEE- HIGHLY CASH-GENERATIVE BUSINESS PLAYER BASED EARNINGS • No. 6 in the largest personal lines • Unique capital-light business model • ~95% of net income attributable to shareholders converted to cash and market in the world1 with fee income based on a remitted to Group • Acquisition of MetLife U.S. P&C percentage of gross earned premium • Non-regulated management services business to further boost nationwide • Earnings contribution largely business free from dividend presence and market share unaffected by underwriting risk restrictions © Zurich 1 FY-20 pro-forma; Source: SNL Financial. 24
FARMERS A unique business structure Zurich owned Policyholders owned Farmers Group, Inc. Farmers Exchanges1 Services Provides non-claims and ancillary services to the Exchanges Carry underwriting risk and handle claims, as well as own the (e.g. underwriting, policy administration, premium collection, Farmers brand and distribution assets (e.g. exclusive agents, direct investment management, and accounting and reporting) call centers) Fees as % of Gross Earned Premiums Farmers New World Life Farmers Reinsurance Co. MetLife strategic Kraft Lake Farmers Financial partnership Brokerage Solutions Life insurance company Reinsurance company providing dedicated to selling products reinsurance to the Exchanges Exclusive relationship Brokerage Broker-dealer to through Farmers exclusive to sell P&C products dedicated to support exclusive agents via MetLife’s U.S. Farmers agents in providing group benefits exclusive clients with employer channel agents investment services © Zurich 1 For all references to Farmers Exchanges see the disclaimer and cautionary statement. 25
FARMERS Farmers Exchanges1 with a truly nationwide presence and increased scale in a consolidating market FY-20 U.S. PERSONAL LINES P&C DWP (USDbn)2 A TOP 10 U.S. PERSONAL LINES PLAYER NATIONWIDE2 Change in market position / FY-20 pro-forma DWP (USDm) / pro-forma market share (%) State Farm 60.4 35.7 North East Allstate Mid West 22nd → 8th Progressive 35.1 West3 8th → 6th USD 716m / 4.2% Berkshire Hathaway (GEICO) 34.3 2nd → 2nd USD 3,015m / 4.1% USD 7,241m / 10.6% USAA 23.1 Nationwide Farmers Exchanges pro-forma1 19.4 7th → 6th Liberty Mutual 19.0 USD 19.4bn / 5.4% Mid Atlantic Farmers Exchanges1 16.0 14th → 10th USD 1,352m / 2.6% Nationwide 10.0 South West American Family 10.0 6th → 6th South East USD 4,729m / 8.2% Travelers 9.7 9th → 9th MetLife 3.4 USD 2,313m / 2.6% 1 For all references to Farmers Exchanges see the disclaimer and cautionary statement. © Zurich 2 FY-20 pro-forma; Source: SNL Financial. 3 Includes Alaska and Hawaii (not pictured). 26
FARMERS Large and diverse distribution footprint with diversified product mix1 FY-20 DWP BY LINE OF BUSINESS FY-20 DWP BY DISTRIBUTION MAIN DISTRIBUTION CHANNELS2 (%)2 CHANNEL (%)2 Farmers Exchanges exclusive 1% ~11,300 agents 10% 12% 11% Independent agent relationships 18% ~35,000 incl. ~3,000 new relationships from MetLife USD 23.7bn 49% USD 23.7bn Active employer relationships in 70% 3,800+ scope from Metlife’s worksite 29% marketing channel Active affinity relationships via 250+ dedicated sales force Exclusive agents Auto Specialty Other Independent agents Home Business insurance Direct, worksite marketing, affinity © Zurich 1 For all references to Farmers Exchanges see the disclaimer and cautionary statement. 2 FY-20 pro-forma; Source: SNL Financial. 27
FARMERS Stable contribution to Group earnings, primarily driven by Farmers Management Services fee-based business BUSINESS OPERATING PROFIT (USDm) KEY DRIVERS 194 138 1,707 49 1,643 Farmers Re GWP (USDm) 15 43 236 1,501 176 26 100 1,048 1,069 1,101 Farmers Life GWP (USDm)1 1,424 1,456 1,375 20,171 20,441 20,109 FY-18 FY-19 FY-20 Farmers Exchanges GEP (USDm) 7.0 7.0 6.8 and FMS MGEP margin (%)2 FY-18 FY-19 FY-20 Farmers Management Services Farmers Life Farmers Re © Zurich 1 Including policy fees and deposits. 2 Margin on gross earned premiums of the Farmers Exchanges. For all references to Farmers Exchanges see the disclaimer and cautionary statement. 28
Investment and capital management
INVESTMENT AND CAPITAL MANAGEMENT Conservative investment portfolio focused on high asset quality FY-20 GROUP INVESTMENTS (%)1 FY-20 ASSET QUALITY (%) FY-20 DURATION (# YEARS)2 12.9 USD 78bn USD 99bn 6% 2% 0% 1% 10.8 5% 2% 5% 7% 26% 34% 35% 2% 4% USD 226bn 37% 4.8 5.1 25% 15% 44% 31% 19% Government and Credit, private debt Life P&C government Government and Equities guaranteed government guaranteed Credit, Hedge funds, private debt private equity AAA A Non-investment Mortgages Cash grade Assets Liabilities Real estate AA BBB Unrated © Zurich 1 Market value of the investment portfolio (economic view). 2 Duration numbers are calculated as DV10 (dollar value of 10bp of move in interest rates over the period on the asset values) divided by market value of fixed income investments. 30
INVESTMENT AND CAPITAL MANAGEMENT Highly diversified credit and private debt portfolio FY-20 RATING OF CREDIT, PRIVATE DEBT SECURITIES (%) USD 31.7bn USD 22.1bn USD 18.1bn USD 8.6bn USD 6.6bn USD 11.8bn 1% 2% 1% 1% 1% 3% 7% 12% 4% 1% 4% 21% 29% 18% 50% 54% 36% 51% 89% 67% 21% 39% 30% 2% 18% 21% 7% 6% 1% 3% Non-financial credit Financial credit Municipals, agencies, Asset backed securities Covered bonds Other state credit AAA AA A BBB Non-investment grade Unrated © Zurich 31
INVESTMENT AND CAPITAL MANAGEMENT Capital managed conservatively to AA financial strength Group Swiss Solvency Test (%) 1 9m-20 SST Sensitivities Impact (ppts)2 240% 216% 221% 222% 204% 189% 182% 200% Interest rate +50bps +15ppts 160% 120% SST target capital of “160% or above” Interest rate -50bps -19ppts 80% equivalent to AA 40% 0% USD appreciation +10% +1ppts FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 USD depreciation -10% -2ppts Q1-20 SST VS. SOLVENCY II FOR EUROPEAN UNION Equities +20% +8ppts ENTITIES (%) ~90ppts Equities -20% -9ppts Credit spreads +100bps3 -21ppts CS excl. EUR sovereign +100bps3 -14ppts SST1 Solvency II 1 On Swiss Solvency Test (SST) see footnote on page 6. The ratio as of January 1, 2020 has been re-calculated on the same basis for disclosure purposes in order to allow better comparison. © Zurich 2 Sensitivities are best estimates and reflect the impact on the pension plans in the UK. For the interest rate sensitivities shocks are applied to the liquid and the non-liquid part of the yield curve. 3 Credit Spreads (CS) include mortgages and including/excluding EUR sovereign spreads. CS sensitivities include changes to the volatility adjustment applied to interest rates curves. 32
INVESTMENT AND CAPITAL MANAGEMENT Moderate leverage with interest cover at Aa levels GROUP CAPITAL STRUCTURE (%)1 MOODY’S FINANCIAL LEVERAGE (%) & EARNINGS COVERAGE 11% 10% 9% 12% 11% 11% 26.4% 25.8% 24.1% 23.7% 14% 17% 16% 15% 16% 22.6% 22.3% 16% 13.2 12.3 76% 73% 75% 74% 74% 9.3 10.1 72% 9.2 6.7 FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 Senior debt Subordinated debt Shareholders equity Financial leverage (Aa = 15-30%) Earnings coverage (Aa = 8-12x) © Zurich 1 Based on IFRS balance sheet 33
INVESTMENT AND CAPITAL MANAGEMENT Low average debt cost and balanced maturity profile CDS SPREAD AMONG BEST OF PEERS (BPS)1 BALANCED REFINANCING NEEDS (USDbn)2 600 2.2 2.1 0.2 0.6 1.8 1.8 1.7 400 0.5 1.3 0.8 1.2 0.4 1.9 200 0.8 1.6 0.6 0.6 0.3 1.2 0.5 0.3 1.0 0.9 0.3 0.2 0.3 0.5 0.2 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2021 2023 2025 2027 2029 2031 2033 2039 Zurich Axa Generali Allianz Senior Subordinated © Zurich 1 5y EUR sub CDS. Source: Bloomberg. 2 Maturity profile based on first call date for subordinated debt and maturity date for senior debt. Includes the placement of USD 1.75bn of dated subordinated debt announced on January 12, 2021. 34
INVESTMENT AND CAPITAL MANAGEMENT We have a strongly cash generative business reflected in high cash remittance Property & Non-Core Group Functions Life Farmers Group Casualty Businesses and Operations BOP (USDbn) 11.3 8.2 10.3 0.0 -4.4 25.3 FY-15 to FY-20 NIAS (USDbn) 11.0 6.4 7.4 0.2 -5.2 19.8 FY-15 to FY-20 Cash remittances (USDbn) 12.2 5.4 7.8 0.6 -5.1 21.0 FY-15 to FY-20 Remittance / NIAS (%) 112% 84% 106% nm nm 106% Expected remittance payout (%) 90% 75% 95% nm 100% 85% FY-21 to FY-22 © Zurich 35
INVESTMENT AND CAPITAL MANAGEMENT We are focused on continuing to reward our shareholders DIVIDEND POLICY1 DIVIDEND PER SHARE (CHF) +4% NIAS2 payout ratio of ~75% 20 20 19 18 17 Dividend increases based on sustainable earnings growth Minimum target of prior year level3 FY-16 FY-17 FY-18 FY-19 FY-201 1 The dividend is subject to the approval by the shareholders at the Annual General Meeting. © Zurich 2 Net income attributable to shareholders. 3 Minimum dividend target is CHF 20 per share based on FY-20 36
Sustainability
SUSTAINABILITY We want to be known as one of the most responsible and impactful businesses in the world A CHANGING CLIMATE WORK SUSTAINABILITY CONFIDENCE IN A DIGITAL SOCIETY • Science-based CO2 reduction targets • Prioritize current workforce over • Ethical use of data & AI external hires and outsourcing • Mitigate climate risk • Data protection and cyber security • Support and develop the skills our • Innovation for sustainable solutions people need for the future of work • Business resilience and digitalization © Zurich 38
SUSTAINABILITY Our commitments in action ACHIEVEMENTS TARGETS -30% in CO2 USD 6bn emissions in 270 invested operations since companies • GROUP 2015 in impact bonds in scope for Align our business to a 1.5°C future infrastructure coal and oil sands policy and private +75 pts implemented by • OPERATIONS equity improvement in 2021 Reduce CO2 emissions by 50% by 2025 eNPS2 score 53% of since 2017 positions +22% filled internally • INVESTMENTS green 170 000 Reduce CO2 emissions in green building investments by people 30% and in equity and credit investments by 25% by 2025 buildings benefited from in investment 12 Countries the Zurich portfolio since with EDGE Resilience • PEOPLE AND COMMUNITY 2010 certification 1 Flood Alliance Help improve the mental wellbeing of 10 million people since 2017 (2024 target of Zurich Z Foundation) © Zurich 1 EDGE Certification is a leading global assessment methodology and business certification standard for gender equality. 2 Employee Net Promoter Score (eNPS). 39
SUSTAINABILITY Delivery against our ambition is widely recognized by external assessors OUR RATINGS1 OUR LONG-TERM COMMITMENT ‘AA’ rating1 #1 in insurance group2 #3 amongst industry peers3 OUR ENGAGEMENT PARTNERS Absolute Score of 4.4 (out of 5.0)4 • Lead author of the World Economic Forum Global Risk Report • Founding member of the Net Zero Asset Owner Alliance • Member of Coalition for Climate Resilient Investment ‘A-’ Management Level5 • Member of Insurance Development Forum 1 MSCI ESG Rating Report July 2020 4 FTSE Industry Classification Benchmark ( ICB ), Dec 2019 © Zurich 2 S&P Global ESG Score 2020 (previously RobecoSAM), 100% percentile 5 CDP Climate Change 2020 score. 3 As defined and reported by Sustainalytics ESG Risk Report, December 3, 2020 40
Appendix
APPENDIX - CAPITAL MANAGEMENT SST is more conservative than Solvency II General information SST SOLVENCY II Most onerous impact Risk measure Expected shortfall 99% (~BBB) Value at risk 99.5% (~BBB) • Market risk (including investment Internal model (ZIP): Standard formula (other entities): credit) • Market risk (including • Market risk • Premium, reserve and UPR risk investment credit) • Counterparty default risk • NatCat risk • Premium, reserve and UPR • Life underwriting risk • Life liability risk risk • Health underwriting risk Risk types covered • Life business risk • NatCat risk • Non-life underwriting risk • Reinsurance credit risk • Business risk (including premium, reserve • Receivables credit risk • Operational risk and NatCat) • Reinsurance credit risk • Intangible asset risk • Receivables credit risk • Operational risk • Scenarios No concept of equivalence, applied to Possibility to use local regimes for subsidiaries in equivalent third Equivalence the entire Group countries Tax Pre-tax Post-tax © Zurich 42
APPENDIX - CAPITAL MANAGEMENT SST is more conservative than Solvency II Yield curves and transitionals SST1 SOLVENCY II Most onerous impact Swaps (EUR, GBP, USD) Base for risk-free yield curves Swaps Government bond (CHF) CHF: 15 years CHF: 25 years Entry point to extrapolation EUR: 20 years EUR: 20 years of yield curves USD, GBP: 50 years USD, GBP: 50 years CHF: 2.1% CHF: 2.6% Ultimate forward rate (UFR)2 EUR, GBP: 3.6% EUR, GBP: 3.6% USD: 3.3% USD: 3.6% - credit risk adjustment: -30bps (USD) and -10bps - credit risk adjustment: -10bps (EUR, CHF, GBP) and - (EUR, GBP) 13bps (USD) Adjustments to yield curves2 + volatility adjustment: 5bps (EUR) for IT, ES and GER + volatility adjustment: 5bps (EUR), 10bps (CHF), 8bps (GBP) and 25bps (USD) + matching adjustment Various transitional measures, especially for yield Transitional requirements None curves and technical provisions, lasting until 2032 © Zurich 1 For EUR and GBP same yield curves are used as under Solvency II. 2 Yield curve parameters as of end March 2021. 43
Other important 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 Fabian Wiederkehr +41 44 625 33 08 EVENTS Patricia Heina +41 44 625 38 44 Investor Relations website Follow us © Zurich 45
Useful hyperlinks CALENDAR AND EVENTS ANALYSTS’ RECOMMENDATIONS AND CONSENSUS PRESENTATIONS ZURICH STOCK INFORMATION AND SHARE PRICE (ZURN) INVESTOR DAY DIVIDENDS FINANCIAL RESULTS AND REPORTS RATINGS OTHER SUBSIDIARY REPORTS BONDS SUSTAINABILITY REPORTS, PUBLICATIONS AND VIDEOS © Zurich 46
Investing in Zurich SIX SWISS EXCHANGE US AMERICAN DEPOSITARY RECEIPT PROGRAM • Listing: SIX Swiss Exchange, Switzerland • Depository: The Bank of New York Mellon • Product type: Swiss Blue Chip Shares • Nature: ADR • Ticker symbol: ZURN • Symbol: ZURVY • Swiss security number (Valorennummer): 1107539 • For further information: • ISIN: CH0011075394 • Bloomberg symbol: ZURN VX Equity in the USA +1-888-BNY-ADRS • Reuters symbol: ZURN.VX outside the USA +1 201 680 6825 E-mail shrrelations@bnymellon.com • Trading currency: CHF Website www.adrbnymellon.com © Zurich 47
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; (viii) increased litigation activity and regulatory actions; and (ix) 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. Specifically in relation with the COVID-19 related statements, such statements were made on the basis of circumstances prevailing at a certain time and on the basis of specific terms and conditions (in particular applicable exclusions) of insurance policies as written and interpreted by the Group and may be subject to regulatory, legislative, governmental and litigation-related developments affecting the extent of potential losses covered by a member of the Group or potentially exposing the Group to additional losses if terms or conditions are retroactively amended by way of legislative or regulatory action. 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 inter-insurance 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 three Exchanges and in that capacity provide certain non-claims services and ancillary 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. Please also note 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. © Zurich 48
© Zurich Insurance Company Ltd
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