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.
5GROUP 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.
6GROUP 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.
7GROUP 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
8GROUP 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.
9Property & 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
11PROPERTY & 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.
12PROPERTY & 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).
13PROPERTY & 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.
14PROPERTY & 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.
15PROPERTY & 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.
16PROPERTY & 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.
17Life
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
19LIFE
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
20LIFE
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.
21LIFE
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.
22Farmers
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.
24FARMERS
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.
25FARMERS
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).
26FARMERS
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.
27FARMERS
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.
28Investment 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.
30INVESTMENT 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
31INVESTMENT 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.
32INVESTMENT 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
33INVESTMENT 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.
34INVESTMENT 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
35INVESTMENT 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
36Sustainability
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
38SUSTAINABILITY
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).
39SUSTAINABILITY
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
40Appendix
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
42APPENDIX - 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.
43Other 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
45Useful 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
46Investing 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
47Disclaimer 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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