Transcript Concluding remarks - Zurich Insurance Group

Concluding remarks
Rolf Hüppi
Chairman and CEO of Zurich Financial Services
© Zurich Financial Services Analysts´ day 2001
1
Key 2003 financial targets
2000
TARGET
NON-LIFE
Combined ratio – overall
Combined ratio – US commercial
Combined ratio – UK
Combined ratio – CH
Premium growth
LIFE
EV return
New business premium growth (APE)
FARMERS
Growth in net income
excluding investment result
1) all growth rates are in local currencies
2) net earned premiums
104%
104%
103%
103%
>10%
Performance
1
105.5%
104.9%
105.1%
105.7%
6.2%2
1% above
discount rate
1.7%>disc.rate
10% - 12%
2.0%
8% - 10%
4.6%
2
Key 2003 financial targets (cont.)
2000
TARGET
Performance1
REINSURANCE ALTERNATIVE RISK
Centre: “Embedded value” return
Zurich Capital Markets: RoE
ASSET MANAGEMENT
Operating margin
Funds performance (1st & 2nd quartiles)
Net fund flow in % of AuM
9%
> 20%
12%
> 20%
> 25%
>70%
5% – 10%
15.7%
>60%2
2.7%
GROUP
Normalized earnings organic growth in USD
1) all growth rates are in local currencies
2) US, UK, Germany
10% - 15%
3
Summary
• Focused financial services group with strong
fundamentals
• Taking firm corrective actions to generate
10%-15% normalized average earnings growth per
year
• 2001 a transition year
• Clear financial targets & strategic direction
• Focus on areas of strengths/Dispose of non-strategic
assets
• Committed to improving efficiency
4
Annual results 2000
Appendix
© Zurich Financial Services Analysts´ day 2001
5
Own Investments
In % of average investments
2000
1999
Investment income
5.2%
5.1%
Total investment return
6.2%
4.0%
TMT stocks
10%
14%
Alternative investments in USD bn.
Total Investments at Fair Value
of which Cap Z
2.2
1.0
of which C ZFS II
0.4
Remaining Commitment
3.5
of which Cap Z
of which CZFS2
2.6
0.2
6
Special items 1999
In USD millions
Gains from IAS 19
Total
153
NL
97
Life accounting changes1 139
250
147
Excess nat cat
-140
-100
Reserve strengthening
-88
-88
Y2K
-80
-35
Total
-210
24
Re
20
Farmers A Mgt.
36
-
-3
-3
33
-3
139
FX gains/losses
Contingency provision
Life
74
29
-40
-30
-9
-210
21
203 -230
1) Plus USD 87m related to realized gains on trading assets already included in normalized net income.
7
Special items 2000
In USD millions
Total
Accounting changes
FX gains/losses
Reserve strengthening
-34
NL
-90
90
-96
-12
-270
350
350
Commutations
215
115
Excess nat cat
-72
-72
Life reserve transfer
Total
Re
Farmers A Mgt.
74
-270
Covariance benefit
Share unification
Life
-101
-92
-80
97
26
100
101
-12
179
-96
-12
8
Rate increases in non-life 2000
Rate increases
4Q 2000 on 4Q 1999
Personal
Commercial
Motor Household
Motor Liability Property
US
3%
13%
UK
14%
5%
20%
12%
5%
Switzerland
stable stable
10%
1%
-1%
Germany
4%
4%
------------11%-------------
--------------5%-------------
9
E-business update
“Zurich’s e-business strategy continues to take a multi-channel approach integrated with
our core businesses, rather than focus on a few major pure play internet initiatives”
Over 200 initiatives worldwide
Customer
15%
efficiency
48%
frequency
23%
in progress
30%
density
14%
revamped
6%
• Progress in 2000
– Success of Agency Dashboard and
AD Online
– Success of e-ZSB: 75% new
premiums processed on-line, 22,500
agents registered
– First version of Swiss portal
launched, UK to follow with Bank of
Scotland
– Significant portion of direct premiums
being written over the internet in the
UK (10%), Japan (20%), Germany
(12%)
– Exchange being rolled out in Canada
launched*
64%
*) of which 47% in phase 2, i.e. new features being added
10
USD Millions
Embedded Value profit analysis
1600
1,029
1400
1200
+112
+37
+160
-256
+141
= USD 1,223 m. USD 194 m.
New
Busines Operating
s Value Profit
Operating
Assumption
changes
1000
Excess
Value
Added
Economic
Assumption
Investment changes
Return
below
expected
800
600
400
200
0
Expected
Embedded
Value Profit
Actual
Embedded
Value Profit
11