Building a better way.
Zurich Insurance Group Annual Report 2020 Zurich Insurance Group Annual Report 2020
Zurich Insurance Group (Zurich) is a leading multi-line insurer that serves its customers in global and local markets. With about 55,000 We’re leveraging employees, it provides a wide range of property and casualty, and life insurance products and services in more than 215 countries and territories. Zurich’s customers technology to include individuals, small businesses, and mid-sized and large companies, as well as multinational corporations. The Group is headquartered in Zurich, Switzerland, where it build resilience was founded in 1872. The holding company, Zurich Insurance Group Ltd (ZURN), is listed on the SIX Swiss Exchange and has a level I American Depositary Receipt (ZURVY) program, which is traded over-the-counter and innovate in on OTCQX. a changing world.
Group overview Governance Non-financial statements Building a better way 1 Message from our Executive message on sustainability 162 Chairman on corporate governance 42 Our business 8 Non-financial statements 164 Corporate governance report 44 Message from our Chairman 12 Message from our Chairman of the Message from our Group CEO 14 Financial review Remuneration Committee 92 Message from our Our business model 18 Remuneration report 94 Group Chief Financial Officer 182 Our strategy 20 Financial overview 184 Delivering on our aspiration 23 Risk review Message from our Stakeholder report 2020 30 Message from our Group Chief Investment Officer 194 Group Chief Risk Officer 128 Consolidated financial statements 196 Risk review 130 Holding company 312 4 Protecting your future Glossary 326 Contact information 329
Delivering on our aspiration 23
10 Our global presence Group Governance Risk Non-financial Financial Zurich Insurance Group 1 overview review statements review Annual Report 2020
Building a better way
We’re adapting to future trends as insurance enters a new era...
Michel M. Liès Chairman of the Board of Directors Message from 12 our Chairman
2020 was a year that vindicated our long-term approach to business... Mario Greco Group Chief Executive Officer
Message from 14 our Group CEO Group Governance Risk Non-financial Financial Zurich Insurance Group 2 overview review statements review Annual Report 2020
Building a better way (continued) The future is digital – we’ve got it covered. Our lives are becoming increasingly digital – and so is insurance. We’re sharpening our focus on innovation in digital technology to reshape the way we interact with our customers and meet their evolving needs. Group Governance Risk Non-financial Financial Zurich Insurance Group 3 overview review statements review Annual Report 2020
Building a better way (continued)
Digital claims solutions provide non-stop support As countries enforced lockdowns, travel restrictions and social distancing measures, we rolled out new digital claims solutions to ensure our customers continue to receive support when they need it – virtually. Our innovative app in Spain allows our adjusters to perform live claims assessments through a customer’s smartphone camera. The entire assessment takes just 15–30 minutes, compared to 10–15 days in the past, resulting in a 25 percent increase in customer satisfaction scores.
Read more of our stories: pages 24–25 Group Governance Risk Non-financial Financial Zurich Insurance Group 4 overview review statements review Annual Report 2020
Building a better way (continued)
Mitigating the impact of climate change on our customers As the effects of global warming become more evident, Zurich established Climate Change Resilience Services in 2020. This helps our commercial customers identify, assess, mitigate and adapt to current and future climate change risks. It leverages our expertise gained from managing climate change risks to provide customers with tailored insights and solutions to help protect them today and long into the future.
Read more of our stories: pages 26–27 Group Governance Risk Non-financial Financial Zurich Insurance Group 5 overview review statements review Annual Report 2020
Building a better way (continued) Protecting your future. Being future-ready means rethinking risk management. At Zurich, we’re developing insurance solutions that go beyond traditional risk transfer to provide risk prevention services. Our innovative products mitigate risk and build long-term resilience for our customers and the communities in which they live and work. Group Governance Risk Non-financial Financial Zurich Insurance Group 6 overview review statements review Annual Report 2020
Building a better way (continued) It’s time to act for people and planet. From building a diverse workforce to delivering on our ‘1.5˚C Future Plan’ climate strategy, we’re forging ahead with our ambition to be one of the most responsible and impactful businesses in the world. We’re making strides in our commitment to sustainability and addressing climate change. If we lose the planet, we can’t claim it back. Group Governance Risk Non-financial Financial Zurich Insurance Group 7 overview review statements review Annual Report 2020
Building a better way (continued)
Biodiversity grows in the Zurich Forest A million trees are taking root in Brazil’s Atlantic Forest. With a grant from Zurich, non- profit Instituto Terra will plant seedlings on 1,730 acres, ensuring that the area becomes self-sustaining and biodiverse. And, Zurich employees can put their names to a tree and become custodians of the ‘Zurich Forest’. The project complements Zurich’s climate change efforts and support of a 1.5˚C future, as established by the UN Global Compact Business Ambition Pledge.
Read more of our stories: pages 28–29 Group Governance Risk Non-financial Financial Zurich Insurance Group 8 overview review statements review Annual Report 2020
Our business Dynamic, agile and well balanced. We are a leading multi-line insurer that serves its customers in global and local markets. With about 55,000 employees, we provide a wide range of products and services in more than 215 countries and territories. Our customers include individuals, small businesses, and mid-sized and large companies, as well as multinational corporations.
Property & Casualty Percentage of total business operating profit² 42%
Life Percentage of total business operating profit² 28%
Farmers Group, Inc.1 Percentage of total business operating profit²
1 Zurich Insurance Group has no ownership interest in the Farmers 30% Exchanges. Farmers Group, Inc., a wholly owned subsidiary of the Group, provides certain non-claims services and ancillary services to the Farmers Exchanges as its attorney-in-fact and receives fees for its services. Details on business mix of the Exchanges are provided for informational purposes only. 2 Based on business operating profit before net expense of group functions and operations and non-core businesses. Group Governance Risk Non-financial Financial Zurich Insurance Group 9 overview review statements review Annual Report 2020
Our business (continued)
Our performance
1 Business operating profit (BOP) The SST ratio as of January 1 has to be USDn 4.2 b USDn 3.8 b 11.0% indicates the operational performance filed with FINMA by end of April each Business operating profit1 Net income attributable to Business operating profit of the Group’s business units by year and is subject to review by FINMA. shareholders (NIAS) after tax return on equity 2 eliminating the impact of financial FINMA agreed to the use of standard market volatility and other non- yield curves for the main currencies to operational variables. calculate the SST, starting end of 2 Shareholders’ equity used to Q1 2020. USDn 3.4 b USDn 51.6 b USD 226.4 bn determine BOPAT ROE is adjusted 7 Impact investments in 2020 consisted Cash remittances 3 Total revenues 4 Investment portfolio 5 for unrealized gains/(losses) on of: green bonds (USD 3.8 billion), available-for-sale investments and social and sustainability bonds cash flow hedges. (USD 904 million), investments CHFn 56.2 b SST 182% AA–/positive 3 Net cash remittances for full committed to private equity funds year 2020. (USD 189 million, thereof 64 percent Market capitalization as Swiss Solvency Test ratio Standard & Poor’s financial drawn down) and impact infrastructure 4 Total revenues excluding of December 31, 2020 (SST) estimated as of strength rating of Zurich private debt (USD 904 million). net investment result on unit- January 1, 2021⁶ Insurance Company Ltd as linked investments. 8 Number shown as of 2019; 2020 data of December 31, 2020 will be available in Q2 2021. 5 Market value of the investment portfolio (economic view). See 9 In 2020, Zurich interviewed over page 194 for more information. 1 million customers (including Zurich Santander) in over 25 countries USDn 5.8 b 1.8 tons Over 1 million 6 Estimated Swiss Solvency Test through its Net Promoter System Total amount of impact C02e emissions per employee Number of customers (SST) ratio as of January 1, 2021, has (NPS) program. investments 7 (metric tons per FTE) 8 interviewed through been calculated based on the Zurich’s NPS program 9 Group’s Internal Model, which has been approved by the Swiss Financial Market Supervisory Authority FINMA.
Property & Casualty usiness mi ––Commercial insurance generates around 2020 ross ritten pre iu s two-thirds of the Group’s Property & Insurance, services and an polic ees line o usiness Casualty gross written premiums. risk insights. ––Zurich is well placed to benefit from strong otor pricing trends expected in commercial USDn 2.1 b 2 ropert insurance in 2021, having reshaped its Business operating profit commercial portfolio during 2016–2019. 2 ia ilit Read more on Property & Casualty: pecial lines page 186–187 USDn 35.5 b or er in ur Gross written premiums and policy fees
Life usiness mi ––Zurich operates a long-term strategy 2020 ross ritten pre iu s of focusing on protection and capital light Protection, savings and polic ees an insurance eposits savings business. This positions the investment solutions. line o usiness Life business well for the prevailing low- yield environment. USDn 1.4 b rotection ––In 2020, the protection, unit-linked and Business operating profit 2 orporate corporate savings business accounted sa in s for 88 percent of new business.