Annual Review 2018 | Zurich Insurance Group
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Zurich Insurance Group Annual Review 2018 A customer-led transformation Welcome to the 2018 Review About us Zurich Insurance Group (Zurich) is a leading multi-line insurer that serves its customers in global and local markets. With about 54,000 employees, it provides a wide range of property and casualty, and life insurance products and services in more than 210 countries and territories. Zurich’s customers include individuals, small businesses, and mid-sized and large companies, as well as multinational corporations. The Group is headquartered in Zurich, Switzerland, where it was founded in 1872. 54,000 >210 1872 Employees Countries and territories History Our employees are one of our greatest strengths. Our business is balanced between Europe and North We have experience in our industry going back Recognized as a leading global employer, we are America, and we have a significant participation in almost 150 years. This gives us not only knowledge proud of our diverse workforce and our ability to growing regions and markets in both Latin America and expertise, but also allows us to look toward attract top talent. and Asia Pacific. the future with confidence. USD 4.6 bn USD 3.7 bn USD 3.8 bn Business operating profit 1 Net income attributable to shareholders Total amount of impact investments 7 12.1% USD 3.8 bn 2.1 tons Business operating profit Cash remittances 4 CO2e emissions per employee after tax return on equity 2 (tons per FTE) 8 USD 51.6 bn USD 195 bn 22% Total revenues 3 Investment portfolio 5 Female participation in Leadership Team CHF 44.4 bn Z-ECM 125% >760,000 Market valuation as of Zurich Economic Capital Model (Z-ECM) Number of customers interviewed December 31, 2018 ratio estimated as of December 31, 2018 6 through Zurich’s NPS program 9 AA-/stable Standard & Poor’s financial strength rating of Zurich Insurance Company Ltd as of December 31, 2018 1 Business operating profit (BOP) indicates the underlying performance of the Group’s business units by eliminating the impact of financial market volatility and other non-operational variables. 2 Shareholders’ equity used to determine ROE and BOPAT ROE is adjusted for net unrealized gains or losses on available-for-sale investments and cash flow hedges. 3 Total revenues excluding net investment result on unit-linked investments. 4 Cash remittances for full year 2018. 5 Market value of the investment portfolio (economic view). 6 The Z-ECM is an internal measure of capital adequacy and reflects midpoint estimates with an error margin of +/– 5 pts. 7 Impact investments in 2018 consisted of: green bonds (USD 2.68 billion), social and sustainability bonds (USD 425 million), and investments committed to private equity funds (USD 145 million, thereof 45 percent drawn down) and impact infrastructure private debt (USD 540 million). 8 Number shown as of 2017; 2018 data will be available in Q2 2019. 9 In 2018, Zurich interviewed over 760,000 customers (including Zurich Santander) in over 20 countries through its NPS (Net Promoter Score) program. Zurich Insurance Group 1 Annual Review 2018 Contents Message from our Chairman 2 Our industry is in the midst of a profound transformation. Led by what customers need and expect, enabled by digital technologies, we are well positioned to adapt to these changes that will define Message from our Group CEO 4 our business not only today, but also tomorrow.” Mario Greco Group Chief Executive Officer Our strategy 8 Our business model 10 Our stakeholders 12 Financial information 28 More information 32 Our 2018 reporting suite The Annual Report provides comprehensive information on our business activities in 2018. The Annual Review offers similar information in a shorter, more visual format. Both are available online and in print. Zurich Insurance Group Annual Report 2018 A customer-led transformation Our cover: Swiss business customer Felix Pfister, his wife Maya Pfister-Gerber, and cat Fifille, at Pfister’s gardening business in Zurich, with Zurich’s Q4_2018_01_AR18_Group_Overview_en.indd 1 27.02.2019 20:10:54 Norberto Orbetti. Zurich Insurance Group 2 Annual Review 2018 Message from our Chairman On the path to success We are on a challenging but We set the right priorities and we are now rewarding journey to become a truly customer-led insurer. starting to reap the benefits of the course Our aim to also be a leader in we have chosen.” sustainability reinforces and Michel M. Liès builds on our strengths and Chairman of the Board of Directors expertise, and complements our strategy. Zurich Insurance Group 3 Annual Review 2018 First impressions Technological empowerment has raised our From transitioning to a new carbon- The past year has been one of transformation – customers’ expectations. But if Zurich can sensitive economy to adapting to a new both for Zurich and for me personally. help them enhance their lives and activities digital workforce, the impact of macro- In these first months as Chairman, I havetaken through our products and services, there level forces on people, communities and time to deepen my insight into this great is great potential to increase our value and the world will be immense, and Zurich company. Having been able to immerse, reflect relevance to all stakeholders. As our strategy understands that its core capabilities can and understand, I am pleased to report my takes hold, we are providing robust returns have a positive impact in securing confidence that Zurich’s transformation is putting and strong investor confidence, meeting an inclusive and resilient future. We are us on a good path to success. Zurich has the investors’ expectations and delivering on our proud of the efforts we have made to knowledge and expertise to achieve our aims. financial targets. We will propose to shareholders date, but even more excited about the What truly sets us apart is our people, and an increase in the dividend to CHF 19 per share, possibilities we can envision. the commitment they are demonstrating each further demonstrating our strength following day to driving the transformation. Our people a set of strong and sustainable results Looking to the future will drive our success: from our diverse and in 2018. Going forward, our focus will be on experienced management team, a passionate Living up to our brand implementing and executing our and skilled workforce, to people just starting transformation. The Board has an important on their career paths. I have been privileged For nearly 150 years, Zurich’s brand has oversight role, ensuring that long-term to witness this process in action – including stood for technical excellence, an open and thinking is embedded into the process. through our Make the Difference program collaborative approach and both global To facilitate this, I am ensuring that and country visits – and look forward to seeing and local expertise. Today, we are strengthening management benefits from the rich and many more examples in future. this identity by embracing the wider role diverse array of perspectives represented that insurance and risk management can play among my fellow Directors, and that we Our strategy builds confidence in people’s lives, in protecting companies and collectively understand both the challenges strengthening communities, and in addressing and opportunities that lie before us. Zurich’s Our strategy to become one of the first society’s most pressing challenges. Risk, after customer-led insurers puts us on the right ambition is a bold one, but we have all the all, is our expertise, and that understanding has ingredients in place to succeed. I look forward path. It reflects a clear understanding of never been in greater demand. today’s fast-changing world, and identifies to continuing to play my part and updating the right actions for us to take. you again in due course. Michel M. Liès Chairman of the Board of Directors Our business segments Property & Casualty Life Farmers Property and casualty insurance Protection, savings Management services related and services, risk insights. and investment solutions. to property and casualty insurance. USD 2.1 bn USD 1.6 bn USD 1.6 bn Business operating profit Business operating profit Business operating profit USD 33.5 bn USD 33.4 bn USD 3.2 bn Gross written premiums and policy fees Gross written premiums, policy fees Management fees and other and insurance deposits related revenues Zurich Insurance Group 4 Annual Review 2018 Message from our Group CEO Delivering on our commitments A changing world demands After reshaping our business, Zurich is focus and a clear understanding of how to create value. well-positioned to face this transformation Zurich is delivering on both from a position of strength. ” while transforming itself Mario Greco for a digital age. Group Chief Executive Officer Zurich Insurance Group 5 Annual Review 2018 Embracing a customer-led We exhibit more underwriting discipline But our growth has not been limited to transformation and manage our cost base more efficiently. acquisitions. We also established a series We are meeting or even exceeding our of collaborations that expand our service In a world undergoing such fundamental 2017 to 2019 financial targets, including offerings and gain us new ways to access change, it is critical that organizations profitability, capital strength and cash customers, ranging from new mobility consciously choose their path, make clear remittances. And we are delivering one solutions through Bright Box to smart home commitments to how they will travel along of the top total shareholder returns in services with Vodafone to cyber prevention that path, and then regularly examine their the insurance sector. capabilities with Cyence. In addition, we surroundings to ensure progress is being developed new offerings internally, made. At Zurich, the path we have chosen is Together with these accomplishments we including an insurance-on-demand device not to resist the digital revolution or to cling are also achieving profitable growth through coverage for millennials in Spain and to old models.