Zurich Insurance : update nine months 2022

News Release

November 10, 2022

Ad hoc announcement pursuant to Art. 53 of the Listing Rules

Continued top-line growth and strong solvency position

• Property & Casualty (P&C) gross written premiums up 8%, with growth of 13% on a like-for-like1 basis
• Hurricane Ian net impact estimated at USD 550 million on a pre-tax basis
• Life new business annual premium equivalent up 2% on a like-for-like1 basis, with margin at an attractive level of 26.5%
• Farmers Exchanges2 gross written premiums grew by 11%, benefiting from the inclusion of the acquired MetLife business and stronger pricing
• Continued delivery on customer-focused strategy, with approximately 1.1 million net new retail customers added since the beginning of the year3
• Capital position very strong with Swiss Solvency Test ratio estimated at 252%4 as of September 30, 2022

"The Group continues to be on track to exceed its strategic and financial targets for the 2020-2022 cycle," said Group Chief Financial Officer George Quinn. "We saw robust premium increases across the Group, most notably in our North American Property & Casualty business, where rate increases drove double-digittop-line growth. We expect margin trends in our commercial insurance business to be positive into 2023. The Life business continues to experience positive operating trends which are offset by the effects of the strong U.S. dollar and weaker financial markets. Farmers is demonstrating strong, rate-driven growth. Our capital position is excellent and the strong delivery through this strategic cycle positions us well as we look forward to setting out our plans for the next three-year cycle at our upcoming Investor Day."

Property & Casualty premiums grew strongly in the first nine months, with rate increases in commercial insurance continuing to drive an expansion in margins. Growth was especially strong in North America, with gross written premiums up by 14%, boosted by the Group's leading crop insurance franchise and rate increases of 8%. The retail business grew 13% on a like-for-like basis1, driven by strong growth across all regions.

In Life, new business volumes grew by 2% on a like-for-like basis1, while new business value was 11% lower, driven by a combination of modelling and assumption updates and higher interest rates.

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Gross written premiums at the Farmers Exchanges2 were up 11%, benefiting from the inclusion of the acquired MetLife business and increased pricing.

Zurich's focused execution of customer strategy helped it add approximately 1.1 million retail customers since the beginning of the year.3

Zurich will provide an update on its strategic objectives and targets for the period 2023- 2025 at its Investor Day on November 16, 2022, in Zurich, Switzerland. The presentations will be available on the Group's website on the day of the event with a real-time webcast beginning at 10:30 a.m. CET. For details, see www.zurich.com.

Key figures

in USD millions, for the nine months ended			Change5	Change1,5
September 30, unless otherwise stated	2022	2021	in USD	like-for-like
P&C gross written premiums (GWP)	33,495	31,152	8%	13%
Life annual premium equivalent (APE)	2,596	2,753	(6%)	2%
Farmers Exchanges2 GWP	20,212	18,225	11%	n.a.
SST4,6	252%	212%	40ppt	n.a.

Commentary

Property & Casualty

	Gross written premiums (GWP)	Rate change, in %
in USD millions, for the nine			Change5	Change1,5
months ended September 30,	2022	2021	2022	Expected trend
unless otherwise stated	in USD	like-for-like
Property & Casualty	33,495	31,152	8%	13%	6%	Moderating
Europe, Middle East and	14,054	14,041	0%	10%	5%	Stable
Africa
North America	16,236	14,279	14%	14%	8%	Moderating
Asia Pacific	2,642	2,406	10%	19%	3%	Moderating
Latin America	2,014	1,804	12%	22%	6%	Increasing

Gross written premiums in Property & Casualty for the first nine months rose 13% compared with the previous year on a like-for-like1 basis, adjusting for currency movements. They rose 8% in U.S. dollar terms, reflecting the strengthening of the U.S. dollar against major currencies.

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Higher premium rates, driven by commercial insurance, supported growth. The Group expects commercial insurance rates to remain above loss cost trends into 2023. Within retail, the Group expects pricing to reflect inflation trends at renewal in 2023.

In Europe, Middle East and Africa (EMEA), gross written premiums increased 10% on a like-for-like1 basis. Growth was driven by a strong performance across the region, most notably in the UK, Switzerland and Germany. Premium rates increased 9% in commercial insurance and 3% in retail insurance.

North America grew 14% on a like-for-like1 basis compared with the previous year, with crop insurance contributing almost 40% of the growth. North America's strong performance continues to benefit from rate increases, which have been developing better than expected since the beginning of the year and which remain above loss cost trends.

In Asia Pacific, gross written premiums increased 19% on a like-for-like1 basis compared with the previous year. Higher retail sales and a rebounding travel insurance business in Australia drove strong growth across the region.

In Latin America, gross written premiums increased 22% on a like-for-like1 basis, benefiting from strong growth in both retail and commercial insurance across the region.

The third quarter saw elevated natural catastrophe losses driven mainly by Hurricane Ian making landfall in the U.S for which, based on current estimates, the Group has recognized a net impact of USD 550 million on a pre-tax basis. Given this, the Group's catastrophe loss ratio for the first nine months of 2022 is estimated to be about 2 percentage points above long-term trends. The higher frequency and severity of natural catastrophe events in recent years underlines the importance of the steps the Group is taking to actively manage its exposure to these events.

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Life

	Annual premium equivalent (APE)		New business value (NBV)
in USD millions, for the nine			Change5	Change1,5			Change5	Change1,5
months ended September 30,	2022	2021	2022	2021
unless otherwise stated	in USD	like-for-like	in USD	like-for-like
Life	2,596	2,753	(6%)	2%	595	717	(17%)	(11%)
Europe, Middle East and	1,580	1,764	(10%)	1%	443	508	(13%)	(5%)
Africa
North America	83	68	22%	22%	9	15	(41%)	(41%)
Asia Pacific	143	149	(4%)	4%	37	73	(49%)	(45%)
Latin America	790	773	2%	4%	106	121	(13%)	(11%)

In the first nine months, Life new business annual premium equivalent (APE) increased 2% on a like-for-like1 basis, adjusting for currency movements, acquisitions and disposals. Growth was driven by higher sales in capital-efficient savings and protection products. In U.S. dollar terms, APE decreased 6% compared with the prior-year period, with growth in local currencies more than offset by U.S. dollar appreciation against major currencies.

In EMEA, APE increased 1% on a like-for-like1 basis, compared with the same period in 2021. This was primarily driven by growth in corporate pensions in Switzerland and unit-linked business in Germany, which more than offset a reduction of low margin individual savings in Spain.

In North America, APE grew 22% on a like-for-like1 basis compared with the same period in 2021, driven by corporate protection products.

In Asia Pacific, APE increased 4% on a like-for-like1 basis compared to the previous year, as growth in Hong Kong, Indonesia and Australia was only partially offset by lower sales in Malaysia and Japan.

APE in Latin America increased 4% on a like-for-like1 basis driven by growth in protection, partially offset by a slowdown in unit-linked sales.

New business margin remained attractive at 26.5% in the first nine months, down from 30.4% in the previous year. The lower margin reflects the impact of modelling and assumption updates, as well as adverse economic variances mainly related to higher discount rates. This resulted in new business value of USD 595 million, 11% below prior year on a like-for-like1 basis.

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Farmers

in USD millions, for the nine months ended			Change5
September 30, unless otherwise stated	2022	2021	in USD
Farmers Exchanges2
Gross written premiums (GWP)	20,212	18,225	11%
Gross earned premiums (GEP)	19,195	17,400	10%
Surplus ratio6	34.7%	40.8%	(6.1ppts)

The Farmers Exchanges2, which are owned by their policyholders, reported an increase of 11% in gross written premiums for the first nine months of the year. Growth was driven by the inclusion of the acquired MetLife business for the full nine months, higher volumes of commercial rideshare business and rate increases across lines of business. Gross earned premiums, which lag written premiums, increased by 10% during the same period.

The Farmers Exchanges2 surplus ratio fell to 34.7%, driven by the higher Farmers Exchanges2 premium base on which it is calculated. A further contributor to the decline was a decrease in the ending surplus, due to a net underwriting loss during the period as well as unrealized capital losses from unfavorable movements in financial markets.

in USD millions, for the nine months ended			Change5
September 30, unless otherwise stated	2022	2021	in USD
Farmers
Farmers Management Services management fees	3,353	3,108	8%
and other related revenues
Farmers Life annual premium equivalent (APE)	57	58	(2%)
Farmers Life new business value (NBV)	45	85	(46%)

Farmers Management Services (FMS) management fees and other related revenues were in-line with the development of gross earned premiums at the Farmers Exchanges.2

Farmers Life new business APE was 2% below the prior-year period. New business value declined by 46% to USD 45 million, driven by lower sales volumes, the impact of higher discount rates and a shift in business mix to lower-margin products.