Zurich Insurance Group Ltd

Good morning and good afternoon, everybody. Welcome to Zurich Insurance Group's 2021 four-year results call. On the call this afternoon we have our Group CEO, Mario Greco, and our Group CFO, George Quinn. Before I hand over to Mario for some introductory remarks, just a reminder that we kindly ask you to keep your questions to two per individual in the Q&A session. Mario.

Thank you, John, and welcome, everybody. Thanks for being on the call. As we entered Zurich 150th anniversary year, the group is in excellent shape. 2022 is also the final year of our three-year strategic plan. We're on track to meet or exceed the targets that we established back in 2019. And I look forward to hopefully seeing you all in November when we will set out our ambitions for the next cycle. As I said back in November last year, the investor update, We have had to be extremely adaptable with the shape of the results being very different than we expected in 2019, given the impact of the pandemic. I'm very pleased with what we have achieved in 2021. Results were among the best in Zurich history with the highest POP and the best property and casualty combined ratio since 2007. However, we can continue to improve from here. And we believe that the trends in revenue and earnings growth will continue at least into 2023. Across the retail business, we're benefiting from our work on improving customer engagement, which is evidenced by the strong net new customer numbers we have reported. Robust top line in retail and SME property and casualty and by the excellent life results. Commercial insurance is reaping the rewards from its repositioning in recent years, with the continuing strength of the pricing cycle providing an additional tailwind. We're also growing selectively in areas such as middle markets, where we are continuing our build-out. Farmers is making good progress integrating the MetLife business with a strong top line growth for 2021. And the balance sheet is very strong with the SSD ratio at 212% and the healthy increase in the dividend to 22 Swiss francs. The SSD ratio is before reflecting the benefit we expect to get later in the year when we complete the disposal of our Italian life and pension back book. And now I hand over to George.

Thanks, Mario. I'd just like to highlight a few additional points regarding the strength of our financial performance. P&C's result in 2021 was very strong with 11% top-line growth and a 2% improvement in the underlying combined ratio. As Mario mentioned, the 94.3% combined ratio is the best in 15 years. Growth was robust with both commercial insurance and retail and SME driving growth, and it's not just rate-driven, but also coming from disciplined new business winds. Despite PYD being slightly higher than our guidance range, we believe that reserve strength has further improved. And consistent with our prior comments on anti-cyclical reserving, we've taken a cautious view and not fully recognised the continuing benefit of rate versus lost cost trend. 2022 should be a further year of growth and margin expansion for the P&C segment, and we expect to see a further strong improvement in performance in 2022, with the pace only slightly slower than we saw last year. We're really happy with the life result in 2021, which benefited from the recovery in markets, strong growth momentum in EMEA and Zurich Santander, as well as favourable claims experience. We aim to grow earnings in 2022 at the mid-single-digit percentage from the reported BOP level. Our continued focus on protection and capital-like savings is serving as well as is our strong presence in the bank channel. In farmers, the integration with the acquired MetLife business continues to go very well. The farmers' exchanges GWP was up 20%, including Met, and 7% like-for-like. As for 2022, we expect further growth in the high single digit range. The balance sheet is strong and the changes that we're making to capital allocation will improve this further, both in quantity and quality. As outlined at the investor update in November, our first priority is the elimination of earnings dilution. This is not a small number, as some of you have already started to estimate. The Italian transaction doesn't trigger any significant energy dilution and the changes that will are likely to come later this year. So hopefully this explains some of the timing. On the use of capital more generally, our preference is to reinvest any further surplus for earnings and dividend growth. But if this is not possible, we will not retain surplus funds that we cannot redeploy productively. With that, I'll hand it over to the operator for the Q&A.