Zurich Insurance : Half Year Report 2022 Earning Release

News Release

August 11, 2022

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

Zurich reports 25% rise in first-half operating profit, on track to beat all targets

• Group business operating profit (BOP) rises to USD 3,393 million, the highest since 2008
• Property and Casualty (P&C) BOP up 32% to USD 2,055 million with record- low combined ratio of 91.9%
• Life BOP rises 13% to USD 903 million
• More than 850,000 net new retail customers added in first half1
• Net income attributable to shareholders up 1% to USD 2,204 million, despite adverse effects from financial markets
• Very strong capital position with Swiss Solvency Test (SST) ratio at 262%2
• Special share buyback of approximately CHF 1.8 billion3 to offset expected earnings dilution from German life back book transaction

Zurich Insurance Group (Zurich) reported the highest first-half business operating profit since 2008 and the second highest ever, with all regions and business lines contributing to the successful results.

Group Chief Executive Officer Mario Greco said: "We are on track to beat all our targets for the second successive three-year cycle. This is particularly remarkable because the last three years have brought unprecedented and unexpected challenges. These results show our agility and our commitment to deliver results, no matter what happens in the markets.

Over the last six years, we have changed our culture and built capabilities to transform Zurich into a leaner and more agile business. This has steered us through the difficult conditions of the past three years. Since 2016, we have set about changing the structure of our organization. We have refocused our commercial business and strengthened technical expertise. We have changed the portfolios to reduce their volatility and we consolidated major market positions. We have raised customer and employee satisfaction by using data to make better decisions and provide better experiences. We have created a diverse and highly qualified leadership team and we have become one of the most sustainable insurers.

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Our first-half 2022 results show the solidity of our business and the value of our mid- term transformation. The P&C business reported today its best ever combined ratio, with continued robust top-line growth. Our Life business also continued to produce excellent results with one of the strongest ever performances for operating profit despite the adverse impact of capital markets and headwinds from currency movements. The planned sale of life and pensions back books in Italy and Germany4 will further reduce the capital intensity of our business and will increase our flexibility.

As we prepare to present our plans for the next three years at our Investor Day in November, I am confident that we are well placed to further lead the transformation of the industry and continue to reward our shareholders well.

I would like to thank all our employees and our distribution partners for their great effort. The second successful achievement of all our three-year targets is absolutely to their credit."

Select financial highlights (unaudited)

(For a more comprehensive set of financial highlights see page 10)

in USD millions, for the 6 months ended June 30			Change
unless otherwise stated	2022	2021	in USD5
Business operating profit (BOP)	3,393	2,714	25%
Net income after tax attributable to shareholders (NIAS)	2,204	2,193	1%
Business operating profit (after tax) return on common	15.7%	13.0%	2.7pts
shareholders' equity (BOPAT ROE)

Half-year 2022 business operating profit (BOP) was USD 3.4 billion, an increase of 25% compared with USD 2.7 billion in the first six months of 2021. Growth was driven by an underlying improvement across all businesses. Natural catastrophe and weather- related claims were slightly above expected levels.

Property and casualty gross written premiums grew by 13% on a like-for-like6 basis, with strong growth achieved in both commercial insurance and the retail business. Growth continued to be supported by significant rate increases in the Group's commercial business across all regions, with these trends expected to continue into 2023.

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The impact of COVID-19 on business operating profit continues to decline. COVID-19- related losses in the Life business fell to USD 26 million from USD 137 million, and at Farmers Life to USD 32 million - mostly in the first quarter - from USD 42 million. On the other hand, the benefits due to reduced claims frequency in the P&C business were immaterial compared with USD 109 million in the prior-year period.

Net income after tax attributable to shareholders was USD 2.2 billion, up 1% over the prior-year period. The improvement in BOP was largely offset by negative mark-to- market effects.

The strength of the U.S. dollar versus other currencies was a headwind to both the reported BOP and net income.

The Group continues to focus on optimizing its capital allocation. In the first half, Zurich announced agreements to sell two legacy traditional life insurance back books in Italy and Germany.4

The Group plans a CHF 1.8 billion3 share buyback to offset the expected earnings dilution from the agreed sale of the Germany life back book.4 The buyback is expected to commence in the coming months, subject to market conditions and regulatory approvals. While the primary goal of the Germany life back book transaction is to reduce capital volatility, the portfolio is, and has been, a reliable contributor to earnings and it is not possible to immediately redeploy capital to offset this effect. The buyback is consistent with the Group's prior position to avoid or compensate actions that would otherwise have a dilutive effect on shareholders.

Continued focus on improving customer satisfaction

Throughout the first half, the Group continued to advance its customer-focused strategy, which has again delivered higher customer satisfaction across the business. Net promoter scores have made further positive progress in the majority of retail markets as the Group deploys digital tools and enhanced insights to improve customer experience.

Retail customer numbers continued to grow, helped by Zurich's continued strength in partnerships, with a net increase of more than 850,000.1

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Delivering on ambition for a sustainable future

The Group took further tangible steps toward its vision of being one of the most responsible and impactful businesses in the world.

The outcome of Zurich's work on reducing the impact of the operational footprint is increasingly apparent with total emissions down 73%7 relative to the 2019 baseline. While the pandemic has temporarily dampened emissions, Zurich is confident that it is on track to achieve durable reductions of 50% by 2025 and 70% by 2029.

The Group continued to support the restoration of part of the Atlantic Forest in Brazil to create a biodiverse and self-sustaining ecosystem on land formerly cleared for cattle farming. Since it started in 2020, the Zurich Forest project with non-profit Instituto Terra has planted 227,000 seedlings of native tree varieties out of the 1 million planned by 2028.

In May, the Group's MSCI ESG rating was upgraded to the highest possible rating of AAA (from AA).

Business performance

Property & Casualty

				Change
in USD millions, for the 6 months ended June 30,			Change	like-for-
unless otherwise stated	2022	2021	in USD5	like5,6
P&C gross written premiums and policy fees	23,797	22,034	8%	13%
P&C business operating profit (BOP)	2,055	1,559	32%	36%
P&C combined ratio	91.9%	93.9%	2.0pts

• Property & Casualty (P&C) business operating profit up 32% to USD 2,055 million, driven by a record-low combined ratio of 91.9% and 8% top-line growth

Business operating profit of USD 2,055 million was 32% higher than in the previous year. The Group achieved a record-low combined ratio of 91.9%. The reduction was mainly driven by an improvement in underwriting profitability with higher prices feeding into the results. Natural catastrophe and weather claims, which were slightly above expectations, were significantly lower than in the prior year. These improvements were partially offset by the absence of the prior year's favorable net impact from COVID-19 and realized capital losses of USD 51 million, mainly driven by the Group's hedge fund

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portfolio due to adverse financial markets, compared with a gain of USD 62 million in the prior-year period.

Gross written premiums grew 13% on a like-for-like6 basis, adjusting for currency movements, with growth in both retail and commercial insurance. All regions contributed to growth as higher rates fed into the results. In EMEA, growth was mainly driven by the UK, Germany and Switzerland. North America continued to benefit from higher commercial insurance prices, as well as rising agricultural commodity prices in the crop insurance business, which contributed about 2 percentage points to overall P&C growth. Asia Pacific experienced a strong rebound in the travel insurance business and Latin America saw higher sales in Brazil and Mexico. In U.S. dollars, the Group's gross written premiums rose by 8%, with growth dampened by unfavorable currency movements.

The Group achieved price increases of about 6% in the first half. Price increases were driven largely by commercial insurance, remaining at a largely stable level and above claims cost inflation.

Life

				Change
in USD millions, for the 6 months ended June 30,			Change	like-for-
unless otherwise stated	2022	2021	in USD5	like5,6
Life gross written premiums, policy fees and insurance	13,658	14,603	(6%)	0%
deposits
Life business operating profit (BOP)	903	802	13%	25%
Life new business annual premium equivalent (APE)	1,838	1,911	(4%)	3%
Life new business margin, after tax (as % of APE)	26.5%	30.5%	(4.0pts)	(4.7pts)
Life new business value, after tax	425	500	(15%)	(10%)

• Life BOP of USD 903 million in the first half, one of the best in the Group's history, with continued reduction in capital intensity of business

The Group's Life business delivered a strong performance during the first half of the year, with continued focus on the execution of its long-term strategy to grow protection and capital-light savings products.

First-half BOP of USD 903 million was up 13% compared with the prior-year period, despite unfavorable currency movements due to U.S. dollar appreciation against other major currencies. On a like-for-like6 basis, Life BOP rose by 25%. Lower COVID-19