Zurich Reports Nine Month Net up 21% to $2.256 Billion

November 21, 2005

Zurich Financial Services Group reported a record operating performance for the first nine months of 2005, despite the impact of severe natural catastrophes in the U.S. with net income of $2.256 billion, an increase of 21 percent over the first nine months of 2004.

Other highlights cited by the company included the following:
— Earnings per share (diluted) of CHF 18.75 [$14.30], an increase of 17 percent
— Return on equity (ROE) of 14.9 percent (annualized)
— Business operating profit (BOP) of $2.863 billion, an increase of 15 percent and an annualized BOP ROE after tax of 13.1 percent
— Net investment income on Group investments of $5.9 billion, an increase of 8 percent, and total investment return of 4.6 percent (not annualized)
— Shareholders’ equity of $22.1 billion, an increase of 7 percent since December 31, 2004

CEO James J. Schiro commented: “The underlying strength of our businesses came through again. We reported a record net income of $2.3 billion despite an impact of $1.1 billion due to an extraordinary series of large catastrophes. Our return on equity was 14.9 percent, which is in excess of our target rate and places us in the top range of our industry. This reflects our commitment to operational excellence and ability to build upon our proven financial strength. Based on our continuous operational improvements, I am confident that we are well-positioned for sustainable profitable growth in the future.”

The bulletin also indicated that Zurich plans further initiatives to generate operating improvements of $500 million in the current year, “with more than three quarters of the benefits coming from increased efficiencies in distribution, claims processing and underwriting. After the first nine months, the Group is well on track toward achieving this goal. The Group plans further efficiency gains of $1 billion in the next two years for a target total of $1.5 billion in the three years ending in 2007.”

In an overall view of the group’s general insurance activities the bulletin noted that the “underlying performance in all business divisions mitigated the impact of large catastrophes in North America and Europe. The combined ratio was 100.9 percent including a catastrophe impact of 4.9 percentage points. In North America Commercial and Global Corporate, the movements in the combined ratio reflect also reduced prior year reserve developments and a more conservative approach to reserving.

“The underwriting result was particularly strong in Europe General Insurance, where the combined ratio improved by 2.3 percentage points to 94.4 percent despite a catastrophe impact of 0.8 percentage points.”

Zurich also confirmed that claims payments from Wilma, which struck Mexico’s Cancun Peninsula and Southern Florida at the beginning of the fourth quarter in October, would not exceed $300 million.

“As a result of higher than expected losses, reinsurers have announced their intention to tighten renewal rates,” the announcement continued. “This is likely to impact prices also in primary insurance markets. The Group’s increased financial strength puts it in a stronger position to seek profitable growth in attractive insurance markets throughout the world. It will continue to pursue disciplined underwriting and optimize its reinsurance program with respect to cover and retention.”

Zurich’s report also notes that “Farmers Management Services achieved growth in business operating profit of 10 percent $926 million due to growth in management fees and other related revenue. This, in turn, was based on increased gross premiums earned by the Farmers Exchanges, which Zurich manages but does not own. The Exchanges also added $315 million to surplus in the first nine months, bringing total surplus growth to $778 million since January 1, 2004. This is more than three quarters of the $1 billion commitment made for the three years ending in 2006.”

The entire report may be obtained on the Group’s Website at: http://www.zurich.com.

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