Zurich’s CEO Comments on Results, Future Plans at Annual Meeting

April 24, 2006

Zurich Financial Services’ Annual General Meeting, held April 20, evinced the considerable turn around in its fortunes under the direction of CEO James J. Schiro, who took over the faltering giant in May 2002.

In his presentation speech to shareholders Schiro stated: “My colleagues and I are proud to present you with a record operating performance for 2005. Net income was 3.2 billion dollars, up 30 percent, and business operating profit increased 32 percent to 4 billion dollars. The return on equity of 15.5 percent ranks us toward the top of our peers and has exceeded our target of 12 percent for the second year in a row.”

The shareholders and the Board of Directors seem equally happy with Schiro, the first American to head the Swiss Group. His contract as CEO was recently extended until December 2009 (See IJ Website March 17).

At the meeting shareholders approved a total gross payout of CHF 7 ($5.50) per share and it elected Don Nicolaisen, Fred Kindle and Tom de Swaan as new members to the Board of Directors. They also re-elected Thomas Escher, Philippe Pidoux and Vernon Sankey to three-year terms.

Commenting on Zurich’s performance in a disastrous year, Schiro stated: “One of the most graphic illustrations of the resilience created by these embedded core strengths was our ability to achieve the 2005 results despite record catastrophes. We recall the heavy floods in the UK and Switzerland, forest fires in Spain and Portugal, and, of course, the exceptional series of hurricanes striking the US Gulf coast states and the Caribbean. Just the floods in Europe and the hurricanes in the US contributed to a catastrophe charge of 1.3 billion dollars net of reinsurance.

“It is worth noting that 7 of the 10 most expensive hurricanes in US history occurred in the 14 months between August 2004 and October 2005. In fact, last year’s hurricane frequency was nearly three times above average, and an early forecast for this year’s season predicts activity levels close to double the long-term average.”

He attributed the Group’s weathering the storms to the fact that “we started early to challenge modeling assumptions, tighten underwriting standards in catastrophe-prone regions, and assemble robust reinsurance programs. Our underwriters have new tools to assess the impact of prospective risks to the overall portfolio before acceptance and reduce overall exposure.”

In a statement signaling an increased role for the Group in its relations with agents and brokers, Schiro stated: “We cannot delegate responsibility, and we must be actively involved in the selection of our customers and the subsequent transactions with them.” He noted that “the Zurich American Insurance Group is implementing new pre-binding disclosures in the US market for general insurance. Brokers and agents will have to inform customers of our company’s compensation arrangements, a first for our industry. This is fair and in the interest of all customers, and we believe to have set a standard for the industry to follow.” He also reiterated Zurich’s commitment to improve regulatory compliance.

Concerning Farmers, Schiro said: “I do not want to leave the United States without mentioning Farmers Management Services. It is the business backed by the Farmers Exchanges, which all of you know, we do not own. Farmers is a unique model that has delivered and will continue to deliver reliable fee income and earnings growth to Zurich. Essential for the income earned in these operations is, of course, the success of the Farmers Exchanges. I am pleased to report that they achieved their goal of growing surplus by 1 billion dollars nearly one year ahead of schedule. The bigger surplus will allow them to grow their business in the future. Their momentum is driven by their strong franchise and their best earnings performance in history. The Exchanges are rapidly growing their tied agent force, and the productivity of their agents has more than doubled in the last three years. Farmers is poised to unleash the power of distribution, and, given their record, we expect them to deliver.”

Schiro downplayed speculation that Zurich might be in a merger and acquisition mode, indicating that “acquisitions are not a strategy. At best, they are a means to complement our portfolio. Our rules are clear: we are not prepared to engage in willful adventures. Any potential acquisition must fit our strategy, meet our hurdle rate and contribute to economic value.”

The full report of the AGM and Schiro’s remarks may be obtained on the Group’s Website at: www.zurich.com.

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