Zurich Reports ‘Excellent’ 9-Months

November 16, 2006

Zurich Financial Services Group reported continued strong operating performances in all business segments, which “generated a record business operating profit and net income for the nine months to September 30, 2006.”

“Our focus on operational excellence continues to generate profitable growth,” commented CEO James J. Schiro. “General Insurance’s disciplined portfolio management approach achieved excellent underwriting results, Global Life’s new business grew by double digits while increasing its margins, and the Farmers Exchanges demonstrated market-beating growth. Together, these results generated record business operating profit and net income, demonstrating the strength of our diversified portfolio.”

Performance highlights cited by the Company include:
— Net income of $3.3 billion, an increase2of 44 percent. Annualized return on equity (ROE) of 19.4 percent
— Business operating profit (BOP) of $4.3 billion, an increase of 50 percent. Annualized BOP ROE after tax of 18.2 percent
— General Insurance gross written premiums and policy fees of $26.3 billion, an increase of 3 percent (in local currencies), and a combined ratio of 94.8 percent, an improvement of 6.1 percentage points
— Global Life new business volume growth of 14 percent (in local currencies), with new business profit margin of 19.3 percent
— Farmers Management Services’ management fees and other related revenues increased 3 percent to $1.6 billion

Zurich said it is “well on track to exceed its previously announced target of generating $500 million of after tax operational improvements for 2006. As the Group develops its new three-year plan it expects a revised target of $2 billion of after tax improvements for the three years 2007 to 2009, of which $700 million would be generated in 2007.” Schiro said the Group might do “even more.”

In its general insurance operations Zurich noted: “Strong underlying performances in all major markets, aided by relatively low levels of natural catastrophes, generated a business operating profit of $2.8 billion, up 105 percent. This result was driven by an underwriting profit of $1.1 billion, compared with last year’s loss of $176 million, and investment income of $2.4 billion, an increase of 19 percent. The combined ratio improved 6.1 percentage points to 94.8 percent. Growth in investment income arose from higher yields and higher invested assets.

“Gross written premiums and policy fees increased 3 percent in local currencies (2 percent in dollar equivalent terms) through the selective and active management of targeted business areas and profitable lines of business. While it expects a generally flat rate environment to persist throughout 2006, Zurich carefully manages the impact of market conditions and accumulation exposures through sophisticated portfolio analyses, disciplined underwriting standards and global capital management procedures.”

The report also noted that “Farmers’ management fees and other related revenues grew by 3 percent to $1.6 billion as a result of targeted investments in its distribution platform and product enhancements that enabled the Farmers Exchanges, which Zurich manages but does not own, to achieve third quarter premium growth of more than 5 percent.

“Farmers’ business operating profit remained stable at $919 and its operating margin decreased slightly to 50.7 percent. These results were impacted by $24 million of investments in growth initiatives, as well as reduced investment income of $29 million in 2006 compared with last year, attributable to the remittance of surplus capital to the Group in late 2005.”

Zurich’s report and additional information may be obtained on the Group’s Website at: www.zurich.com. The Company ‘s telephone conference with a Q&A session for analysts and investors, held today, Nov. 16 will be audio webcast on the Web site, followed by a webcast playback available after 12:00 p.m. CET. The numbers are as follows:
Europe – +41 (0) 91 610 56 00
UK – +44 (0) 207 107 06 11
USA – +1 (1) 866 291 41 66

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