Welcome
Dan Riordan, Chief Executive Officer, Zurich Global
Corporate, North America
Agenda- Thursday 19th September AM
1
08.30
Update on strategy and view of the market
2
09.15
The Economy- A global health check
3
10.00
Networking Break
4
10.30
Risk Tools - sessions
5
12.00
Networking Luncheon – Le Belle Arti
Agenda- Thursday 19th September PM
6
13.30
How can Risk Managers help manage employee benefits risk?
7
14.15
Business Interruption Claims- the challenges and opportunities
8
15.15
Networking Break
9
15.30
Customer Forum
10
16.30
Conference Closes
Global Corporate- Update on strategy and
view of the market
Thomas Hürlimann Chief Executive Officer, Zurich Global Corporate,
The Economy- A global health check
Andrea Boltho, Emeritus Fellow, Magdalen College,
University of Oxford
ONE MAJOR CLOUD
OVER THE HORIZON
US interest rates are bound to rise over
coming months and years
U.S. INTEREST RATES
12
10
8
6
4
Short
rates
2
0
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
U.S. INTEREST RATES
12
10
8
6
Long rates
4
Short
rates
2
0
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
U.S. INTEREST RATES
12
10
8
6
Long rates
4
Short
rates
2
0
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
ONE MAJOR CLOUD
OVER THE HORIZON
US interest rates are bound to rise over
coming months and years
Nobody knows how financial markets
and economies will react
ONE MAJOR CLOUD
OVER THE HORIZON
US interest rates are bound to rise over
coming months and years
Nobody knows how financial markets
and economies will react
The early response to some very mild
policy pronouncements has not been a
happy one
SELECTED EXCHANGE RATES
(1st May 2013 = 100)
Vis-a-vis the Dollar
100
Indonesia
95
Turkey
90
85
Brazil
80
India
75
May-1
May-29
Jun-26
-01
Jul-24
Aug-21
A CONTRASTING PICTURE
Some areas are catching the flu
A CONTRASTING PICTURE
Some areas are catching the flu
China
Other BRIC countries
Many emerging markets
A CONTRASTING PICTURE
Some areas are catching the flu
China
Other BRIC countries
Many emerging markets
Other areas are recovering
Japan (perhaps)
The US
A CONTRASTING PICTURE
Some areas are catching the flu
China
Other BRIC countries
Many emerging markets
Other areas are recovering
Japan (perhaps)
The US
And Europe is still convalescing
(though there may be light at the end
of the tunnel)
CHINA - WHY SLOWDOWN ?
CHINA - WHY SLOWDOWN ?
No country can go on growing at 10
per cent per annum for ever; hence
some deceleration is inevitable
CHINA - WHY SLOWDOWN ?
No country can go on growing at 10
per cent per annum for ever; hence
some deceleration is inevitable
In addition, there are several reasons
for expecting a slowdown
CHINA - WHY SLOWDOWN ?
No country can go on growing at 10
per cent per annum for ever; hence
some deceleration is inevitable
In addition, there are several reasons
for expecting a slowdown
In particular:
The exchange rate is appreciating
CHINA'S EXCHANGE RATE
(1st July 2005 = 100)
130
Vis-à-vis
the Dollar
120
110
100
2005
2006
2007
2008
2009
2010
2011
2012
2013
REAL EXCHANGE RATES
CHINA'S EXCHANGE RATE
(1995 = 100)
(1st July 2005 = 100)
150
China
140
130
130
120
Vis-à-vis
the Dollar
United
States
110
120
100
Eurozone
90
110
80
Japan
70
60
100
2005
2006
2007
2008
2009
2010
2011
2012
2013
1995
1997
1999
2001
2003
2005
2007
2009
2011
CHINA - WHY SLOWDOWN ?
No country can go on growing at 10
per cent per annum for ever; hence
some deceleration is inevitable
In addition, there are several reasons
for expecting a slowdown
In particular:
The exchange rate is appreciating
Demographic trends are unfavourable
CHINA - POPULATION
1500
Thousands
Total
1300
1100
Aged 16-64
900
700
500
300
1950
1960
1970
1980
1990
2000
2010
2020
2030
2040
2050
CHINA - POPULATION
1500
THE AGEING POPULATION
(share of people aged 65 and more
in total population)
Thousands
30
Total
Japan
1300
25
1100
Aged 16-64
20
900
15
Eurozone
700
United
States
10
500
5
300
1960
1950
1960
1970
1980
1990
2000
2010
2020
2030
2040
2050
1965
1970
Source : UNPD
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
CHINA - POPULATION
1500
THE AGEING POPULATION
(share of people aged 65 and more
in total population)
Thousands
30
Total
Japan
1300
China
(1985
-2050)
25
1100
Aged 16-64
20
900
15
Eurozone
700
United
States
10
500
5
300
1950
1960
1970
1980
1990
2000
2010
2020
2030
2040
2050
1960
1965
1970
Source : UNPD
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
CHINA - WHY SLOWDOWN ?
No country can go on growing at 10
per cent per annum for ever; hence
some deceleration is inevitable
In addition, there are several reasons
for expecting a slowdown
In particular:
The exchange rate is appreciating
Demographic trends are unfavourable
And the slowdown seems welcomed by
the authorities
CHINA - WHY SLOWDOWN ?
No country can go on growing at 10
per cent per annum for ever; hence
some deceleration is inevitable
In addition, there are several reasons
for expecting a slowdown
In particular:
The exchange rate is appreciating
Demographic trends are unfavourable
And the slowdown seems welcomed by
the authorities
"8 per cent used to be the floor for
China's annual growth rate; it will in
future be the ceiling"
JAPAN - WHY
ACCELERATION ?
No country, hopefully, can go on
stagnating forever
JAPAN - WHY
ACCELERATION ?
No country, hopefully, can go on
stagnating forever
In addition there are some reasons for
expecting a better performance
JAPAN - WHY
ACCELERATION ?
No country, hopefully, can go on
stagnating forever
In addition there are some reasons for
expecting a better performance
In particular Abenomics:
Double the monetary base in 2 years
MONETARY BASE
(January 2007 = 100)
550
UK
450
United
States
350
250
Euro Zone
Japan
150
50
2007
2008
2009
2010
2011
2012
2013
2014
MONETARY BASE
(January 2007 = 100)
550
UK
450
United
States
350
250
Euro Zone
Japan
150
50
2007
2008
2009
2010
2011
2012
2013
2014
MONETARY BASE
(January 2007 = 100)
550
UK
450
United
States
350
250
Euro Zone
Japan
150
50
2007
2008
2009
2010
2011
2012
2013
2014
JAPAN - WHY
ACCELERATION ?
No country, hopefully, can go on
stagnating forever
In addition there are some reasons for
expecting a better performance
In particular Abenomics:
Double the monetary base in 2 years
Provide a large fiscal stimulus
Enact significant structural reforms
JAPAN - EQUITY PRICES
AND EXCHANGE RATE
Thousands
16
Kuroda
announc.
Nikkei
index
(l.h.sc.)
15
14
13
12
11
10
2013 Jan-02
Feb-13
Mar-27
May
Jun-19
-08
Jul-31
Sep
-11
JAPAN - EQUITY PRICES
AND EXCHANGE RATE
Thousands
16
-85
Kuroda
announc.
Nikkei
index
(l.h.sc.)
15
Exch. rate
vis-à-vis $
(r.h.sc.)
-90
14
13
-95
12
-100
11
10
2013 Jan-02
-105
Feb-13
Mar-27
May
Jun-19
-08
Jul-31
Sep
-11
JAPAN - WHY
ACCELERATION ?
No country, hopefully, can go on
stagnating forever
In addition there are some reasons for
expecting a better performance
In particular Abenomics:
Double the monetary base in 2 years
Provide a large fiscal stimulus
Enact significant structural reforms
Main risks:
Higher bond yields
JAPAN - BOND YIELDS
JAPAN - EQUITY PRICES
AND EXCHANGE RATE
1.1
Thousands
16
Kuroda
announc.
-85
Kuroda
announc.
Nikkei
index
(l.h.sc.)
15
Exch. rate
vis-à-vis $
(r.h.sc.)
-90
0.9
14
13
-95
0.7
12
-100
11
10
2013 Jan-02
Feb-13
Mar-27
May
Jun-19
-08
Jul-31
Sep
-11
-105 0.5
2013 Jan-02
Feb-13
Mar-27
May
Jun-19
-08
Jul-31
Sep
-11
JAPAN - WHY
ACCELERATION ?
No country, hopefully, can go on
stagnating forever
In addition there are some reasons for
expecting a better performance
In particular Abenomics:
Double the monetary base in 2 years
Provide a large fiscal stimulus
Enact significant structural reforms
Main risks:
Higher bond yields
Raising the consumption tax in 2014
JAPAN - MORE OF THE SAME ?
(GDP; per cent changes; 3 yrs. mv. avrgs.)
5
4
3
2
1
0
-1
-2
1995
2000
Source: Oxford Economics.
2005
2010
2015
2020
THE UNITED STATES
WHY IS IT IMPROVING ?
Despite "sequestration" and fiscal
gridlock, things are looking up
THE UNITED STATES
WHY IS IT IMPROVING ?
Despite "sequestration" and fiscal
gridlock, things are looking up
Why ?
THE UNITED STATES
WHY IS IT IMPROVING ?
Despite "sequestration" and fiscal
gridlock, things are looking up
Why ?
The two main causes of the "Great
Recession" (excessive indebtedness
and house prices) have been tackled
UNITED STATES
DEBT/GDP RATIOS
110
Households
90
Corporate
Sector*
70
50
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
* Non-financial corporations.
UNITED STATES
DEBT/GDP RATIOS
HOUSE PRICES*
(2000 = 100)
110
United
States
170
Households
155
90
140
Corporate
Sector*
125
70
110
50
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 95
2000
2002
* Non-financial corporations.
* In real terms.
2004
2006
2008
2010
2012
THE UNITED STATES
WHY IS IT IMPROVING ?
Despite "sequestration" and fiscal
gridlock, things are looking up
Why ?
The two main causes of the "Great
Recession" (excessive indebtedness
and house prices) have been tackled
The banks are lending again
GROWTH IN BANK LENDING
TO BUSINESS
(per cent changes; 3 mnths. mov.avrgs.)
20
United
States
15
10
5
Japan
0
-5
-10
-15
-20
2005
2006
2007
2008
2009
2010
2011
2012
2013
THE UNITED STATES
WHY IS IT IMPROVING ?
Despite "sequestration" and fiscal
gridlock, things are looking up
Why ?
The two main causes of the "Great
Recession" (excessive indebtedness
and house prices) have been tackled
The banks are lending again
Productivity growth has been rapid
TOTAL PRODUCTIVITY
GROWTH
(GDP per employed; 1999 Q1=100)
125
United
States
120
115
Japan
110
105
100
95
1999
2001
2003
2005
2007
2009
2011
2013
TOTAL PRODUCTIVITY
GROWTH
MANUFACTURING
PRODUCTIVITY GROWTH
(value added per employee; 1999 Q.1=100)
(GDP per employed; 1999 Q1=100)
125
United
States
190
United
States
180
120
170
160
115
150
Japan
Japan
140
110
130
120
105
110
100
100
90
80
95
1999
2001
2003
2005
2007
2009
2011
2013
1999
2001
2003
2005
2007
2009
2011
2013
THE UNITED STATES
WHY IS IT IMPROVING ?
Despite "sequestration" and fiscal
gridlock, things are looking up
Why ?
The two main causes of the "Great
Recession" (excessive indebtedness
and house prices) have been tackled
The banks are lending again
Productivity growth has been rapid
And energy self-sufficiency is round
the corner
USA – RETURN TO NORM ?
(GDP; per cent changes; 3 yrs. mv. avrgs.)
5
4
United
States
3
2
Japan
1
0
-1
-2
1995
2000
Source: Oxford Economics.
2005
2010
2015
2020
EUROPE - LIGHT AT THE
END OF THE TUNNEL ?
EUROPE - LIGHT AT THE
END OF THE TUNNEL ?
No recession lasts for ever and Europe
is, finally, recovering
LIGHT A THE END OF THE TUNNEL ?
LIGHT A THE END OF THE TUNNEL ?
It could, of course, be a train …
LIGHT A THE END OF THE TUNNEL ?
It could, of course, be a train …
but probably it is not
MANUFACTURING PMI
INDICES
(3 months moving averages)
56
U.K.
54
52
Germany
50
48
Italy
46
Spain
44
France
42
Jan-12
April
July
Oct.
Jan-13
April
July
MANUFACTURING PMI
INDICES
CONSUMER CONFIDENCE
(3 months moving averages)
(3 months moving averages)
56
U.K.
0
Germany
54
U.K.
52
-10
Germany
50
Italy
-20
48
Italy
France
46
-30
Spain
Spain
44
France
-40
42
Jan-12
April
July
Oct.
Jan-13
April
July
Jan-12
April
July
Oct.
Jan-13
April
July
EUROPE - CONSUMER CONFIDENCE
(3 quarter moving averages)
20
10
0
-10
-20
Italy
-30
-40
1996
1998
2000
2002
2004
2006
2008
2010
2012
EUROPE - CONSUMER CONFIDENCE
(3 quarter moving averages)
Sweden
20
10
0
-10
-20
Italy
-30
-40
1996
1998
2000
2002
2004
2006
2008
2010
2012
EUROPE - CONSUMER CONFIDENCE
(3 quarter moving averages)
Sweden
20
Denmark
10
0
-10
-20
Italy
-30
-40
1996
1998
2000
2002
2004
2006
2008
2010
2012
EUROPE - CONSUMER CONFIDENCE
(3 quarter moving averages)
Sweden
20
Denmark
Finland
10
0
-10
-20
Italy
-30
-40
1996
1998
2000
2002
2004
2006
2008
2010
2012
EUROPE - LIGHT AT THE
END OF THE TUNNEL ?
No recession lasts for ever and Europe
is, finally, recovering
But prospects remain modest
EUROPE - LIGHT AT THE
END OF THE TUNNEL ?
No recession lasts for ever and Europe
is, finally, recovering
But prospects remain modest
What America has tackled, Europe
has not
UNITED STATES
DEBT/GDP RATIOS
140
120
100
Households
80
Corporate
Sector*
60
40
20
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
* Non-financial corporations.
UNITED STATES
DEBT/GDP RATIOS
140
EUROZONE
DEBT/GDP RATIOS
140
Eurozone
Corporate
Sector*
120
100
120
Households
U.K.
Corporate
Sector*
100
U.K.
Households
80
80
Corporate
Sector*
60
60
40
40
20
20
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
* Non-financial corporations.
Eurozone
Households
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
* Non-financial corporations.
HOUSE PRICES*
(2000 = 100)
United
States
170
155
U.K.
140
Eurozone
125
110
95
2000
2002
* In real terms.
2004
2006
2008
2010
2012
HOUSE PRICES*
(2000 = 100)
United
States
170
155
U.K.
140
Italy
Eurozone
125
110
95
2000
2002
* In real terms.
2004
2006
2008
2010
2012
GROWTH IN BANK LENDING
TO BUSINESS
HOUSE PRICES*
(2000 = 100)
(per cent changes; 3 mnths. mov.avrgs.)
United
States
170
20
United
States
15
155
U.K.
10
5
Euro
zone
140
Japan
Italy
0
Eurozone
125
U.K.
-5
-10
110
-15
-20
95
2000
2002
* In real terms.
2004
2006
2008
2010
2012
2005
2006
2007
2008
2009
2010
2011
2012
2013
GROWTH IN BANK LENDING
TO BUSINESS
HOUSE PRICES*
(2000 = 100)
(per cent changes; 3 mnths. mov.avrgs.)
United
States
170
20
United
States
15
155
U.K.
10
5
140
Euro
zone
Italy
Japan
Italy
0
Eurozone
125
U.K.
-5
-10
110
-15
-20
95
2000
2002
* In real terms.
2004
2006
2008
2010
2012
2005
2006
2007
2008
2009
2010
2011
2012
2013
TOTAL PRODUCTIVITY
GROWTH
(GDP per employed; 1999 Q1=100)
125
United
States
120
U.K.
115
Japan
110
Euro
Zone
105
100
95
1999
2001
2003
2005
2007
2009
2011
2013
TOTAL PRODUCTIVITY
GROWTH
MANUFACTURING
PRODUCTIVITY GROWTH
(value added per employee; 1999 Q.1=100)
(GDP per employed; 1999 Q1=100)
125
United
States
190
United
States
180
120
170
U.K.
U.K.
160
115
150
Japan
Japan
140
110
130
Euro
Zone
Eurozone
120
105
110
100
100
90
80
95
1999
2001
2003
2005
2007
2009
2011
2013
1999
2001
2003
2005
2007
2009
2011
2013
TOTAL PRODUCTIVITY
GROWTH
MANUFACTURING
PRODUCTIVITY GROWTH
(value added per employee; 1999 Q.1=100)
(GDP per employed; 1999 Q1=100)
125
United
States
190
United
States
180
120
170
U.K.
U.K.
160
115
150
Japan
Japan
140
110
130
Euro
Zone
Eurozone
120
105
110
Italy
100
100
Italy
90
80
95
1999
2001
2003
2005
2007
2009
2011
2013
1999
2001
2003
2005
2007
2009
2011
2013
JAPAN - MORE OF THE SAME ?
USA – RETURN TO NORM ?
5
(GDP; per cent changes; 3 yrs. mv. avrgs.)
4
United
States
3
2
Japan
1
0
-1
-2
1995
2000
Source: Oxford Economics.
2005
2010
2015
2020
JAPAN - MORE OF THE SAME ?
USA – RETURN TO NORM ?
5
EUROPE - HEADING FOR
SEMI-STAGNATION ?
(GDP; per cent changes; 3 yrs. mv. avrgs.)
(GDP; per cent changes; 3 yrs. mv. avrgs.)
5
4
4
United
States
3
3
2
2
Eurozone
Japan
1
1
0
0
-1
-1
-2
-2
1995
2000
Source: Oxford Economics.
2005
2010
2015
2020
1995
2000
2005
2010
2015
2020
JAPAN - MORE OF THE SAME ?
USA – RETURN TO NORM ?
5
EUROPE - HEADING FOR
SEMI-STAGNATION ?
(GDP; per cent changes; 3 yrs. mv. avrgs.)
(GDP; per cent changes; 3 yrs. mv. avrgs.)
5
4
4
United
States
3
3
U.K.
2
2
Eurozone
Japan
1
1
0
0
-1
-1
-2
-2
1995
2000
Source: Oxford Economics.
2005
2010
2015
2020
1995
2000
2005
2010
2015
2020
JAPAN - MORE OF THE SAME ?
USA – RETURN TO NORM ?
5
EUROPE - HEADING FOR
SEMI-STAGNATION ?
(GDP; per cent changes; 3 yrs. mv. avrgs.)
(GDP; per cent changes; 3 yrs. mv. avrgs.)
5
4
4
United
States
3
3
U.K.
2
2
Eurozone
Japan
1
1
0
0
-1
-1
-2
-2
1995
2000
Source: Oxford Economics.
2005
2010
2015
2020
Italy
1995
2000
2005
2010
2015
2020
EUROPE - LIGHT AT THE
END OF THE TUNNEL ?
No recession lasts for ever and Europe
is, finally, recovering
But prospects remain modest
What America has tackled, Europe
has not
Semi-stagnation is a distinct possibility
JAPAN, EUROPE AND ITALY
RECOVERY OR STAGNATION
(GDP; % changes; 3 year moving averages)
Japan
(1989-2012)
5
2.5
0
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
JAPAN, EUROPE AND ITALY
RECOVERY OR STAGNATION
(GDP; % changes; 3 year moving averages)
Japan
(1989-2012)
5
av. growth 1950-1970: 9.6
2.5
0
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
JAPAN, EUROPE AND ITALY
RECOVERY OR STAGNATION
(GDP; % changes; 3 year moving averages)
Japan
(1989-2012)
5
av. growth 1950-1970: 9.6
1970-1990: 4.2
2.5
0
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
JAPAN, EUROPE AND ITALY
RECOVERY OR STAGNATION
(GDP; % changes; 3 year moving averages)
Japan
(1989-2012)
5
av. growth 1950-1970: 9.6
1970-1990: 4.2
1991-2011: 0.8
2.5
0
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
JAPAN, EUROPE AND ITALY
SHARE PRICES
300
Japan
(1985 Q1 =100)
250
200
150
100
50
1985
1989
1993
1997
2001
2005
2009
2013
JAPAN, EUROPE AND ITALY
SHARE PRICES
300
Japan
(1985 Q1 =100)
250
U.K.
(2003 Q1=100)
200
150
Eurozone
(2003 Q1=100)
Italy
(2003Q1=100)
100
50
1985
1989
1993
1997
2001
2005
2009
2013
JAPAN, EUROZONE AND
ITALY - HOUSE PRICES*
(1980 or 1995 = 100)
230
200
170
Japan
140
110
80
50
1980
1985
* In real terms.
1990
1995
2000
2005
2010
JAPAN, EUROZONE AND
ITALY - HOUSE PRICES*
(1980 or 1995 = 100)
230
200
170
Japan
Eurozone
(1995-2013 Q1)
140
Italy
(1995-2012)
110
80
50
1980
1985
* In real terms.
1990
1995
2000
2005
2010
JAPAN, EUROZONE AND
ITALY - HOUSE PRICES*
(1980 or 1995 = 100)
230
U.K.
(1995-2013 H1)
200
170
Japan
Eurozone
(1995-2013 Q1)
140
Italy
(1995-2012)
110
80
50
1980
1985
* In real terms.
1990
1995
2000
2005
2010
JAPAN, EUROPE AND ITALY
HOUSEHOLD DEBT/GDP
100
80
Japan
60
40
20
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
JAPAN, EUROPE AND ITALY
HOUSEHOLD DEBT/GDP
U.K.
(1996-2012)
100
80
Japan
Eurozone
(1996-2012)
60
Italy
(1996-2012)
40
20
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
JAPAN, EUROPE AND ITALY
HOUSEHOLD DEBT/GDP
JAPAN, EUROPE AND ITALY
PUBLIC SECTOR DEBT/GDP
130
U.K.
(1996-2012)
100
110
80
Japan
90
Eurozone
(1996-2012)
60
Italy
(1996-2012)
70
Japan
40
50
20
30
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
JAPAN, EUROPE AND ITALY
HOUSEHOLD DEBT/GDP
JAPAN, EUROPE AND ITALY
PUBLIC SECTOR DEBT/GDP
130
U.K.
(1996-2012)
100
Italy
(1996-2012)
110
80
Japan
90
Eurozone
(1996-2012)
U.K.
(19962012)
Eurozone
(1996-2012)
60
Italy
(1996-2012)
70
Japan
40
50
20
30
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
POPULATION AGEING
(share of people aged 65 and more
in total population)
35
30
Japan
25
Italy
Euro
Zone
20
U.K.
15
10
1990
1995
Source : UNPD
2000
2005
2010
2015
2020
2025
POPULATION AGEING
POPULATION AGEING
(share of people aged 65 and more
in total population)
(share of people aged 65 and more
in total population)
35
35
Italy
(2010-45)
30
30
Japan
25
Japan
25
Italy
U.K.
(2010-45)
Euro
Zone
20
Euro
Zone
(2010-45)
20
U.K.
15
15
10
10
1990
1995
Source : UNPD
2000
2005
2010
2015
2020
2025
1990
1995
Source : UNPD
2000
2005
2010
2015
2020
2025
JAPAN, EUROPE AND ITALY
RECOVERY OR STAGNATION
(GDP; % changes; 3 year moving averages)
Japan
(1989-2012)
5
av. growth 1950-1970: 9.6
1970-1990: 4.2
1991-2011: 0.8
U.K.
(2005-15)
2.5
EuroZ.
(2005
-15)
0
Italy
(2005-15)
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
JAPAN, EUROPE AND ITALY
RECOVERY OR STAGNATION
(GDP; % changes; 3 year moving averages)
Japan
(1989-2012)
5
av. growth 1950-1970: 9.6
1970-1990: 4.2
1991-2011: 0.8
U.K.
(2005-25)
2.5
EuroZ.
(2005
-25)
0
Italy
(2005-25)
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
EUROPE - LIGHT AT THE
END OF THE TUNNEL ?
No recession lasts for ever and Europe
is, finally, recovering
But prospects remain modest
What America has tackled, Europe
has not
Semi-stagnation is a distinct possibility
And the Euro area could still face major
problems
A EURO COLLAPSE ?
THE EUROZONE'S
PROBLEMS
The immediate problem is one of deficits
and debt in a number of Southern
countries. These are seen as excessive
by financial markets
GOVERNMENT
DEBT/GDP RATIOS
200
Greece
180
160
140
Italy
120
100
Portugal
80
60
Spain
40
20
0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
GOVERNMENT
DEBT/GDP RATIOS
GOVERNMENT
DEBT/GDP RATIOS
200
200
Greece
180
180
160
160
140
140
Italy
120
120
100
100
Portugal
80
60
Belgium
Netherlands
Austria
80
Spain
Germany
60
Finland
40
40
20
20
Luxembourg
0
0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
ITALY AND SPAIN - BOND
YIELD DIFFERENTIALS*
6.3
SpainGerm.
5.3
4.3
ItalyGerm.
3.3
2.3
Jun. July Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr.
* Difference between yields on 10 year Spanish or Italian Euro bonds
and equivalent German 10 year Eurobonds.
May Jun.
Jul. Aug.
ITALY AND SPAIN - BOND
YIELD DIFFERENTIALS*
6.3
SpainGerm.
26.7.12: Draghi's
"Whatever it takes"
5.3
4.3
ItalyGerm.
3.3
2.3
Jun. July Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr.
* Difference between yields on 10 year Spanish or Italian Euro bonds
and equivalent German 10 year Eurobonds.
May Jun.
Jul. Aug.
ITALY AND SPAIN - BOND
YIELD DIFFERENTIALS*
6.3
SpainGerm.
26.7.12: Draghi's
"Whatever it takes"
5.3
4.3
ItalyGerm.
3.3
2.3
Jun. July Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr.
* Difference between yields on 10 year Spanish or Italian Euro bonds
and equivalent German 10 year Eurobonds.
May Jun.
Jul. Aug.
ITALY AND SPAIN - BOND
YIELD DIFFERENTIALS*
6.3
SpainGerm.
26.7.12: Draghi's
"Whatever it takes"
6.9.12: OMT
Announcem.
5.3
4.3
ItalyGerm.
3.3
2.3
Jun. July Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr.
* Difference between yields on 10 year Spanish or Italian Euro bonds
and equivalent German 10 year Eurobonds.
May Jun.
Jul. Aug.
ITALY AND SPAIN - BOND
YIELD DIFFERENTIALS*
6.3
SpainGerm.
26.7.12: Draghi's
"Whatever it takes"
6.9.12: OMT
Announcem.
5.3
4.3
ItalyGerm.
3.3
2.3
Jun. July Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr.
* Difference between yields on 10 year Spanish or Italian Euro bonds
and equivalent German 10 year Eurobonds.
May Jun.
Jul. Aug.
ITALY AND SPAIN - BOND
YIELD DIFFERENTIALS*
6.3
SpainGerm.
26.7.12: Draghi's
"Whatever it takes"
6.9.12: OMT
Announcem.
5.3
4.3
ItalyGerm.
02.13
Italian
elects.
Cyprus
crisis
3.3
2.3
Jun. July Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr.
* Difference between yields on 10 year Spanish or Italian Euro bonds
and equivalent German 10 year Eurobonds.
May Jun.
Jul. Aug.
ITALY AND SPAIN - BOND
YIELD DIFFERENTIALS*
6.3
SpainGerm.
26.7.12: Draghi's
"Whatever it takes"
6.9.12: OMT
Announcem.
5.3
4.3
ItalyGerm.
02.13
Italian
elects.
Cyprus
crisis
3.3
2.3
Jun. July Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr.
* Difference between yields on 10 year Spanish or Italian Euro bonds
and equivalent German 10 year Eurobonds.
May Jun.
Jul. Aug.
ITALY AND SPAIN - BOND
YIELD DIFFERENTIALS*
6.3
SpainGerm.
26.7.12: Draghi's
"Whatever it takes"
6.9.12: OMT
Announcem.
5.3
4.3
ItalyGerm.
02.13
Italian
elects.
Cyprus
crisis
22.5.13
Bernanke
speech
3.3
2.3
Jun. July Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr.
* Difference between yields on 10 year Spanish or Italian Euro bonds
and equivalent German 10 year Eurobonds.
May Jun.
Jul. Aug.
ITALY AND SPAIN - BOND
YIELD DIFFERENTIALS*
6.3
SpainGerm.
26.7.12: Draghi's
"Whatever it takes"
6.9.12: OMT
Announcem.
5.3
4.3
ItalyGerm.
02.13
Italian
elects.
Cyprus
crisis
22.5.13
Bernanke
speech
3.3
2.3
Jun. July Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr.
* Difference between yields on 10 year Spanish or Italian Euro bonds
and equivalent German 10 year Eurobonds.
May Jun.
Jul. Aug.
WILL THIS LAST ?
WILL THIS LAST ?
In theory, yes
The ECB has unlimited firing power since
it can print money and buy public debt
WILL THIS LAST ?
In theory, yes
The ECB has unlimited firing power since
it can print money and buy public debt
And this is what the recently announced
OMT programme has set out to do
WILL THIS LAST ?
In theory, yes
The ECB has unlimited firing power since
it can print money and buy public debt
And this is what the recently announced
OMT programme has set out to do
In practice, however, there could be
problems
WILL THIS LAST ?
In theory, yes
The ECB has unlimited firing power since
it can print money and buy public debt
And this is what the recently announced
OMT programme has set out to do
In practice, however, there could be
problems
Many in Germany (and elsewhere) are
opposed to this. Why ?
WILL THIS LAST ?
In theory, yes
The ECB has unlimited firing power since
it can print money and buy public debt
And this is what the recently announced
OMT programme has set out to do
In practice, however, there could be
problems
Many in Germany (and elsewhere) are
opposed to this. Why ?
Two major reasons:
i) Fear of future inflation
15 October 1923: 200 billion marks
15 October 1923: 200 billion marks
2008: 100 trillion dollars (15 zeros)
ITALY AND SPAIN - BOND
YIELD DIFFERENTIALS*
6.3
SpainGerm.
26.7.12: Draghi's
"Whatever it takes"
6.9.12: OMT
Announcem.
5.3
4.3
ItalyGerm.
02.13
Italian
elects.
Cyprus
crisis
22.5.13
Bernanke
speech
3.3
2.3
Jun. July Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr.
* Difference between yields on 10 year Spanish or Italian Euro bonds
and equivalent German 10 year Eurobonds.
May Jun.
Jul. Aug.
U.S. - MONETARY BASE
3,500
Monetary
base ($ bill.)
3,200
2,900
2,600
2,300
2,000
1,700
1,400
1,100
800
500
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
U.S. - MONETARY BASE
3,500
Monetary
base ($ bill.)
3,200
2,900
2,600
2,300
2,000
1,700
1,400
August 2008:
August 2013:
1,100
843 bn
3,398 bn
800
500
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
U.S. - MONETARY BASE AND INFLATION
3,500
6
Monetary
base ($ bill.)
3,200
5
2,900
4
Inflation
(% ch.; r.h.sc.)
2,600
3
2,300
2,000
2
1,700
1
1,400
0
August 2008:
August 2013:
1,100
843 bn
3,398 bn
-1
800
500
-2
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
WILL THIS LAST ?
In theory, yes
The ECB has unlimited firing power since
it can print money and buy public debt
And this is what the recently announced
OMT programme has set out to do
In practice, however, there could be
problems
Many in Germany (and elsewhere) are
opposed to this. Why ?
Two major reasons:
i) Fear of future inflation
ii) Fear of future indiscipline and
profligacy in the weaker countries
WILL THIS LAST ?
In theory, yes
The ECB has unlimited firing power since
it can print money and buy public debt
And this is what the recently announced
OMT programme has set out to do
In practice, however, there could be
problems
Many in Germany (and elsewhere) are
opposed to this. Why ?
Two major reasons:
i) Fear of future inflation
ii) Fear of future indiscipline and
profligacy in the weaker countries
That is why the programme is conditional
(and nobody knows what would happen
if the ECB started applying it)
EMU BREAKDOWN
(GDP; per cent changes; 3 qtrs. mv. avrgs.)
4
United
States
Central
scenario
UK
2
0
Euro
zone
-2
-4
-6
2007
2008
2009
Source: Oxford Economics.
2010
2011
2012
2013
2014
2015
2016
EMU BREAKDOWN
(GDP; per cent changes; 3 qtrs. mv. avrgs.)
4
United
States
Central
scenario
UK
2
0
Euro
zone
-2
-4
-6
EMU
breakdown
2007
2008
2009
Source: Oxford Economics.
2010
2011
2012
2013
2014
2015
2016
EMU BREAKDOWN
(GDP; per cent changes; 3 qtrs. mv. avrgs.)
4
United
States
Central
scenario
UK
2
0
Euro
zone
-2
-4
-6
EMU
breakdown
2007
2008
2009
Source: Oxford Economics.
2010
2011
2012
2013
2014
2015
2016
EMU BREAKDOWN
(GDP; per cent changes; 3 qtrs. mv. avrgs.)
4
United
States
Central
scenario
UK
2
0
Euro
zone
-2
-4
-6
EMU
breakdown
2007
2008
2009
Source: Oxford Economics.
2010
2011
2012
2013
2014
2015
2016
EMU BREAKDOWN
EMU BREAKDOWN
(GDP; per cent changes; 3 qtrs. mv. avrgs.)
(GDP; per cent changes; 3 qtrs. mv. avrgs.)
4
4
United
States
Central
scenario
Central
scenario
Germany
2
UK
2
0
0
Italy
-2
Euro
zone
-2
-4
-6
-4
-8
-6
EMU
breakdown
-10
2007
2008
2009
Source: Oxford Economics.
2010
2011
2012
2013
2014
2015
2016
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
EMU BREAKDOWN
EMU BREAKDOWN
(GDP; per cent changes; 3 qtrs. mv. avrgs.)
(GDP; per cent changes; 3 qtrs. mv. avrgs.)
4
4
United
States
Central
scenario
Central
scenario
Germany
2
UK
2
0
0
Italy
-2
Euro
zone
-2
-4
-6
-4
-8
-6
EMU
breakdown
EMU
breakdown
-10
2007
2008
2009
Source: Oxford Economics.
2010
2011
2012
2013
2014
2015
2016
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
EMU BREAKDOWN
EMU BREAKDOWN
(GDP; per cent changes; 3 qtrs. mv. avrgs.)
(GDP; per cent changes; 3 qtrs. mv. avrgs.)
4
4
United
States
Central
scenario
Central
scenario
Germany
2
UK
2
0
0
Italy
-2
Euro
zone
-2
-4
-6
-4
-8
-6
EMU
breakdown
EMU
breakdown
-10
2007
2008
2009
Source: Oxford Economics.
2010
2011
2012
2013
2014
2015
2016
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
THE EUROZONE'S
PROBLEMS
The immediate problem is one of deficits
and debt in a number of Southern
countries. These are seen as excessive
by financial markets
The medium-run problem is one of
insufficient competitiveness in a number
of, again, Southern countries
GROWTH OF EARNINGS
(1999 Q.1 = 100)
Spain
Italy
140
France
130
120
110
100
1999
2001
2003
2005
2007
2009
2011
2013
GROWTH OF EARNINGS
(1999 Q.1 = 100)
Spain
Italy
140
France
130
120
Germany
110
100
1999
2001
2003
2005
2007
2009
2011
2013
MANUFACTURING
PRODUCTIVITY GROWTH
GROWTH OF EARNINGS
(1999 Q.1 = 100)
(value added per employee; 1999 Q.1 = 100)
Spain
140
France
Germany
Italy
140
130
France
130
120
Spain
110
120
Germany
100
Italy
110
90
80
100
1999
2001
2003
2005
2007
2009
2011
2013
1999
2001
2003
2005
2007
2009
2011
2013
GROWTH OF EARNINGS
(1999 Q.1 = 100)
150
EZ
South**
140
130
EZ
North*
120
110
100
1999
2001
2003
2005
2007
2009
* Germany, Benelux, Austria, Finland. ** Italy, Spain, Greece Portugal.
2011
2013
GROWTH OF EARNINGS
GROWTH OF PRODUCTIVITY
(1999 Q.1 = 100)
(GDP per employed; 1999 Q.1 = 100)
115
150
EZ
South**
EZ
North*
140
110
130
EZ
North*
120
105
EZ
South**
110
100
100
1999
2001
2003
2005
2007
2009
* Germany, Benelux, Austria, Finland. ** Italy, Spain, Greece Portugal.
2011
2013
1999
2001
2003
2005
2007
2009
* Germany, Benelux, Austria, Finland. ** Italy, Spain, Greece Portugal.
2011
2013
REAL EXCHANGE RATES
(1999 Q.1 = 100)
130
120
EZ
South**
110
100
EZ
North*
90
1999
2001
2003
2005
* Germany, Benelux, Austria, Finland.
Source: IMF.
2007
2009
2011
2013
** Italy, Spain, Greece Portugal.
RECESSION AND RECOVERY
(GDP; per cent changes; 3 qtrs. mv. avrgs.)
4
EZ North
GDP*
2
0
EZ South
GDP**
-2
-4
-6
2007
2009
2011
2013
* Germany, Benelux, Austria, Finland. ** Italy, Spain, Greece Portugal.
Source: Oxford Economics.
2015
RECESSION AND RECOVERY
EUROZONE GDP
(GDP; per cent changes; 3 qtrs. mv. avrgs.)
(indices; 2007 Q1 = 100)
110
4
EZ North
GDP*
Eurozone
North*
2
105
0
100
EZ South
GDP**
-2
95
Eurozone
South**
-4
90
-6
2007
2009
2011
2013
* Germany, Benelux, Austria, Finland. ** Italy, Spain, Greece Portugal.
Source: Oxford Economics.
2015
2007
2009
2011
2013
* Germany, Benelux, Austria, Finland. ** Italy, Spain, Greece, Portugal.
2015
EURO ZONE - GROWTH IN
BANK LENDING TO BUSINESS
(per cent changes; 3 mnths. mov.avrgs.)
16
12
8
Eurozone
North
4
0
Eurozone
South
-4
-8
2008
2009
2010
2011
2012
2013
EURO ZONE - GROWTH IN
EURO ZONE - INTEREST RATE
BANK LENDING TO BUSINESS
ON NEW BUSINESS LOANS
(per cent changes; 3 mnths. mov.avrgs.)
16
(per cent; 3 mnths. mov.avrgs.)
6
12
5
8
Eurozone
South
Eurozone
North
4
4
0
3
Eurozone
North
Eurozone
South
-4
2
-8
2008
2009
2010
2011
2012
2013
2008
2009
2010
2011
2012
2013
UNEMPLOYMENT
(in percent of the labour force)
20
Eurozone
South
16
12
8
Eurozone
North
4
2007
2009
Source: Oxford Economics.
2011
2013
2015
THE EUROZONE'S
PROBLEMS
The immediate problem is one of deficits
and debt in a number of Southern
countries. These are seen as excessive
by financial markets
The medium-run problem is one of
insufficient competitiveness in a number
of, again, Southern countries
And there could be an even longer-run
problem that has to do with different and
diverging governance standards between
Northern and Southern Europe
ESTIMATES OF SIZE OF
SHADOW ECONOMY
(in per cent of GDP)
1998-2000
25
20
15
10
5
0
EZ Nth.
Source: F.Schneider.
EZ Sth.
ESTIMATES OF SIZE OF
SHADOW ECONOMY
(in per cent of GDP)
2010-11
1998-2000
25
20
15
10
5
0
EZ Nth.
Source: F.Schneider.
EZ Sth.
EZ Nth.
EZ Sth.
EMU - NORTH-SOUTH
CONVERGENCE
PERCEPTIONS OF CORRUPTION
6
1999-2000
4
2
0
EZ Nth.
EZ Sth.
Source: Transparency International.
EMU - NORTH-SOUTH
CONVERGENCE
PERCEPTIONS OF CORRUPTION
6
2011-12
1999-2000
4
2
0
EZ Nth.
EZ Sth.
Source: Transparency International.
EZ Nth.
EZ Sth.
EMU - NORTH-SOUTH
CONVERGENCE
PRESENCE OF THE RULE OF LAW
(deviations from international average)
2
1998-2000
1.5
1
0.5
0
EZ Nth.
Source: World Bank.
EZ Sth.
EMU - NORTH-SOUTH
CONVERGENCE
PRESENCE OF THE RULE OF LAW
(deviations from international average)
2
1998-2000
2010-11
1.5
1
0.5
0
EZ Nth.
Source: World Bank.
EZ Sth.
EZ Nth.
EZ Sth.
EURO-DOLLAR RATE
(dollars per euro)
1.6
1.4
1.2
1
0.8
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
EURO-DOLLAR RATE
(dollars per euro)
1.6
1.4
1.2
1
0.8
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
THE VALUE OF THE EURO
THE VALUE OF THE EURO
1 Euro
=
1.00 €
THE VALUE OF THE EURO
1 Euro
=
1.00 €
1 Euro
=
1.32 $
THE VALUE OF THE EURO
1 Euro
=
1.00 €
1 Euro
=
1.32 $
1 Euro
=
11.00 $
THE VALUE OF THE EURO
1 Euro
=
1.00 €
1 Euro
=
1.32 $
1 Euro
=
11.00 $
1 Euro
=
22.00 $
THE VALUE OF THE EURO
1 Euro
=
1.00 €
1 Euro
=
1.32 $
1 Euro
=
11.00 $
(Monaco - Prince Albert)
1 Euro
=
22.00 $
$ 11
THE VALUE OF THE EURO
1 Euro
=
1.00 €
1 Euro
=
1.32 $
1 Euro
=
11.00 $
(Monaco - Prince Albert)
1 Euro
=
22.00 $
(Vatican City - The Pope)
$ 22
$ 22
$ 22
$ 10
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Wendy Liu, Head of Central Deal Desk, Corporate Life & Pensions, Zurich
174
Opportunity for HR and RM to work together
MAXIMIZE VALUE OF
EMPLOYEE BENEFITS
PROGRAMS
MANAGE EMPLOYEE
BENEFITS RISKS
Case 1 - Multinational pooling agreement
Multinational
parent company
International
The Insurer
pooling agreement
Client subsidiary
country A
Client
Client subsidiary
subsidiary
Country
country B
Client subsidiary
country C
Local
contracts
Local
contracts
Local
contracts
Network partner
partner
Network
country A
A
country
Network partner
country B
Network partner
country C
Case 2 - Captives for funding employee benefits
Financial Benefits:
• Cost Savings
• Cashflow Management
Non-financial Benefits:
• Control
• Coverage
Case 3 – De-risking pension liabilities
Current
allocation
Current
Extend Bond
Duration
Increase Bond
Allocation
Hedged
Portfolio
De-risk
Freeze / close
Current Plan plans
Cash-out
Deferreds
Insurance Buyin/out
Settle Active
Obligation
Success factors
Risk
Management
Experience
and Expertise
Global
Perspective
Coordinated effort
HR
Legal
Governance
Risk Management
Finance
Process
Identify the
opportunities for
RM’s involvement
Assess costs and
benefits
Evaluate and
prioritize
Execute and
monitor
How can Risk Managers help manage
employee benefits risk?
Otto Bekouw, Head of insurance & Risk Management, Royal Philips
Wendy Liu, Head of Central Deal Desk, Corporate Life & Pensions, Zurich
Business Interruption Claims-the challenges
and opportunities
Chris Barnes, Chief Claims Officer, Global Corporate, Zurich
Keith Batty, Director Group Insurance, Brambles Limited
Michael Raney, Chief Executive Officer, Global Corporate. Latin America
Iwan Borszcz, Head of Large Loss Team, Zurich
David Mahoney, Forensic Accounting Unit Manager, Zurich
Events …. and their Business Impact
Hurricane Sandy Oct 2012
EQ Christchurch Feb 2011
Flooding Thailand Q3/Q4 2011
14.03.2016
EQ Tohoku March 2011
BR TC Business
Resilienc
e
Services
Catastrophe Update
First Half of 2013, USA and Worldwide
Significant Events, January – June 2013
• HY 2013 Events (Jan-Jun)
• Worldwide: 460 events (51% of full year 2012)
• USA: 68 events (37% of full year 2012)
Floods
Canada, June
Floods
Europe,
June
• USA Losses
• 2012 was 3rd highest insured loss year in USA
(57% of overall losses insured)
• 2013 US losses running below 2012 and 2011
YOY, but consistent with decade prior
• Worldwide trending
• 5 of top 14 most expensive catastrophes
worldwide have occurred since 2010
• Both overall and insured loss amounts
increasing YOY (faster in last decade…)
Winter storm
USA, 7–11 April
Severe storms, tornadoes
USA, 18–20 March
Severe storms, tornadoes
USA, 18–19 March
Earthquake
China,
20 April
Floods
India,
June
Heat wave
India, June
Floods
Indonesia,
15–22 January
Floods
Australia,
21–31 January
Geophysical events
(earthquake, tsunami, volcanic activity)
Hydrological events
(flood, mass movement)
Meteorological events
(storm)
Climatological events
(extreme temperature, drought, wildfire)
SOURCE: Insurance Information Institute (III), 2013 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE
Evidence from Claims:
Share of Business Interruption losses grows
50%
Evolution of BI Share at Large Claims (LCD)
Business Interruption share
of annually averaged claims data 2002 - 2011
42%
40%
35%
30%
32%
28%
27%
20%
17%
16%
20%
28%
18%
10%
0%
2002
2003
2004
2005
Source: Zurich GCi Europe Portfolio 2001-2011
BI Share
2006
2007
2008
Poly. (BI Share)
2009
2010
2011
Business Interruption
Loss Shares Have Grown Over Time and in Severity
Source: Zurich Portfolio 2001-2011
60%
50%
BI share [%]
40%
30%
20%
10%
0%
500'000
5'000'000
Loss [$]
50'000'000
2001-2004
2005-2007
2008-2011
50 per. M ov. Avg. (2001-2004)
50 per. M ov. Avg. (2005-2007)
50 per. M ov. Avg. (2008-2011)
Business Interruption Claims-the challenges
and opportunities
Chris Barnes, Chief Claims Officer, Global Corporate, Zurich
Keith Batty, Director Group Insurance, Brambles Limited
Michael Raney, Chief Executive Officer, Global Corporate. Latin America
Iwan Borszcz, Head of Large Loss Team, Zurich
David Mahoney, Forensic Accounting Unit Manager, Zurich
Customer Forums
Customer Forums
4
3
2
Customer Satisfaction
International Programmes
Addressing Risk Holistically
Jacques Arragon
Tim Bunt
Frank De Costanzo
Dan Desjardins
Martha Doherty
Renee Garbus
Paula Gentile
John Hurrell
Reiji Inomata
Kathleen Ireland
David Jewell
George Jones
Chris Koppang
Kevin Lang
Dave Lynch
Ed Martingano
Ken Murphy
Pascal Prevost
Jeff Purdy
Michel Rodrigue
Brian Turnwall
Kurt Urquhart
Bill Zachry
Franck Baron
Luis Baretto
Otto Bekouw
Sonia Cambia
Armando Giner
Julia Graham
George Jones
Vassilina Lapteva Walford
Maria Jose Leal
Michael Lusk
Hector Mastrapa
Edwin V. Meyer
Filippo Miliani
Anil Sharma
Anders Soeborg
Claudia Temple
Rob Tutchener
Mark Vorbach
Dirk Wegener
Oliver Wild
Raziyah Yahya
Keith Batty
Andrew Bradley
Eva Catillon
Andre Coetsee
Yvon Colleu
Carlo Cosimi
Alessandro De Felice
Ignacio Del Corral
Zekeriya Dur
Emelie Ekholm
Juan Jose Gil Sanchez
Philippe Guerry
HADING
Warren Hutcheon
Olivier Ketelaer
Nils Lindstedt
Paolo Rubini
Paolo Scalzini
Kazuhiko Shinkai
Kristian Snall
Adrian Teng
Pieter Van Vuuren
Jean Marc Vanescote
Networking Break
Salone Foyer
Customer Forums
4
3
2
Customer Satisfaction
International Programmes
Addressing Risk Holistically
Jacques Arragon
Tim Bunt
Frank De Costanzo
Dan Desjardins
Martha Doherty
Renee Garbus
Paula Gentile
John Hurrell
Reiji Inomata
Kathleen Ireland
David Jewell
George Jones
Chris Koppang
Kevin Lang
Dave Lynch
Ed Martingano
Ken Murphy
Pascal Prevost
Jeff Purdy
Michel Rodrigue
Brian Turnwall
Kurt Urquhart
Bill Zachry
Franck Baron
Luis Baretto
Otto Bekouw
Sonia Cambia
Armando Giner
Julia Graham
George Jones
Vassilina Lapteva Walford
Maria Jose Leal
Michael Lusk
Hector Mastrapa
Edwin V. Meyer
Filippo Miliani
Anil Sharma
Anders Soeborg
Claudia Temple
Rob Tutchener
Mark Vorbach
Dirk Wegener
Oliver Wild
Raziyah Yahya
Keith Batty
Andrew Bradley
Eva Catillon
Andre Coetsee
Yvon Colleu
Carlo Cosimi
Alessandro De Felice
Ignacio Del Corral
Zekeriya Dur
Emelie Ekholm
Juan Jose Gil Sanchez
Philippe Guerry
HADING
Warren Hutcheon
Olivier Ketelaer
Nils Lindstedt
Paolo Rubini
Paolo Scalzini
Kazuhiko Shinkai
Kristian Snall
Adrian Teng
Pieter Van Vuuren
Jean Marc Vanescote
Customer Satisfaction Results
Valerie Butt, Head of Customer, Distribution and Marketing,
Zurich Global Corporate
Measuring Customer Satisfaction
Net Promoter Score (NPS)
RNPS
1
Objectives
TNPS
In-depth understanding of competitive positioning.
Real time measurement to treat acute problems
Prioritization of initiatives based on relevance for customers and impact on
retention
Closed learning loops to drive continuous customer experience improvement
Benchmarking our customer delivery vs. competitors
Root cause analysis and ensuing initiatives to improve services and customer
loyalty
Critical for target and incentive setting
2
Frequency
Every 12months
Top down :
“Understand drivers of customer advocacy and prioritize actions”
On-going measurement after customer interactions at selected touch points
Bottom up:
“Drive customer focus at the frontline”
In-depth
analysis
RNPS - Understanding the results
The NPS Questions:
• How likely would you be to recommend Zurich to your colleagues and
peers?
• …and why?
DETRACTORS (0) to 6)
not willing to recommend insurer, can
spread negative word-of-mouth
PASSIVES (7+8)
passive in recommendation, have
neutral attitude to insurer
PROMOTERS (9+10)
willing to recommend, can actively spread
positive word-of-mouth
NPS = Promoters - Detractors (range -100 to +100)
The goal is to have as many promoters as possible and as few detractors as possible (i.e. as high NPS as possible).
Global Corporate in North America
On a scale from 0-10 how likely would you be to recommend Zurich / [COMPETITOR] to your colleagues or peers?
NPS ZURICH VS. COMPETITORS
MIN
MAX
n=
43
500
Competitor 1
-11
201
Competitor 2
-5
140
Competitor 3
3
95
Base: Zurich customers and those, who use competitors apart from Zurich
Global Corporate - RNPS 2013
Global Corporate in Europe
On a scale from 0-10 how likely would you be to recommend Zurich / [COMPETITOR] to your colleagues or peers?
NPS ZURICH VS. COMPETITORS
MIN
MAX
n=
3
464
Competitor 1
-35
71
Competitor 2
-32
78
Competitor 3
-14
37
Base: Zurich customers and those, who use competitors apart from Zurich
Global Corporate - RNPS 2013
Areas Measured:
Relationship
Service
Relationship
Leaders
Loss
Control
Product
Overall
Customer
Experience
Claims
Price
Brand
Underwriting
Broker
3 Key Areas of Strength
NPS drivers with high performance
GCiNA
GCiE
Areas of Strength
Areas of Strength
Providing clarity around how your
relationship is managed
Single point of contact
Access to people who make decisions
Responsive decisions on priorities
Understanding your company
Understanding your company
Global Corporate - RNPS 2013
3 Key Areas of Strength
NPS drivers with high performance
Clarity on How Relationship
Managed
It is an excellent service. We have built an
effective relationship with our appointed
relationship manager.
Strong balance sheet, good quality company,
good relationship management, good
reputation
We get good service …more the personal
touch…personal attention .. We get quick
response and rapid answers to our questions.
We have had a good working relationship
Access to Decision Makers
Good pricing, good service accessible
senior management
Easy and accessible…. friendly staff … very
knowledgeable.
Understanding Your Company
Zurich understands the business and they
provide thorough proposals.
Client representative is phenomenal
..they have a good understanding of
global business not only individual
policy. I think they are a great business
partner
They are very comprehensive group and very
accessible and accommodating...They are
great to work with.
Truly understands the construction industry.
We are treated very, very carefully. Excellent
customer service. They will go to bat for us for
anything.
Highly responsive, very involved in assisting
us with education. Good customer relations.
3 Key Areas where action is required
NPS drivers with low performance
GCiNA
GCiE
Action Required
Action Required
Ability to align with your corporate
culture
Ability to align with your corporate
culture
Consistency of service across
departments
Consistency of service across
departments
Offering proactive Risk Insights
Offering proactive Risk Insights
Global Corporate - RNPS 2013
3 Key Areas where action is required
NPS drivers with low performance
Corporate Culture
Zurich could improve the way the
various contracts I buy from them are
managed & dealt with as a single
relationship. It feels a bit fragmented
at the moment.
Risk Insights
Service
More customer relations, maybe providing resources…like
loss prevention or control, risk management and
education.
Constant client service, one
account manager, who stays.
Speed of decision making, it is quite slow. Policy
wording, and slow in providing documentation.
To become more business oriented
when working to create an insurance
arrangement.
More knowledgeable about my
account when underwriting.
More outreach in regards to policy
services and action to mitigate
losses….
The claims agents are hard to reach. We don't have a lot
of claims with them but the claims we have, we always
have a problem with something. Let's say, we pay for
insurance, why do we always have to provide proof of
payment? They should know that about the company.
Global Corporate - RNPS 2013
….the efficiency in their customer
service and paperwork.
Better customer service. The
claims agents are hard to
reach…. Basically, the problems
have many things that are
unnecessary. Like, info that
they already have.
3 Key Areas where action is required
NPS drivers with low performance
What does this
mean to you?
Action Required
Ability to align with your corporate
culture
What do we need
to do differently?
Offering proactive Risk
Insights
Consistency of service across
departments
Global Corporate - RNPS 2013
Customer Satisfaction Results
Valerie Butt, Head of Customer, Distribution and Marketing,
Zurich Global Corporate
Welcome
Dan Riordan, Chief Executive Officer, Zurich Global
Corporate, North America
Agenda Friday 20th September
1
08.30
Zurich Group Strategy
2
09.30
Customer Forum feedback to Zurich Executive Team
3
10.30
Networking Break
4
11.00
What is driving the risk discussion at the board level?
5
12.00
Traditional & Emerging Cyber Threats Facing Risk Officers
6
13.00
Wrap up & close
Thomas Hürlimann
Chief Executive Officer, Zurich Global Corporate,
Zurich Group Strategy
Martin Senn, Chief Executive Officer, Zurich
Customer Forum
feedback to Executive Team
Customer Satisfaction
3 Key Areas of Strength
GCiNA
GCiE
Areas of Strength
Areas of Strength
Single point of contact (RC)
Single point of contact
Access to people who make decisions
Responsive decisions on priorities
Understanding your company
Understanding your company
Global Corporate - RNPS 2013
211
3 Key Areas of Strength
Single point of contact
•
•
•
Is a differentiator
But RLs need more authority
Less consistent experience outside
GC
•
Is working well. Time consuming but
good communication
Access to people who make decisions
Understanding your company
Senior Executives understand their
company, needs to be translated at all
levels
Global Corporate - RNPS 2013
212
3 Key Areas where action is required
GCiNA
GCiE
Action Required
Action Required
Ability to align with your corporate
culture
Ability to align with your corporate
culture
Consistency of service across
departments
Consistency of service across
departments
Offering proactive Risk Insights
Offering proactive Risk Insights
Global Corporate - RNPS 2013
213
3 Key Areas where action is required
•
•
•
Consistency of service across departments
•
•
•
•
Offering proactive Risk Insights
•
Ability to align with your corporate culture
•
Inconsistent service across geographies, we don’t
expect it to be perfect
Recommend to create service standards at local
level. Encourage engagement between local
entities (delivering policies)
Better data quality – claims and captives
Timely transparency on pricing at renewal
Customers don’t know what’s available and don’t
know when to use them
Recommendation is to align tool delivery with
corporate cycle
Compliance while important is still too
cumbersome and Z needs to be more flexibly
Global Corporate - RNPS 2013
214
Additional insights
 Ability to integrate with customers systems and processes
– Data transfer into their RMS systems
– Tools to be integrated with in house systems
 The broker
– The tripartite relationship is working well, however more effective when the Risk Manager clearly outlines
expectations to all parties
Customer Forum feedback to
Executive Team
Networking Break
Salone Foyer
What is driving the risk discussion at the
board level?
Micheal Kerner, Chief Executive Officer, General Insurance, Zurich
Andre Coetsee, Managing Executive, Sasol Financing & Insurance Services
Barbara Plucnar Jensen, SVP & Head of Group Treasury, ISS A/S
Adrian Teng, Group Treasurer, Jardine Matheson Limited
Traditional and Emerging Cyber Threats
Facing Risk Officers
Tom Bossert, Partner, Civil Defence Solutions, Zurich Cyber Risk Fellow, Cyber
Statecraft Initiative, Atlantic Council
Jason Healey, Director, Cyber Statecraft Initiative, Atlantic Council
Neal Pollard, Director, PricewaterhouseCoopers, Senior Fellow, Cyber Statecraft
Initiative, Atlantic Council
Dr. Paul Twomey, Managing Director, Argo P@cific, Board Director, Atlantic
Council
Wrap Up and Close
2014 Global Risk Management
Summit
September 17 – 19
Penha Longa Resort
(Ritz Carlton), Portugal