On February 18, 2016, the Zurich Insurance Group announced the successful placement of CHF 200 million of undated subordinated notes, which was subsequently raised to CHF 225 million at closing on March 2, 2016. The subordinated notes are first callable in June 2021. The notes will be issued by Zurich Insurance Company Ltd under its “Euro Medium Term Note Programme”. The coupon of 2.75 percent per annum is fixed until June 2021. Thereafter the coupon will reset every 5 years based on the then prevailing 5-year swap rate plus a margin of 3.323 percent per annum. The notes were placed to retail and institutional investors in the Swiss franc domestic market and the transaction has been conducted for refinancing purposes.
Appropriation of available earnings as proposed by the Board of Directors
number of shares, as of December 31 2015 2014
Dividend-paying registered shares
Dividend-paying shares 82,500,000 82,500,000
in CHF, as of December 31 2015
(Proposed)
2014 (Approved) Appropriation of available earnings as proposed by the Board of Directors
Balance brought forward 7,723,157,781 6,611,181,760
Net income after taxes 1,961,628,804 3,611,976,020
Available earnings 9,684,786,585 10,223,157,781
Dividend (1,400,000,000) (2,500,000,000)
Balance carried forward 8,284,786,585 7,723,157,781
The Board of Directors proposes to its shareholder at the Annual General Meeting on March 31, 2016, to pay a dividend of CHF 1,400,000,000 and to carry forward available earnings of CHF 8,284,786,585 as shown in the above table.
As the general reserves (consisting of the legal reserve and the capital contribution reserve) exceed 100 percent of fully paid-in share capital, no further allocation to the general reserves is required by the Swiss Code of Obligations and article 28a of the Company’s articles of incorporation.
On behalf of the Board of Directors of Zurich Insurance Company Ltd
Tom de Swaan Chairman
Zurich, March 2, 2016
Report of the statutory auditor
To the General Meeting of Zurich Insurance Company Ltd, Zurich Report of the statutory auditor on the Financial statements
As statutory auditor, we have audited the accompanying financial statements of Zurich Insurance Company Ltd, which comprise the balance sheet, income statement and notes, for the year ended December 31, 2015.
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation of the financial statements in accordance with the requirements of Swiss law and the Company’s articles of incorporation. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity’s preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements for the year ended December 31, 2015, comply with Swiss law and the Company’s articles of incorporation.
Report on other legal requirements
We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our independence.
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists which has been designed for the preparation of financial statements according to the instructions of the Board of Directors.
We further confirm that the proposed appropriation of available earnings complies with Swiss law and the Company’s articles of incorporation. We recommend that the financial statements submitted to you be approved.
PricewaterhouseCoopers AG
Mark Humphreys Peter Bieri
Audit expert Audit expert
Auditor in charge
Zurich, March 2, 2016
Disclaimer and cautionary statement
Certain statements in this document are forward-looking statements, including, but not limited to, statements that are predictions of or indicate future events, trends, plans or objectives of Zurich Insurance Company Ltd or the Zurich Insurance Company Group (ZIC Group). Forward-looking statements include statements regarding ZIC Group’s targeted profit, return on equity targets, expenses, pricing conditions, dividend policy and underwriting and claims results, as well as statements regarding ZIC Group’s understanding of general economic, financial and insurance market conditions and expected developments. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results and plans and objectives of Zurich Insurance Company Ltd or ZIC Group to differ materially from those expressed or implied in the forward-looking statements (or from past results). Factors such as (i) general economic conditions and competitive factors, particularly in key markets;
(ii) the risk of a global economic downturn; (iii) performance of financial markets; (iv) levels of interest rates and currency exchange rates; (v) frequency, severity and development of insured claims events;
(vi) mortality and morbidity experience; (vii) policy renewal and lapse rates; and (viii) changes in laws and regulations and in the policies of regulators may have a direct bearing on the results of operations of Zurich Insurance Company Ltd and ZIC Group and on whether the targets will be achieved. Zurich Insurance Company Ltd undertakes no obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information, future events or circumstances or otherwise.
All references to “Farmers Exchanges” mean Farmers Insurance Exchange, Fire Insurance Exchange, Truck Insurance Exchange and their subsidiaries and affiliates. The three Exchanges are California domiciled interinsurance exchanges owned by their policyholders with governance oversight by their Boards of Governors. Farmers Group, Inc. and its subsidiaries are appointed as the attorneys-in-fact for the Farmers Exchanges and in that capacity provide certain non-claims administrative and management services to the Farmers Exchanges. Neither Farmers Group, Inc., nor its parent companies, Zurich Insurance Company Ltd and Zurich Insurance Group Ltd, have any ownership interest in the Farmers Exchanges. Financial information about the Farmers Exchanges is proprietary to the Farmers Exchanges, but is provided to support an understanding of the performance of Farmers Group, Inc.
and Farmers Reinsurance Company.
It should be noted that past performance is not a guide to future performance. Persons requiring advice should consult an independent advisor.
This communication does not constitute an offer or an invitation for the sale or purchase of securities in any jurisdiction.
THIS COMMUNICATION DOES NOT CONTAIN AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES; SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR EXEMPTION FROM REGISTRATION, AND ANY PUBLIC OFFERING OF SECURITIES TO BE MADE IN THE UNITED STATES WILL BE MADE BY MEANS OF A PROSPECTUS THAT MAY BE OBTAINED FROM THE ISSUER AND THAT WILL CONTAIN DETAILED INFORMATION ABOUT THE COMPANY AND MANAGEMENT, AS WELL AS FINANCIAL STATEMENTS.