Q2 2025 Allianz SE Earnings Call

I would like to turn the call over to your host today. Oliver beta, Chief Executive Officer of Aliant. SE please go ahead Oliver.

Thank you, Andrew. I'm not sure. What host means probably. I pay the bill, but I don't know why, but I'm very happy to talk to you today. Thanks for your interest. Um,

On this beautiful afternoon in Munich, I would like to do an introduction into the discussion and then Clary will uh go with you through all of your questions. And a lot of the details that um, you may be interested in. Let me just start. Um, initially even though this is the analysts call about what we are going to talk about. That is the delivery of the strategy that we have discussed at the capital markets day in December. And that's exactly what is happening now.

As a reminder, while we report in 3, segments PNC life Asset Management reality. We run from a customer perspective, 2 businesses, we run a protection and a retirement business and those are, we are trying to drive further at this point in time in terms of value creation, through 3, most important levers and many others behind. But the most important, 1 are 3, driving smart growth going forward. As you know, historically, aliens has worked very hard on bringing the brand forward customer satisfaction forward productivity app but it's now time to translate uh the strength of the foundations into growing market. Share the second 1 is further reinforcing productivity.

You can probably spend hours on the impact of AI on that. The 1 thing, we know for sure on our industry, we now have the opportunity to really uh process unstructured data in a much more productive way than any time before. And we're going to leverage that not just in administration or call centers. Everything is going, everyone talks about but also how do we serve customers better? And you can measure that in terms of, um, expense ratio for sure, which we've been improving for a long time again, in the first 6 months, but also other items as you going to see and the further 1 in given this. How do I say this properly? Interesting political and economic environment, we need to further strengthen resilience because that's what customers want. And that's many of our shareholders want that too, what is the the core message is aliance has been for a long time. A world-class product organization, we are exceptional at the products we design and sell and service. What we can do better is to help serve customers.

Uh, across products, you will see that in the form of lower lapses over time and in the form of higher cross-selling.

Some of that to come now on page A5. Let's please move. There, just 2 examples, uh, from the first 6 months. 1 focus is on uh, internal uh, or growth in the PNC segment. The other 1 is on productivity again. Highlighting it through the expense ratio. We can take other items.

On the first 1, it's very important. We've shown

Uh, 8% growth and that's really important.

Of which 5% is pricing in 3% is volume and the biggest contributors. The volume have been during the first 6 months. And by the way, they often change over a quarters, they may change year by year, but this time, it has been aliens Partners. So our platform business is keeping on growing very strongly. It needs very important demands in our economy agency and as it's Brazil is growing Leaps and Bounds. After we have completely reformed the platform and certainly last, but not least Germany, which where, all our investments in improving performance are really paying off.

Now you can take subcategories and say. Yeah. Yeah. Yeah, that sounds great. But what happens in retail, what happens at partner, specifically what's happening in commercial lines? And you see that, uh, the commercial lines number? Let me just explain, we had very significant growth in the health side of aliens partners that we we account in the commercial line, segments. So the 6% growth number that you see, there is Without Partners, and that's a at a very solid 6% Partners. I mentioned it's 9% and Retail lines is 8%. So across the segments, we see very, very, very good results on the productivity side, the same picture as we've had the last

7 years and you see from 22, what we can go back to uh, 2019 where we started with the journey in terms of seeing it. Remember, we are coming from 28.6 expense ratio in 2018.

now, this year, you are seeing, uh, for the first 6 months 24%, that's

Uh, 30 to 40, sorry basis, points Improvement and we do not intend to let go sometimes per OE or per region, the sum of these numbers may change because of a change in the product mix with the change in the distribution. Mix in an aggregate level. We do not expect this number to change over the coming years and certainly not for the Strategic cycle that we've talked about.

Now, now let me take your attention to page A6, just an update on what we're doing on the portfolio for the last 10 years. We've systematically said, we refrain from Big acquisition, we focus on bolt on and things that bring us new capabilities. Maybe new distribution access or new business model, um, uh, uh, invention. So, let me actually guide you through them. And I start on the right hand side with Sanlam. As announced before, we have stepped up our participation in the joint venture, with samlamb to 49%. We always said, we want to do that. We want to be present, but we want to be present in Africa with the partner, whose Destiny and origination is Africa. So we are much better placed than where we before. I think we're now 3 at least 3 times, uh, the size of our next competitor. In order to be able to exploit the opportunity. And remember the JV covers all countries outside of South Africa, the whole Market of

So, uh, that is important to say, I'll talk about India in a second. Let me turn to, uh, other Investments that you could consider to be more traditional in Australia. We went into a strategic partnership with the Royal automobile, uh, Association of South Australia. It is very good for us because it helps us to diversify also from a netcat perspective. So, in terms of net capital consumption, it's also pretty good. And then in aliance direct, we've done a number of very targeted, small Acquisitions in order to build on the scale of the platform. Remember aliance direct is 1 of the very few uh businesses that exist in our industry that operates across countries with exactly the same operating and it platform. It's not like they look similar. They are identical and now we need to integrate these portfolios to build the scale on the platform. You see that some of these uh acquisition will only come into the numbers later this year.

Or early next year.

Now more unconventional, you may say are what we've done on sconet 3. This is a continuation of the work we've done in 21 where we uh, hyped up 36 billion in reserves. Now we have created an open or so-called open book or flow, reinsurance, uh, structure in the United States, in order to be able, um, to not just address enforce books. But also new business that makes us competitive.

In products and segments, that we were not competitive in before because of solvency 2, on our Capital model, having different cost of capital, and we continue to work on similar solution. Uh, likes consider in order to uh, optimize the usage of capital in the United States. Remember because of the RBC model, actually compared to Soy 2. The US is not very Capital efficient because we cannot use the value of the new business as an offset to Capital requirements. So we need to continue to work on Capital efficiency while growing the franchise.

The other 1 is vidiem. We have led the Consortium

That has, uh, taken over the company. We're very happy to have him. Just close this 1 having received regulatory approval a while ago, and we want to combine, um, our expertise, in terms of running life, insurance books with the expertise, on the investment side. We also deleted Asset Management service provider to the radio. So we expect a significant boost on our ability to grow both pinco and ngi out of this partnership. And by the way, Alan's investment management is the partner for readium in terms of asset allocation,

So, that's just a little bit of a view. Let me then hit to, uh, the most important strategic development of the quarter. We've just announced our partnership in India with Reliance group. Um, many of you may know Reliance group really. Well, is not just the biggest, uh, petrochemical and chemical company. In India, is also the biggest retailer in India.

Um and it's also the biggest mobile phone company just to give you some numbers that uh are quite staggering. If you think about geophone they have 494 million so I'm was 500 million subscribers.

In the retail side, 36 million regular customers in Reliance retail.

And uh just a jio Mart which is sort of the Amazon equivalent of 600,000 deliveries a day by the way. Last year Reliance retail recorded 1.26 billion sales transactions in their retail Network. So it's a giant partner that we're starting our journey with. Now a couple of you will say so why are you starting with reinsurance given the numbers? You just mentioned is is very simple answer.

Um, we do not have any competition issues with our current partner but judge. Therefore, there is a no issue with non-compete. That's why we're starting now and we're launching with

the renewal season that is in April of 2026.

But as soon as we have, um, fully exited our partnership with Bajaj, which is happening in a very Amico way. We are going to launch in commercial lines in PNC, retail in health and subsequently in all lines of insurance. And by the way also Insurance Services as a partnership

I'm also proud to say that, indifference to what we had, uh, before we have a 50/50 relationship, but we are going to have management control and that is a first, apparently, in, uh, the universe of Reliance. So we are very proud about that. Now, you were some of you will ask. So why did you then change this again, a very simple explanation. While we founded the insurance company in 2001 with Bajaj. We contributed 100% of the capital that ever went into allion Bajaj. We brought the people, we brought the it systems at the time. We grew it together, but we could only own and control 26% of the capital. And we could not agree, uh, with our long-term partner. But judge to a very simple fact. Uh, that aliens would want to run the insurance business. We are not in the investment business for insurance. We are in the operating business and as Bajaj the, Bajaj family, eventually decided that they would not ever relinquish management control to us. Uh, we have, um,

Had to decide to find a new partner and we are extremely proud to have partnered with the best partner that we can.

Ever. Imagine India. That's the Reliance group in the Ambani family. We are very, very proud and dignified by them partnering with us and I gave you some numbers. The potential is gigantic. So that's what we have done. Uh, in the first 6 months of this year, in terms of working on the portfolio strengthening, uh, growth. And there is more to come uh, the investors over the next couple.

couple of months following uh the same strategy that we've had for a decade now,

Now, let me turn your attention to page A7.

Just to give you an overview.

um,

for us, it's very important to continuously deliver.

And there may be a quarter where some of you feel. Well, this is a little bit light there. And why is this part of the portfolio? Not, uh, perfect. Just look at the growth profile. The financials delivered and the balance sheet strength.

Property casually, internal growth that is always remember without m&a and FX, uh, 8% up over the first 6 months, new business, value growth, and life is 9% Asset Management. AUM growth is uh, a little lower given. What we have discussed annualized at a 4%, but already in July already July, I already in the first month of the third quarter, we had 21 billion dollars of net flows into Pimco. So the growth continues, extremely strongly a lot of the FX translation effects are really noise glamory. We'll talk about it because the, the really relevant numbers that's dividends coming out of the US are hedged forward. And therefore, that is something that we need to discuss in terms of financials operating. Uh, profit is at 54% of full year midpoint.

The core EPS is 8%, and that we have been taking out both the texts we had to pay, but also the gains on, uh, unique credit and the core return on Equity is at an annualized 18%, which is an outstanding number particularly relative to what our long-term average used to be.

Every now and then something may move in a crazy world. I'd like to also mention 1 thing, um, that that I find very important, I've seen some comments around sort of uh, we had lower netcat. Yeah. But we also had prior year development, you know? I've been here 18 years, I never understand these questions. Um, we do not need High runoff and we certainly use every opportunity to be extremely prudent in setting our reserves. If I may say that,

Now with that I hand over to Clare Marie to give you some more color on the details in all the segments uh around growth profitability and whatever you want to know. Thank you.

Thank you very much, Oliver and good afternoon, uh, to everyone. So, looking at page B3, uh, here you can see as mentioned by Oliver already that the group has delivered excellent results. Uh, in the first half of the year and, uh, in the second quarter as well on the Standalone basis. Uh, this is clearly positioning us very well for the full year of targets. Uh, but as well towards our Capital Market Day Ambitions. Also, as mentioned by by Oliver first. What you see on this page, uh, is that we have a strong level of growth. Uh, that is coming across our 3 segments and, um, we continue to see that grow steaming from the 3 segments as we have seen previously. So we have a strong consistency here, uh, despite, uh, some ethics in sex that we have also seen, uh, in the quarter. So we grew at a total business volume, uh,

Uh, 8% at constant ethics. As you can see on the page as well. It would have been double digit growth at 10%.

Our operating profit in the second quarter is even higher, uh, than the record level of operating profit. We have achieved in the first quarter. So, overall, our first half operating profit is at 8.6 billion, which is up, 9% clearly, an excellent level which is fully on track against our guidance of 16 billion. Plus minus 1 billion Euro for the full, uh, full year 2025 here, as well as I have been mentioning for the growth. Our 3 businesses are contributing to the positive development of our operating profit um, uh, with the stronger support from PNC, as you can see, on the page as well.

We see as well, an excellent development of our cornet income, which, uh, did benefit from the sale of uni credit Vita. Uh, GV in the second quarter. But if I had just for this, gain on sale, and for the famous, uh, Bad Judge related tax, Provisions that we have booked in the first quarter, our current net income is up 6% and our core EPS is approximately eighty 8% growth, which is the midpoint of our 729% EPS growth rate that we have been mentioning during the Capital Market Day.

As mentioned by Oliver as well. Uh, we continue to deliver an excellent level of IFRS. Are we reach for the second quarter on a standalone? Basis is uh, above 19% on a core basis.

And I think even more fundamentally, I would say, beyond the pnl item, our resilience remains strong in the environment today, that is uh, uh, quite uh, quite challenged overall, our solvency to ratio image, uh, up at 205, 209? Sorry, with an excellent Capital generation of around 13, percentage points in the first half of the year. So overall, an excellent set of numbers from growth to profitability and financial tra strength. Clearly, uh, this is making us very happy as you have as you have heard as well from Oliver clearly in his introduction. So, moving to next page, uh I'm leaving a look at the PNC business uh before

Here here we see a strong level of growth and the next level of profitability in both retail and commercial in the second quarter, we achieved an even better level of combined ratio, uh, compared to the first quarter. And we have delivered an even higher level of operating profit, which was at a record level already in the first quarter. This is bringing our first out for operating profit to 4.5 billion euros, which is up 12% versus last year. This is the outcome of first higher higher volume level, which uh, which we are earning

Who at an increased level of margin, with some offsets uh from FX FX in the investment results.

First, we see a good Topline momentum that is continuing in the second quarter.

This results in an internal growth rate of 8% for the Alfia. The growth was driven by both price 4% and volume 5% in the second quarter and the Standalone basis.

Them. We see plenty of good example, in the quarter of our platform play. In addition to Partners, we have direct, which has been growing by more than 20% on an internal growth basis. In the first half with more to come. I would say in the second half of the year as we are integrating Friday and apq, which are 2 acquisition. Uh, you may remember, we did, um, previously

Our pricing Trends, uh, continue to be robust in general with clearly quite some differences and nuances between geographies and line of business. Uh, but the average renewal rate at 6, uh, at 6 a.m. is eighteen plus 5%. The pricing continues to be strongest in real in retail lines. Uh, where we are at plus 8%. We are close to, uh, 10% in motor retail and mid to high single digits in all other retail lines in commercial, uh, the rate momentum continues to Trend downwards, uh, and now stands at plus 1% across our portfolio. Uh, where mid-court remains resilient, and we see some soft turning, uh, continuing in the large corporate space at agcs and Islands, trade, uh, as an example.

Our underwriting profitability is excellent uh with our combined ratio at 91.5. This is fueled by 3 main Dimensions. The first 1 is that we have an excellent attritional performance as we are running through our pricing and our underwriting actions.

We have had a relatively benign, netcat experience, uh, but this has been counterbalanced by a conservative level of Reserve setting, as already mentioned by Oliver as well. And we continue to focus on our productivity with our expense ratio, 40 beeps lower than last year at 24%.

by segments, you can see as well on this page that we have strong Improvement on our retail business while the commercial profitability remains very good, uh, at 91%

Overall, it was an excellent file for the PNC business. Our operating profit is 12% ahead of the, midpoint of our guidance run rate, we have good underlying volume growth. We have an excellent under writing profitability and the positive developments are very broad base, both from a line of business perspective, but as well from a geographical angle,

Let's now move, uh, to life. Uh, and let's have a look on page B5 where here, uh, we continue to see a double digit new business growth, uh, at an attractive. Uh, new business margin, um, of 9.6, uh, percent in our preferred line of business, which is very important from also, from a resilience perspective, our

Operating profit is up 5% versus last year, which is exactly in line with our Outlook. And also with our Capital Market, the expectations,

What I find very interesting when you look uh a bit further into the details of our portfolio is that our um life businesses outside of our 2, largest entities, uh Germany and basically aliens lean and easy life contributes to just over 60% of the operating profit.

And increases, uh, their contribution 11% year on year. So we have a high quality and we have a very well Diversified portfolio on the life and health side. This is as well. What we see, uh, in terms of a new business growth for the, for the healthier, which is really broadly spread with double digit growth in Germany in Italy, in Asia or sea as an example.

As always uh we do have the the second quarter on the Standalone basis which is a bit lower than the first quarter. Uh in terms of growth we always have some seasonality uh in um in our goals development in life. We should also expect to have a bit of a lower growth in the third quarter as well. Uh and on the operating profit uh, side the second quarter was a bit impacted by ethics and as well, uh, some weaker investment results, which are partly reflecting the market volatility, uh, we have experienced during these, uh, this period

We are a particularly pleased with the underlying CSM development in the first half of the year year 2 points to mention first. Our CSM growth adjusted for a fixed. Effect is almost 4% which clearly demonstrate our low level of non-economic variances in the current environment.

And secondly, our normalized CSM growth is around 3%, which is clearly a strong level of growth relative to the 5% annual expectations, we do have for normalized CSM growth.

so in life and health, uh, we see

Guys, the secular trends we have discussed in the Capital Market Day, the quality of the Allianz brand, and the trust in our resilience.

clearly allows us to build sustainable value, that we are going to earn in the future as we are going to earn the CSM going forward.

Let's move to B6 and let's look at our asset management segment, where here, as well? We are delivering very good results in a very volatile quarter.

First, when we look at our results you need to keep in mind that more than 70% of our third party asset, and our management are US dollar denominated, meaning that it's very important to look at the underlying to judge the performance. And from all 3 segments, uh, you need to note as well. That asset management is the most impacted by the US dollar volatility.

Corrected for S6 affect our asset under management growth is around 4%. Uh, with net inflows at 42 billion.

With an organic growth rate of around 4% annualized. This is clearly very strong. Uh, for a pure active manager, in particular, in the volatile Market, we have experienced in the first half of the year.

The inflows. Uh, we have, uh, we have experienced mainly emerge from Pimco and here some colors. I like to give. Uh, first of all Pimco continues to see an excellent traction, uh, in its active ETF proposition, which is now sitting at 40 billion, euros of asset under management. And we have seen 10 billion a year to date of net flows into that proposition.

Uh, we have seen as well, the credit and the private alternative strategies are being as being the ones which have attracted attracted most inflows this year.

And into July as mentioned by Oliver. We continue to see more than 20 billion of inflows. Where clearly I think the offering from Pimco continues to be supported by a strong out performance in terms of alpha for our customers of our strategies which is daily being delivered. Um, over time. So really structurally in the 5 years, 3 year, 1 year approach, you consistently see that I would performance and this in the challenge environment we are we are experiencing currently. This is also a huge opportunity uh for Pimco to create more values for customer.

Segment is very resilient with an operating profit which is up 5% in the context of negative ethics effect and lower performance fees.

Excluding performances and ethics adjusted. Our operating profit is up 7%, which demonstrates the strength of the underlying in the volatile environment.

At both our asset managers, our third party asset and management margin remains very stable. As you can see as well on this page in a competitive environment and our focus on productivity is unchanged as the development of our cost income ratio. Clearly highlights as well on the page as we are emerging at 61.3%.

While we may continue to see the translation effects from the US dollar into our numbers in the in future quarters, our strong track record on managing productivity efficiency and profitability provides resilience into our numbers. We are confident on continued, net inflows and our ability to create value for our customers and shareholders as well on the asset management side.

Let's move to page B7 and take a look at the development of our solvency ratio. We remain strongly capitalized, with our sensitivities broadly unchanged. As you can see, also on this page.

Some elements may be too highlighted when it comes to the development of our solvency ratio. Since the beginning of the year, we have seen excellent organic capital development at 13 percentage points here to date. As a reminder, for the full year 2024, we were at around 20 percentage points, and we expect to achieve more than 20 percentage points for 2025, with our medium-term objective to improve the run rate of our operating capital generation to 24 to 25 percentage points in 2027.

As an organization, we have been uh, very, uh, very focused on these metric. And we see some of the early benefits of these in the improved generation year to date. We as well, add in the first quarter, some positive Sciences in particular from Life, which I don't think are to be fully extrapolated into the second half of the year.

Point. Then we have a small, uh, negative Market impact and we have a positive contribution from the management actions. We have taken mainly from the reinsurance transaction at easy life and the disposal of the unique credit Vita, GV.

Those results reiterate our confidence on the strengths and resilience of our Capital position at this stage. In the year, we feel even even more confident in our ability to improve our Capital generation as we advance the initiatives outlined at the Capital Market District.

Let me conclude on page B8.

Clearly our results are excellent. We see continued business growth stemming from all 3 segments and a record level of profitability. This positions us very well for the second half of the of the year and allows us to reiterate our Outlook of 16 billion. Plus minus 1 billion operating profit for 2025 more fundamentally. These as well positioned as very well for the delivery of our Capital Market. The ambitions

as mentioned by Oliver as an organization, we are focused on working on the initiatives, along the 3, levers, driving smart growth, reinforcing productivity, and strengthening resilience

And I will say the energy and the creativity. Also in Cross sharing the initiatives we have experienced, during the meetings, we had with the board of management of each and every operating entities together with Oliver in May is very much comforting uh in our ability to deliver against our ambitions.

With that, I thank you all very much for your attention, and I hand it back to you for questions.

Great thanks. Um Clare Marie. Um okay so we're um ready to take your questions just um to remind you

How to do that: if you're joining us on the web, you would press the "request to talk" button, which I think is in the top right-hand corner. If you're joining us by phone, it would be star 5.

And by way of usual housekeeping, if you could restrict yourself to questions, and then if we have time, we'll come back for follow-ups after that.

Great. So with that um uh it looks like the first question is from Andrew Sinclair from Bank of America. Go ahead Andrew.

Thanks, thanks Andrew. Um, thanks everyone. Um, first for me was just, uh, looking at the, the undiscounted nutritional, uh, which is was, was a really good figure, just what scope do you see for further improvement from here? I think it's 70.9% for the half year. I think Q2 Standalone was about 70.3. You mentioned, uh, there's been some conservative booking that does that include conservative booking of of the attritional, uh, or should we think about this as a, as a break, uh, level for where can we go? Uh, and then second was just on agcs, um,

Uh, rate changes minus 0.9% for q1 minus 2.6 for H1, uh, by my math. I think that means Q2 is down about -4.5. Um, but you have still got internal growth in in acns, just, just really wondering if you can give us a little bit of color in terms of where you feel on on rate adequacy for different lines. Um, are there any, uh, new areas for your your concerns and, and where are you happiest to to push more for? Um, for volume thanks.

Uh, so thanks a lot. Um, Andrew. So let me start maybe with the uh, with the uh, attritional uh, lost ratio so indeed, I think uh the undiscounted additional loss ratio in the second quarter. Uh was very good uh at 70.3. Um, the main driver for the Improvement, was a retail business. Um, how, however, I think the commercial business contributed as well. What we see clearly in the 70.3 is the earnings of the pricing and the underwriting actions that is structurally. Coming through what we see as well is that indeed, the at, on this country that traditional loss ratio, first quarter Peak was a bit higher because indeed, as I mentioned to you at that point in time is that you are always a bit more conservative at the beginning of the year and then you recognize more of the benefits at the year is coming through. But also in balance of the of the overall performance. At this point in time, I would still consider that you should look at the Alfia, right?

So, I've seen as things stand for and as we are earning the benefit of our actions. I'm confident we will we, we may emerge. Um, we may emerge a bit, a bit better on on that Dimension or to put it differently, we may emerge also a bit better on our overall combined ratio, um, that I had guided towards 93, maybe a little better than that overall. So I think that's what, what? You can anticipate a bit given the strength of the underlying actions. We see ya.

And remember and who there is always a bit of uh uh possible noise in the atmosphere because that's coming from uh, from retail plus commercial plus, many different line of business and so on and so forth. So that's why I think looking at it overall is also uh giving you a good indication I believe. Yeah.

I think, then you were asking the, what are the development on the, the, what are the, uh, the price development. We are seeing, uh, in the, in the context of the commercial business, right? Um, so I think, first of all, and you know that very well and who, but I think it's important to have in mind that for us. The commercial business is made of really different buckets, right? Uh, we have, uh, we have the partners, Benes. We have the trade business. We have the mid-core business, uh, we have the insurance business from 93 and we have agcs. That is focusing on uh the large corporate uh large corporate only. Uh and we are focused uh at the level of uh I mean across the book to grow in a in a very professional.

Vegetable manner. So we are focusing. Extremely tightly on technical Excellence of our underwriting. This is also the case for agcs. So even if we see, uh, some uh, year on year rate reduction, because clearly the market is softening. I would say across geographies and across line of business to be a bit nuanced, as, as I always mentioned, right. I think the areas where we see, uh, that, uh, we we are mostly impacted by rate. Decrease will be, will be, cyber will be property, uh, will be Aviation still? Uh, uh, will be. Uh, so I think it's quite, uh, it's, it's it's quite broad base, but it does not mean, uh, that the actual price against the technical price is not above 100%, which is very important to have in mind because you can be fairly priced even if the price is going down. So in many of the line of business and geographies, we are still in a status where we are fairly

Priced, but the price is going down. So we are grabbing some uh some good, good businesses, uh, in the in the case of egcs where where we, where we are strong.

Uh like uh like in the in the construction or in the still in property, and so on and so forth. So they are really a lot of pockets, where we can, uh, tap and grow nicely as you may remember, as well. Also, because our market share, uh, offers opportunities for for growth uh in the case of edcs.

Uh, and also, clearly, we have a good new, uh, commercial Dynamic, uh, in the, in the, in the, the environment of EDS. Also, with the, uh, arrival of of the new CFO CEO who is activating, uh, some, some part of the organization as well.

Okay. Um, thanks Andrew.

And obviously we've got a lot of Andrews around today. Um, it's a very unfashionable name but here we have another Andrew. So uh, Andrew Andrew Baker from Golden Sachs, um, Andrew. Uh, go ahead.

Thanks Andrew. Um so I guess the first 1 obviously PNC. The internal growth still looks really strong if you look at the insurance Revenue,

Grow 3.8% in Q2 alone. I appreciate some of this was FX. So are you able to give us what the FX impact was there? And I guess, any view on, if we assume constant FX from here, how you would expect the insurance Revenue line to develop would be really helpful, maybe in 25 and 26.

And then, similarly, unfortunately on the FX volatility, just on the PNC, operating investment result. So, again FX, impacts Argentina had some impact. I think, previously, you guided to 2.8 billion or so, for the year, is that still a good number or should we re look at that just given some of these volatile items. Thank you.

and I need to push the button, so,

The second quarter uh, with uh, some elements actually related to ethics in the broad sense, right? Many related to some hyperinflation countries, an example of that would be the fact that we had less return from the inflation Ling bonds as an example coming from Argentina and so on and so forth. But I would say at this point in time and who the way I continue? I mean we I think we you,

Is that our Outlook, was that, um, uh, 2.8 billion Euro for the, uh, for the overall investment results for, for the, for the year, which basically, was implying 200 million less compared, to compared to last year, um, in the, in the PNC segment overall. So, if you look at the healthier, we are exactly 100 million below. Uh, what we were in the at 6 a.m. last year 2024, which is absolutely consistent with the Assumption we have taken. So I would really keep our guidance uh, as as we have provided it uh, in the uh, in the

When when we have set the, the Outlook, yeah.

uh, then you were asking, um,

Revenue. Yeah. Okay.

Yeah.

so on the, uh, so basically on the fact, uh, that, um, we yeah,

I think you're sorry. Andrew your question was, um, how do we think about the revenue growth? The volume growth was was high but the revenue growth. You noted was was lower.

In precisely. Yeah, just how do you think about that with the FX impacts as well? Thank you. Yeah.

So I think indeed, we are a bit, we are a bit lower, we are at 5.4 in the, in the first half uh versus what I mean versus our Capital Market, the commitment which is like 6 to 7% that. I think that's a fair point. You have 2 elements, you need to have in mind. And who the first 1 is that, indeed, we have the FX effect and secondly, we have these transfer of some health business. Uh, I mean, the German has business and the, uh, um, so the ubr business, right? And the, uh, and the health health related business or, um, life health related business in Austria, that was also transferred to the live segment. So, if you correct for these, uh, for this later affect then our our growth is at 5.9% which is towards the low end of these 627% commitment. Uh, and I think that the way you need to think about it basically because these year-on-year effect related to that transfer will neutralize itself over time 2026.

March 27. So, uh, with the

Next question is uh from Michael Michael hardtner of Baron Berg. Please go ahead.

Um, 2 questions 1 is is hopefully for all of it. Well,

Um, if your competitors or has gone to sleep, not assume but you know, we're seeing amazing.

combined ratios and very strong outlooks on pricing about loss cost in in retail, uh, pretty much across the board and

Is this a what's happening? Has a consumer's kind of said, no. We'll pay more. I I I I don't quite get it. And then the other 1 is on the, um, just just a really silly question. Maybe I put 2 together, um, the cost of the um, as uh, life hacking and the cost of French fires, the more recent ones, that's it.

Yeah, thank you. Um, as usual, very, um, nicely phrased, smart questions. I'll deal with the US is an unfortunate event and the key thing is really to protect our customers and to protect the business. That's the most important thing at this point in time, from what we understand, it will not have a material impact at the group level. This is really important to understand.

Um, the key thing is to actually thank our people because at a life, our employees are working 24/7. Now, to call our clients, our Distributors and reassure them, that aliens are safe, also, just to put it into perspective. Uh, the key thing is uh, while there was a data leak and of large numbers, there was no financial data released, so no policy content. No credit card numbers and things like that. So it's mostly contact numbers.

Material impact at group level, out of this event.

So that's uh for the first 1 and the other 1 is in terms of uh pricing versus volume. Um it's a very fair, what you're saying and I'm very concerned personally in many of us are about the issue of affordability of insurance. For consumers, is not just an auto but it's also in home insurance. It's in health insurance, so it is not something to laugh about. Um, the only way to really address this is twofold. The first 1 is to strengthen the the quality of products and services to a point that customers feel that they are getting True Value from us for what they pay. That's been a journey that, you know, we have been on for a long, long time, we will in the fall show you our updated net promoter score numbers and there again improving massively in terms of loyalty leadership. So that's important. And you see that also what happens on the claim side. The other 1 is to try to pull every lever for our clients to make our products more affordable. Uh so yes, shareholder should be happy about the

Productivity gains but also customers because part of that we are reinvesting into the business. And the third 1 is often goes unnoticed the businesses that we are building a service offering, uh, that complement our insurance offering particularly offered by aliens partners and solved have 2 components. The first 1 is to improve service quality and therefore value for products, but the second 1 is also to help the reduced of cost of risk.

To give you a practical example. And we don't have the time uh for details today is when we route a uh claim a Costco claim in Germany through solved. And by the way, also in other countries, but for Germany, I have the number on the top of my head, the Costco claims

Outside of deductibles about 6 6 and a half thousand Euros. We save about a thousand Euros out of that and that allows us to significantly reduce the price paid for the consumer. We're offering a significant discount and that role, whether that's a car, by the way today, or a home tomorrow, or even Healthcare will have over the next 10 years. A much larger share of our thinking and our value proposition for consumers. So, it's a very good question. But so far, we are able to send our pricing, but we need to keep on adding value, uh, to Consumers, otherwise, it will become very tough.

Okay.

Uh, thanks Michael. Um, next question is uh from uh far far, far far of uh Kepler Shu. Um go ahead for

uh hi there. Thank you very much for taking my question. Um just on the PNC discounts um to receive regarded to 2%. I mean, where are we seeing this end up?

For the year. Uh, and what I suppose, what our USD mean, for Turkish uh interest rates, which might impact it. Um, second thing on the expense ratio, um, running better than the 30 bits Capital markets guidance. Um, should we still be sticking with 30 bits? Um, is there something with business mix? Uh, for example, writing more reinsurance and medium-term. So, 30 bits Improvement is the right number to look at. Thank you.

Yeah, maybe starting with your second question. Yes, indeed. I mean we you always have a bit of a mix effect. Uh, so, so that's why our fundamental uh, use is that you should be like taking into account more, these 30 beeps, uh, structurally year on year as being, uh, what we are aiming aiming for. So that's really what, what you should be using. Um,

And then when it comes to the, to the discounting, uh, in the, in the first quarter, uh, the discounting impact you, you remember right was relatively High, we were at 3.4% because we had some, uh, some uh, usual seasonality that we also always see, but we also had some impacts from iteration in Argentina. In the second quarter, the discounting benefit uh, is at 2.5%, which is very much in line with uh, with our expectations. So, all in all, um, given what we know, uh, already uh, today about interest rate, uh, I I will see it very lightly that we will end up.

A bit higher than the 2% which basically we were guiding 4 to 1 as part of our Outlook and we will raise a land at 2.3 to 2.5%. Uh, but of course, you will always depends on what are the interest rate? We are going to experience, but slightly higher, compared to what we were considering at the beginning of the year.

Okay, great. Thank you.

Uh, thanks so hard. Um next question is from uh James shook of uh City Group. Um go ahead James.

Alexandre. Um, so part of my question has been answered. I was interested in that difference between the internal growth and PNC, um, versus the, uh, the headline on the and the like, the like, um, because India what you mentioned at the bottom end with your range. Um, if you normalize for FX and, um, and and other things, but there's only 1 of the missing pieces. There's also the Arts transaction. So I'm just thinking if I correct for that as well. I presume you the top end but um, gives you just clarify that on the same topic. Um, I I just look at Germany TNC in particular because the the headline increased by 9 points, uh, 9.6, but the like the light was 4.4, I'm not aware of any disposals, so it actually can just help me understand why, uh, those 2 weren't aligned. Um, that's my first question. Um, secondly, um, on alien's Partners. Um, obviously you've got a plan towards 600 billion profit, uh, by the end of the plan, you've got the 95% combination of your target. 96.7 up at 1, H it, it's now your big.

PNC segment, really behind Germany. Particularly if I look through the front thing that happens in in a in ADC are so

Oliver I'm just Keen to see how how you think about you know this business as it continues to grow. Um and scale you know what do you think about in terms of the capital stack um are you going to open up to the third party Capital? At some point? Does it make sense for any chance to be 100% owner? Um, and how do you think about mgas within any as partner as well? Thank you.

Sorry, James, it was quite hard to that. Your Line's not great. The, the first question I think was was, was, was focusing back on Revenue growth in PNC.

Did did you ask specifically about Arc business as well or something?

Yeah, shall I? Repeat it is that is the line better now?

I think that's the transfer between to the health segment. Yeah, to the correctly. Maybe we can explain that. And I think the particularly Germany is most impacted by the transfer of the business is, is Germany and Austria from memory that are the most impacted. Um, segments. Yeah, it's a um, James is Oliver here. Thank you for your question. So we have in Germany, a, um, an accident business called Uber that comes always in, with the 100 combined and has also always distorted our combined ratio numbers for Germany and it is as part of the protection business as we sort of cleanly, formulated the strategy, we we have transferred that so that explains all the difference that you are looking at. It's a super attractive business that not under PNC kpis, um, because you don't see, the the value creation more properly. That is maybe the first 1. The second 1 was more around capital structure. Um, it is a very good question. We continuously. Look at how do we access, uh, more?

Efficient capital structure. So again, as I mentioned earlier on the life side, we need to continue with the likes of concept we using vidiem and we want to again build it not just in Germany but across Europe that will offer the opportunity for partners but also for us and other markets.

Uh, to find more Capital, efficient sources, and then transform so-called spread business into fee income. That comes with a lot less, uh, Capital consumption. And by the way, higher valuations and the same thing we will do and have been doing in PNC. Now, there's a couple of things happening. The first 1, is whatever people say, and it's a bit differentiated when you, if you have had, uh, La, uh, netcat exposure or not, reinsurance prices in, uh, are coming down for those that have been not attached and, uh, more importantly, uh, capacity is growing significantly in conditions are happening, so there is now Capital available where there was no Capital available. I think we're 1 of the only ones in the world that actually had an aggregate cover. So that's the first thing to bear in mind and we're working on that. The second 1 is indeed. We're not just looking at it for netcat, but also for other businesses for partners that is not needed because they run an extremely Capital efficient set of, uh,

Products.

In history, the issue was a different one. It was, uh, by and large, a services business that is fairly low margin with a lot of operating leverage, and that is something that we are working on. If we, in partners, find a way to make it more capital efficient—because there are a few businesses that are capital consumptive—we will certainly.

Use them because we really like the 18% that are that we have.

Yeah, that's it. And and again Clarity and Tim are working very hard on improving um Capital generation for solvency 2. This is already working in the first 6 months. You clearly see it in the numbers. So it's happening as we speak.

I hope that's very helpful. Thank you. Okay. Yeah, thanks for that. Thanks James. Um, next question is from uh, Venit, Venit MRA,

Uh, go ahead Venice.

Thank you. Good afternoon to all of you. I'll just ask 1 question. Now, you know the, we heard this news about the early approval for restarting, the

The AGI book in the US, and I'm just curious that, uh, you haven't really mentioned it to the Oliver. Maybe you did, and I missed it. So apologies. But if you could just share some thoughts on that, it would be very kind and and much appreciated. Thank you.

And it doesn't mean much short term, it's a big relief to me, personally, Andrea Zimmer, we don't have to sign all these papers anymore. Second thing we had some limit limitations in the in the sense of having to report on certain items from our us entities, that also has fallen away. So that's also a big relief to the colleagues as Alan's life and at Pimco and other than that, it doesn't mean anything, right? It gives us more, um, optionality as investment, bankers would call it but there's nothing in the cards or nothing changing as we speak. We're focusing really on further improving investment performance and productivity at AGI and growing as strong as we can. That's it. Nothing else in the cards at this point in time.

Sure, thank you.

Uh thanks Venit. Um, next question is from uh William William, Hawkins of kvew. Uh go ahead. William

Hi everyone. Thank you. This is a very high level 1. So please forgive me, but Oliver, I wanted to ask you if you could delve a bit more into the opportunities, you see emerging in Germany, please, um, you were recently quoted in the Press, reminding us about the fiscal pressure, faced by demographics and the pay as you go Social Security Financing and I guess I did want to ask the macro level, you know how serious do you think that is for Germany? You know, given that you're starting with an incredibly low debt to GDP. Um, I I appear, I I recognize that it's relevant, but I don't know if it's as relevant given all the other fiscal pressures going on around the world. But then more relevantly. I want to ask you about the, you know, um, commercial business opportunities that you're seeing in Germany from maybe the need for welfare reform and and the, what could be very large infrastructure spending going on in Germany um just sort of to tie it together, you know, is there much going on? That will be incremental to our estimates. Or is is this all just sort of you know, part of the general noise of macro.

Thank you, thank you. I'll keep it very short. We can have a coffee at some point to go into more detail as a complicated subject but we think about it as an opportunity. Why first of all um the state is now becoming as overleveraged as other European countries. That is not so good if you think about it in terms of uh the question of Jed to GDP. But the nice thing for us is we'll have a spread that we can earn for our policy holders and we we run their Investments very well second. Uh, and you saw that uh the last 2 to 3 years aliance, uh, health insurance is growing Leaps and Bounds and is doing extremely well. We're now the Loyalty leader in health insurance in Germany. We are also very, uh, growing very strong in group health, which is a super strong growing business. It's supplemental because postco employers who are still struggling to attract talented, people are using that, uh, to retain, uh, their key employees. So it's a huge growth area for us and with the steepening of the curve, believe it or not, life insurance is going to come back, right? Because people,

Always compare that to investing in Nvidia. That's a brilliant idea. Much more brilliant is to look at the trillions we have in non-yielding bank accounts in this country, where I think we have one of the worst rates in the world. So that's the right thing, and that cannot stay if people want to have decent retirement income. Now, on top of that—and then I'll stop—we have a huge amount of unfunded pension liabilities in companies in Germany of any size, in contrast to many other countries. Why?

Is that it's not for a lack of uh offers from the industry is because the financing of these uh liabilities through external parley, extremely expensive because of misregulation you have to pay 30% more in Germany to fund, uh, your corporate pension than, for example in the UK or in the US. So, we need regulatory reform if and when they come which I can only hope for we have 2 things 1, we have a huge business opportunity and we can supply a lot more capital for the rebuild of our infrastructure. And that's my last comment. It will only materialize if we have, uh, decent political leadership. Let's hope and pray they get something done. Thank you.

Okay. Um, thanks William.

Hi afternoon. Everyone, thanks for taking my questions. Uh, just a moment from me on Capital generation so in in the capital generation slyde, I think you flagged a positive 1-off from live. If you could, just give us a bit of detail around the Quantum of that that 1 off and what it relates to that would be useful. And then also just following that I think even without that 1 off, you would have been running comfortably ahead of the, uh, 20% guidance, probably closer to, the the 27 24, to 25% guidance. And your comments certainly implies that things are continuing to improve in terms of uh, in terms of the levels of capital generation and the optimization going on within the business. So just um, wondering why we should still be sticking with 20%, that's the right number for this year.

Yeah. Um, so I think Yan, um, what we, what we see in the plus 13, percentage point of operating Capital generation at this point, at this, at this point in time I would say is approximately 2 percentage points of, um, positive oriented. If you want to put it this way, there is 1, which is related to the fact that we had, uh, some positive effects that came through, uh, in particular, on the, uh, on the vests on the live side. Um, so that's 1 element to it. It's almost 1 percentage point. And the second effect is that we have benefited from very, uh, very uh, I mean, excellent performance on the PNC side which contributed as well to a higher level of operating Capital Jenner.

Ation against our, um, yearly guidance. If you want and that represent also as well, almost 1 percentage Point. Um, so if you correct for those 2 effects normalized, you come back to these, uh, 5.5. I would say, uh, operating Capital generation per quarter approximately so that's why I think the we see improvements, uh, but we are we are in this order of magnitude, I was, uh, I was more more mentioning, uh, in the underlying. That's really what, what you, what you can also perceive from from the development. Is that as an organization, we are clearly working, uh, extremely actively on the toolbox. You know, I presented as part of the Capital Market day uh and there is a lot of uh good energy of the business teams working with the finance teams to really look at at all options to to improve here which is very important and that's contributing to some of the positive developments. And so I I would say at this point in time we are more grabbing the low-hanging fruits in a way

And the more heavily lifting uh, type of levers will come later on as an example. You know what I was mentioning the shifting part of our business from the standard to internal model once we get regulatory approval, and those type of things that will more come later on. So that's why I think Beyond those positive Sciences. I think the fundamental effect are still to come a bit later on as we, as we have mentioned in the Capital Market Day,

Okay, thank you. Okay, thanks Ian.

Um,

The next question is uh from Andrew Andrew Green. Um autonomous. Um go ahead Andrew.

Thanks Andrew. Um, a couple of questions, you've talked quite a lot about uh improving volumes through better persistency better product density. Lower lapses, are there any data points from the first half that you could give us that uh, show that you're moving along that line and secondly slide A6?

Um you said I think that there was more developments to come in the second half. Obviously you can't see what those are but is it possible to just look at the types of areas uh that you're looking to do bolt-ons whether it's to do with developing markets or different Distribution Systems and some some sensors to what is your thinking when you're looking at portfolio optimization

Thank you, I'll take the first 1. Andrew, um.

It is not yet there the way I wanted it, but just to basically, um, neither this thing. But, but remember, aliens is a very, very big ocean liner. Right? So, um, from the time we prepared all the technology in the tools to the time that we drive that and let me explain to you why sort of uh, changing and like selling the course, will take some time. The first 1

Uh, these things always come with a delay effect. So as we drive that the first time, you're going to see it accounting wise in in my opinion is in the second or third quarter of 26. Um because some of the measures just um a lot of the premium that we write today have been written a lot of the renewals have been written by the time we end the first quarter so there will be a lay just from the fact of how the uh re underwriting Cycle Works. I'm talking to PNC at the moment. Um, so it is going to take some time, what will provide you with an update on how we do over time? Trust me, because we really uh need to get this thing right over time. By the way, both levers are very important. And and to give you an example, what we are currently doing, we are completely resetting, the incentives for distribution Partners. Everything that does not require to cancel or re noi. The overall commission systems in order to make sure that, uh, both retention and cross-selling are making

it too. We have, as I said, 50% of clients. That haven't had a contact with us for a long time and that is not because we're idiots. It's because we have Distribution Systems that are excellent. As I said, initially at selling individual products that are less excellent in driving that. In fact, when you are an expert on selling life business, in Aliens, we have zero incentive factually historically to work on cross-selling, and that's not a good idea, and that is what we are and have been changing and that will bear fruit, because we have more demand

Inbound, Andrew, then we can support. So it's it's not a matter of conceptualizing is just operationalizing it every day. Now, the second question you got clarity.

Yeah. Yeah, I will, I will answer it. So I think um, I mean no, no big news. Uh, I would say on on that slide is 6 when it comes to our to our m&a, m&a Focus, right. Um, so we are as an organization constantly uh, screening and looking at what what makes sense against, what are m&a targets? Clearly, we are focusing. Um, on uh Bolton strategy when it comes to to m&a as Oliver was mentioning in particular. I will say on the on the PNC side looking at Elements which are either allowing us to be in the top 3 in our markets because to for us, to be able to implement um, the sort of technical excellent system. If I may put it this way for our operating entities, we need to have a certain, uh, certain scale.

That's very important. And the second, uh, Dimension, I will say, on on PNC is definitely as well. Uh, uh, further continuing to build, uh, our platform play. Uh, so it may be under the shape of form of smaller portfolios. As we have seen for Islands, direct or adding as an example to the solved infrastructure, uh, to, to be able to deliver um, a better. Uh uh, a better ecosystem to, to support our, our technical Excellence. So those are the type of examples of things. We we

We are looking at we are as well, uh, in terms of geographical Focus, definitely, um, very interested in Southeast Asia. Um, uh, and uh, our Indian development is an example of that. But also, uh, what what we were, uh, when when we were, when we are looking at the Singapore or other places, similarly, both on the on the life and PNC that the type of perspective, we are, we are looking at and then there is definitely the play when it comes to, um, providing support to our life and asset management convergence. Uh, so it can be as an example, also, helping our asset management, uh, to, um, uh, to invest into teams or basically to buy certain teams to accelerate our asset management capabilities as an example together, uh, with some elements around uh, uh, the the capital optimization, uh, type of approach or typically what we have done with a very young Consortium, which is very much going into

That logic so I think no fundamental change but uh we continue to be as an organization extremely focused and active at looking at what makes sense to enhance our overall portfolio.

Great, thank you. Thanks, Andrew. Um, okay, so we have one follow-up question. Um, from Michael. Um, Michael, your line is live again, so it's Michael Huttner from Baron Berg. Go ahead.

Thank you. I I had 3 actually. But um um 1 is the total figure for FX headwind. If you if you if you have that either for Q2 H1, the second is, um, the video numbers um,

Or anything like that. Thank you.

Uh just a week. Last 1. Sorry, yeah, sorry that's it. It was FX headwind, 1 H. Yeah, we can give you that uh veridium. You wanted the amount we invested on on on our shareholding. Roughly right? Yeah. And then the third 1 so related to that you want the S2, the S2 impact. I think which we put in the analyst presentation. Yeah. And then sorry. I I haven't. And then what was you have 1? Other question. I'll give you. Yes I did. Have an oh thank you so much. It's the um corporate another which is very low. And I've read the comment, but I was a bit puzzled about

Okay.

Okay. Okay, yeah. Um, so the ethics ethics said win for the, for the quarter, was on the, in the operating profit, uh, was around 10060 60 million Euros. Uh, it was mainly related to the, uh, to the ethics effect. I have been mentioning on the, uh, on the pnt side, on the, on the investment, uh, investment side, we have as well and that you have identified. I assume on the NoNo side, on the fair values, to, to pnl some, um, uh, some, uh, some negative effects that came from the valuation of, uh, of the of the assets. Basically, that's a negative 260 million approximately, um,

um,

and um,

Uh, and then really, I'm sorry, Michael. You wanted the rough investment level.

Yeah, the the investments in in hammocks roughly 700. Yeah. Roughly 700 million um and and we're in the equity. So it it's about a 20% of the equity.

Uh if that helps and I think we've said it's just uh around the point of of solventi impact in um the second half.

Exactly.

And the final question is Corporate another. Is that right? Yes, please, yeah, and yeah. And, and just like to clarify right on the, on the ethics Edwin, right? That's for the entire first half, that's not for the second quarter, stand alone just to be precise.

Thank you. And then the corporate you were asking why this is better than expected, right overall. So first of all, there is always a bit of seasonality in the, in the corporate segment. Um, so so that we see in particular because we have a lower level of admin expenses in the, in the second quarter. Yeah. There is always that seasonality effect. And usually you have the sort of catch up uh in the in the last quarter of the year. That is, that is coming through and the second uh,

Elements. So I think we have another element, which is associated with the seasonality is related to the investment income, which was um, relatively high in the second quarter. And that's mainly related to some inflation linked bonds and also to to the dividend uh, payment pattern. We are getting into into the corporate segment. Um, additionally

Uh we uh we had also a better contribution from my own technology into the corporate segment that more related to the fact that uh, we have established also with the help of the, of, of the new, uh, Finance team there. Um, uh, like a more structured way of capturing the revenues on ion's technology side. So that's also coming as a, as a positive effect into this quarter. And lastly, uh as you know, always uh we tend to be uh a bit conservative in the in the outlook for the corporate segment. So that also a reason why we are also better from from that angle.

Definitely, thank you so much.

Um, thanks Michael. Thanks for that.

Great. Um, well that that concludes, we have no more questions, um, in the queue. So, uh, thank you very much. Um, everyone for your participation, uh, with that. Uh, I wish you all a nice, uh, rest of the summer. Uh, and we'll speak to you at Q3. Thank you.

Ladies and gentlemen, welcome to the Allianz conference call on the Allianz Group financial results for the first quarter of 2025.

For your information, this conference call is being streamed live on aliance. Calm and YouTube.

The recording will be made available shortly after the call.

At this time, I would like to turn the call over to your host today. Clare Marie, Costa, Pooch Chief Financial Officer of aliance SE please go ahead clarie, thank you very much and all good afternoon everyone. I'm very happy to welcome, you all to our first quarter call, uh, as you will see as well. We have decided to change a bit, the format of the call uh adding to our usual set of slides, uh, some pages which are providing some highlights and hopefully also leave more time for Q&A.

We hope together with the team that you are going to like it. Uh, and as always, we welcome your feedback so that we keep on improving

Let me start on page A4, which provides an overview of our first quarter results for the Allianz Group. Overall, you can see that we had a very good start to the year and that Allianz is very well positioned to achieve its 2025 and mid-term financial targets. As we focus on executing our Capital Market, we deliver rising smart growth, reinforcing productivity, and strengthening resilience.

If you look at our Top Line, which is up by almost 12%. And as you can see supported by all segments, which is positive very positive. We emerge, uh, with a total business volume of 54 billion euros, which is a record level in a quarter for the islands group. Also, at a record level is our operating profit at 4.2 billion Euro. And again, here, all segments are contributing. Our performance is supported by our focus on customers. Technical excellence and productivity. As you will see as we go through the segment.

Our share income emerged at 2.6 billion which is a strong level and we have as you have seen a lower translation of the growth of our operating profit into our share net income, which is due to 2 items.

First of all, um, a higher level of restructuring this quarter compared to last last quarter. And last year,

And second and exceptional tax item related to the decision to sell our stakes in the badge, joint ventures and this will over time, obviously, once we get the proceed, create more shareholder value. Once, uh, we received and we deploy them, right. So adjusted for these tax effects. Our core EPS is up 7%, which is in line with our Capital Market. They communication

Continue to be strong. It's supported by a very good level of operating Capital generation, which has offset the impact of our dividend acral. And our previously announced new, share buyback programme, which cost 4.4 percentage point of solventi ratio.

Let me move to page A5 and let's have a look at our PNC business. We had a very strong quarter for the PNC business, which is leading to a record level of operating profit. This performance is due to both the earnings of the growth and the very good level of the combined ratio.

With 7% internal growth. We see good Topline development. Further growing from the strong 2024 Bass.

I would say that of the 7%, approximately 5% is price and 2% is volume in the quarter.

The pricing and the volume affects is higher in retail while on Commercial line pricing momentum is slowing as we expected and as we have already communicated in the Capital Market Day,

maybe let me illustrate that a little bit more on motor. We are seeing the highest level of rate in our portfolio as we continue to see discipline in most markets, large corporate is moving towards flat rate and the details of our portfolio illustrate. Well, our underwriting approach against this background with double digit. Um, percentage growth in new business volumes in Germany. As an example. As we went through our most successful, 1 1, renewal in motor and by contrast, we were

Discipline in markets like the UK or some line of business on the AGCS side.

The overall level of combined ratio was very good at 91.8%, even slightly ahead of the first quarter last year, which had a very low level of natural catastrophes of 0.4%. For this quarter, the cat load was 2.1%.

For.

Both retail and Commercial are contributing very nicely to these 91.8 combined ratio.

Retail has seen, um, more as has been improving strongly. As we are clearly earning in the number, the benefit of our pricing and underwriting actions.

Commercial profitability remains at a very attractive level. It's lower compared to last year, but it's mainly due to the larger level of natural catastrophes. We have seen this in commercial and also the lower level of discounting in that sub-segment, PNC, overall.

Continues to be well, supported by our private productivity Focus as. Uh, this is evidenced by the further Improvement of our expense ratio.

So, overall on PNC, this is strong growth. We see the earnings of our actions that we have undertaken in terms of profitability, which is basically leading to a level of operating profit that is at a record level for a quarter at €2.2 billion.

Moving to life and health on page A6. Uh, here you can see that our customer centricity T3 and the discipline under writing, we are putting in place is clearly leading to an excellent performance across the board.

To start with, what is particularly striking in our numbers is the continued strength of our new business production. We sell the volumes up 17% at a very healthy new business margin of 5.5%, which is driving excellent new business profit growth of 14%.

We are delivering these growth after what was already a great new business level in 2024.

So for me, it clearly reflects the continued strength of our product propositions and our distribution initiative.

What is very strong as well, is that our growth continues to be globally, Diversified, as I already mentioned last year. So this is really building on the continuous Trend and you will see as well, that within our portfolio. Almost all our entities have a value of new business growth, which is above 20%.

The strong new business and also the healthy Dynamic. We see now in force have driven a good level of growth in our CSM this quarter. Clearly this growth of the CSM will support our profitability going forward. As we are going to earn these CSM in the future. And as a consequence as well of those, uh, good development. Uh, we have a normal icsm growth, which is her head of our yearly guidance at 1.9% and better than last year as well.

This is leading to a strong development of our operating profit which is supported by the earning of our CSM and as well as the impact of a small portfolio transfer, we have done between PNC and life and health this quarter.

So clearly we have a very healthy dynamic in the life and health segment. From my perspective, this is fueled by many elements we have elaborated on during the Capital Market Day, including the need for trusted solutions both on retirement and health in a volatile environment.

Let me move to Asset Management on slide A7. And here, you can see that our asset management business continues to see a good level of profitability in the first in the first quarter. We had um, we had strong. Uh, net inflows of 29 billion euros that has been emerging from both AGI and Pimco. As you know, the asset under management are also impacted by the market and the ethics movements. And this quarter, the ethics effects were negative uh by almost 56 billion euros, which is basically leading them to an overall stable picture on the asset management side.

Our net flows continued to be supported by the strong rely relative investment, performance of our franchise which has supported a high market share of Industry net inflows into active strategies, into the quarter.

How overall revenues grew by 5%, as you know, uh, performance fees can always be volatile. They are low at Pimco for the quarter against a backdrop of high performance fee for first quarter last year.

Our asset under management driven revenues, which exclude, these volatile item who strongly by around, 10% in the quarter. As you can see supported as well, by a very stable, third party, a certain management margin

our operating profit increased by 5%. And this is exactly 25% of, of our full year outlook midpoint, as you can see, as well, we continue our focus on productivity in the asset management segment. As a lower performance, fees are barely impacting, the cost income ratio,

Results and Associated provision to support this, in the first quarter.

Let me move to solvency on page A8.

You can see as well here.

Realization at 208, which is almost unchanged versus last quarter with the operating Capital generation of sets by the normalized dividend actual and the 2 billion previously announced share by Bank.

The market effects have been neutral in the first quarter with efficacy effects increased, uh interest rate, volatility and movements in spread of setting, the positive effects from the interest rate and the equities up in Europe.

Our operating capital generation is very good at 6 percentage points post tax.

This is driven by high operating earnings, especially in the PNT segment, and also some non-economic variances of our Life and Health segments, which accounts for almost 1 percentage point.

On an annualized basis, this brings us well on track for our ambition of above 20 percentage points in operating capital generation by year-end.

This concept transaction contributed positively, as expected in the management actions, part of the effect should actually be operating Capital generation as a new business under written out of the new structure already in the first quarter benefited from a lower cost of capital.

On the right side, you can see how stable our solventi to ratio is under various stresses. Our sensitivities are mainly unchanged versus your and 2024. So this is clearly overall emphasizing the structural resilience of our group.

Let me move to page A9, where I'd like to spend a bit of time to highlight some of the key elements on how we are managing our performance during uncertain times.

As I mentioned to you during the Capital Market day, we have a very clear Focus as an organization on structural resilience and we do so comprehensively when it comes to financial volatility, risk management, balance sheet and liquidity strength or governance.

Of course, the capital markets context in recent days has been more positive, but we are mindful of the volatility that has been observed in recent months and the debate which clearly persists on the macro outlook.

So, this page provides a summary of the key features to remember for the, for the island group for the island group, when it comes to the market, to ethics, and to micro sensitivities in the current volatile environment.

I will clearly not go through those items in details, but this provides some elements, highlighting our confidence in underlying assets and liability positioning. And the option we have for risk mitigation,

Clearly, we are very proactive as an organization. We constantly monitor, we stress test, and we take actions as required.

Also, our diversified business model, the strength of our franchises, and the management toolbox provide strong downside protection to our organization.

While clearly this is super important for us to manage risk. Uh, in the light, I times our strengths can as well. Allow us to take advantage of this locations, or capture of the opportunities as well. This can be to fuel growth or also to promote life and asset management product propositions as an example,

Let me move to page 810 uh, and conclude here. What I want to stress out, is our strong performance in the first quarter. The first quarter I seen positive contribution from all segments, delivering again, a record level of operating profit fueled by good growth and underlying productivity,

These very good starts into the year allow us to reaffirm with confidence our outlook for the year at €16 billion, plus or minus €1 billion, with also good resilience in the context of any potential volatility.

Those results are in line with our Capital Market Day target if I adjust for the effect associated with the posting of the tax effect associated with the bad judge transaction.

These transactions will, over time, create value for our shareholders, with the expected proceeds creating more opportunities for creative deployment and financial flexibility.

We are focused on executing our Capital Market data targets, with the first quarter already reflecting positively on the journey to deliver higher organic growth, improve capital generation, and ongoing productivity improvement.

With that. I'm happy to take your question and I hand over back to you and

Corner.

Alternatively, if you've dialed in which, I think some of you have, um, it is Star 5 and, and we will unmute you. Um, and again on housekeeping, if we could stick to 2 questions, uh, and then, uh, hopefully, if we have time, we we, you can rejoin, rejoin, the queue, um, okay, with that. Um,

I think we're ready for the first question.

Which looks to be from Andrew Andrew Sinclair from Bank of America. I go ahead.

Yeah, thanks guys. Um,

2 for me, then. Uh, first was just on vidiem. Actually, um,

What can you tell us about the transaction? Uh, what is its cost for Allianz? How much will you get from it, really?

What it brings to aliance to uh, to to do this transaction as my first question. Um, and second I suppose actually just a slightly kind of big picture question on on life and health you, you've

You've looked at income Insurance, you've you've taken a stake in, in vidiem you're doing, what was a huge amount, more organically. Some some really Punchy sales there but the good news is, is this just a signal that this is the right time in the cycle to be, pushing more for, for growth in life? It should, it should be be getting more excited about aliens. Maybe pivoting a little bit towards life and health and a real growth opportunity here, um, any questions thanks.

Um, okay. Thank you very much and who for your questions? Uh, so maybe let me start with a very young. Uh, so with very young, you know, we are part of the Consortium of investors and we have an equity stake. That is around 20%. In, in vidiem, we are really happy to be part of part of that Consortium and the rationale for us, I would say is 3-fold. Um, as I have mentioned to you. So first of all being the CFO, it's clearly a very good, uh, investment. It's double digit. So we are, we are happy with the expected um, uh, value generation from our investment, uh, there in vidiem.

Uh, secondly, uh, we we also, um, we also want, I mean, we also see that as an opportunity for our asset management business. And over time, this will, this will provide opportunities for deep for deploying more of our own, uh, asset management into, uh, into into very young. So that's clearly part and connected to the communication. We have made in the Capital Market day of uh, supporting more convergence between life and asset management. So that that clearly part part of that logic and the third dimension is that for us, it's very important that at European level. There is, um, there is a good quality, uh, back book integrator, that is available. And obviously with the knowledge we have. But also with the knowledge that other parties joining, the Consortium have

We have we are now establishing a high quality uh back book operator for the European market which is providing flexibility to the market as well. And we may also become at some point uh a client of uh of that back book. Operator uh as well. Now I think you were asking also in particular just I mean I'm I'm conscious on the asset management opportunities you mentioned. I mean you there's another massive asset manager on on, on on that agreement as well. Is, is there some sort of

Specific asset classes or any more detail, you can give us in terms of where you'll be able to provide asset management support for for for again. So I cannot be extremely uh specific and who I think it will not be a problem.

In the, in the setup. But maybe if you look at what was the strength of veeam, intense, historically, in terms of value creation, uh, as a, as an operator was more by uh, optimizing I think operationally the setup. So we clearly see a lot of opportunities for optimization on the essay and the asset side from, you know, the the level of expertise we do have on the matter.

Excellent. And then on the light stuff. Yeah so basically I think on I'm I'm not sure I 100% understood your your question on life and health. So but basically what you were asking is what do do. We see like m&a opportunities in general in life and health versus the organic growth? That was basically what you were asking or should we

Concentrate more on organic growth, right? I mean, yeah. Essentially just saying like we've we've probably spent.

More than a decade of of of composite insurers, pushing hard towards PNC uh and and kind of edging away from Life. Uh I think income insurance is probably the first time we've seen a big tented life acquisition in in a while. And then you followed up with vidiem is this really

No.

Um, so basically, I mean, you know, that for us, uh, we have our 3 pillars. And I think uh, when you look at it, um, in the current environment, first of all, uh, the life and health business is operating at a really good level of Roe. And we are very stringent as I was mentioning also in the Capital Market day at looking at uh, the profitability of each of each of our segments and their contribution to the uh to the overall. So that's why I think as well. Uh and who we have always been mentioning that we like our 3 pillars. And we believe that the 3 pillars are clearly part of of our strategy and compared to many of our peers, we have never really moved away from life. And we also, by the way, think that life and asset management are strongly coming together? So that's the logic clearly with interest rate up now or I mean, increasing having increased, there is clearly also, um, more opportunities in the life and health segments, uh, compared to what was available in the life and health segments when interest rate.

It where well, I mean, negative or close to zero. So this is strengthening the further appetites but also the more flexibility you can create strategically uh, in that segment. We also see a lot of opportunity on the protection, uh, on the protection side, and on the health side that we are also developing very strongly. Both I, I will say, mainly organically, but we also see opportunities from an inorganic perspective. So

So for me, it's just very logically in line, uh, with uh, with our strategy.

We have a lot of focus to produce growth in uh in an organic manner. Uh but we also are selectively looking at inorganic opportunities when they emerge and when they make sense against the guidelines, I have always always provided back to you.

Good, thank you very much.

Um great. Thanks Andrew. Um the next question is from uh William William Hard Castle will. Um go ahead. Uh sorry will from UBS go ahead.

Thanks Andrew. Um, first 1 is is I guess. Can you help us to understand how you think about that PNC? Margin delivery? We know that in the past runoff is often been managed alongside Nat.

I guess, how do we think about discounting volatility, which looked higher today? Do you always let this flow through the pnl or is there a management of that at all? Through attritional?

And the second 1 is just seeking an update. Really, we've seen a lot of Capital Market FX volatility quarter to date April and May I guess. Can you give us an update on the asset management AUM and net flows so far please or at least to the end of April. Thank you.

Yep. Thank you very much for your question. Um, so indeed a lot of, uh, Market volatility. So, I hope that's why also, you know, we have provided this overview on what it means for us and how we are thinking about it overall on this, on this new page. But when it comes to the asset management segments, uh, where where we stand at this point in time, in the, in the quarter, we we have seen mid single digit. Um, net inflows in the, in the quarter. Uh, so we are, um, we see we see good, good developments clearly after also a month of April that I think, um, was very volatile, obviously as we as we all know.

Then you were asking around uh PS p PNC, margin delivery, right? Um,

I think, uh, so we, we have given a target for the entire year, our guidance for the combined ratio is around 93%. Uh, so we are clearly, uh, very comfortable with these, uh, with these guidance for, for 2025, and clearly there are like the moving components you are highlighting. So for, for us, what is important is that, uh, we believe that the normalized cat load is around 3% that, uh, basically, also, um, our normalized, uh, level of, uh, of, uh, runoff is as well, uh, between, uh, 2 and 3 2 and 3 percentage, uh, percentage points. So, that also the type of magnitude you should have in mind and then, when it comes,

Then I commit directly to answer your question, but the last piece of seasonality is clearly at the beginning of the year, when you are an activity or when you are resolving actually, you are always more careful in in what you are picking as being your attritional loss ratio, right? It's very natural because you are just in the first quarter. So you have not seen all the evidences that could allow you as an example to uh to relax some of the assumptions. You are going to use uh to pick up uh your uh your attritional loss ratio so we don't. Um, so

So, and then I think to your question, I think that the way we are thinking about it is usually more careful, in particular in the attritional loss ratio, peaking at the beginning of the year and then waiting for the quality of the business and the quality of the underwriting to evidence itself, to then emerge later in the year.

And then, I think, if you're asking a more generic question on how we are managing, runoff against the rest, uh, I think it's very natural. I will say that when you are in a very, uh, positive environment, where you see emerging, I mean, strong level of profit. You can also be a bit more careful in your best estimate Peak within, uh, within the best estimate range. Exactly. Along the lines of what I have mentioned in the full year code, right? And that was typically the experience we had in particular in the commercial segment in the first quarter.

That's really clear. Thank you.

Thanks will. Um, next question is from Michael, Michael huttner from Baron Berg. Um, go ahead. Michael

Fantastic. Thank you. Um, and and congratulations on Amazing results. I was actually a bit disappointed that um um

Uh, your CEO was none because he would have, uh, he might have reacted a bit more to why why the stock is down. Anyway, um, on Kymco and, uh, also on the song So Pimco, you talked about restructuring, um, and, and that's clearly a big charge. Um, I I I just wondered if you, if you can talk a little bit about that and and what the benefits could be at an cost Ratio or growth, or whatever. And, and also it, I know, I've asked the question in the past, you've always batted it back, but maybe I'll be lucky. Um, you know, the plan to maybe buy out some of the, uh, uh, founding members of timko, uh, where, where we are at and what you're thinking on that and then on soy, that was the 1 number, which I really do think, I mean the operating capital on generation in fantastic, but the Sony number itself and I don't understand why it was was clearly off, uh, a consensus. I just wonder if you can talk a little bit more about how you see that. Um it it it's it's real it's really

Strange consensus, which I think is is, you know, it's a lot of fakes. Every analyst I'm not 1 of them but um 2:11 then you report to 28. So there's clearly something there. Um, I can't explain it, thank you.

Sure. I mean, if you want, I can be a bit emotional as well on the share price section but I will do so yeah, but but clearly, uh, I agree with you. Um, so let's see on the restructuring Dimension, um, that we are mentioning. So the restructuring I mentioned that went into the first quarter results in particular among others, right. We, I mean, by the way, I think there were also quite some comments on the restructuring. They are. Um, I mean, they are always a bit of volatility in the restructuring items. You never know, when, when they emerge. Right? Um. So this quarter, we had a bit more this quarter versus last year, which was extremely low. And by the way, remember that for the full year last year? The restructuring was 670 million uh Euros, right? So anyway, uh, so going back to your question. Uh, so the restructuring I was mentioning in the asset management segment is related to is not related to Pimco is related to AGI, right?

So what, uh, AGI as mentioned is, uh, a strategic reorganization in particular, um, that is that is that is being implemented actually to support strongly the growth strategy of, of AGI. Uh, the the focus is, um, on optimizing the, um, uh,

But it will be supporting its supporting both strategically higher growth. And also bottom line improvements. Ultimately

You had a question on the um, operating Capital generation for the for the quarter, right? Indeed. It seems. There is a bit of confusion. So these operating Capital generation is uh, is post tax pre dividend. So before, you know, we were used to, to present uh, an operating Capital generation that was post tax post dividend. So if you were to take our 6 percentage point this quarter, it's equivalent under the old Matrix to 3 percentage point of operating Capital generation post tax post dividend which compared to 1 percentage point last year. So it's clearly much stronger compared to last year. And it's really a demonstration of, as I was mentioning high quality of our of our earnings in general, and also some, um, positive variances which have emerged from the life finesse segment.

So I hope that answers your question on the operating Capital generation and I think you had the last question, uh, which now I missed. So, just on some see you wide 2008. I I know 28 is in the number and you you you're not responsible for what analysts say, but it's still, it's still, it's still a different. I don't understand it. And you overall to age, this is what you mean, right? Yeah. Yeah it is. It's like you could ask Mike, you were trying to understand why we missed.

Consensus. Is that the question? Yeah that that's basically it. Yeah I mean if I could add my input, I mean I think

Uh, we can't tell exactly how how you guys model, everything. Um, um, I, I, the there was quite a big acral in the quarter, uh, both for the buyback, which we flagged, but I'm not sure. Um, all the consensus captured, the ordinary dividend, integral

Um and then the final Point as clarey's already highlighted the market impacts.

Uh, you may have expected to be positive, uh, and they were, but we had some offsets from, um, FX and interest rate volatility.

Point is that the capital generation is what we're focused on and and that clearly uh we think was a good number.

Lovely. Thank you very much. Thank you. Thanks, Michael.

Um the next question is from Andrew. Andrew Andrew Baker from Goldman Sachs. Go ahead Andrew.

Hi guys, thanks for taking my questions. Uh, to the first 1. Yeah, you're able to just give a bit more detail on the pricing dynamics that you're seeing, in agcs by line of business, and then, secondly,

But just on retention. So you've talked about retention being 1 of the highest sort of areas of attention for the group.

Um there's no sort of mention of it today. So just curious, how are you tracking? I appreciate it. Take some time to come through but how are you tracking against your retention initiatives? And what's the best way for us to sort of see your progress here from the outside given the disclosure? Thank you.

Well, I think, um, on on egcs, what we see is that we see rates uh regions uh Rich change uh, reducing across the board. So I think like the softening is happening across line of business and across geographies in general, right. And then the status is quite different depending on the line of business and the geographies where we see the highest level of price, uh, price reduction or softening, uh, will be in financial lines in cyber but also, uh, quite uh, quite quite largely uh, in in property.

And around in general around. Uh, I mean, in general across uh, across the business, we are still at level of, uh, you know, uh, rate at the Quality that is positive. So we are still on the base where we can grow from, right? So I think it's more, we have we are in the situation where we have to be extremely nuanced and selective in the way we are in the way we

We are growing, that's what we see. And, secondly, um, we we also see good opportunities in some areas where the market is also, um, uh, started to adjust again, uh, a bit like, so, typically that will be, uh, liability or Marine where we see also positive rate change as an example, most negative Market definitely at this point in time. Uh will be uh UK and Australia this at this point in time. Yeah.

And then you were a second question around retention, right?

Is actually, we are measuring retention ratio in our business, but indeed, we are not communicating our retention ratio, uh, uh, externally. Um, and I don't think it will make sense because you have many components, right? Which are showing up in the level of volume, we are seeing where we have like, uh, uh, uh, the price, and the volume effect, and also like a different Dynamic on the new business versus the renewed business. So it's it, it will be very, very complex, uh, to share. But what you can see on the list. When, when you look at our, at our business and the level of, um, uh, internal growth, we are, uh, we are showing on page B9. As an example, you will see that we have, um, a higher, uh, I mean, a lower level of internal growth in the, in the UK, as an example, which is clearly, uh, linked to the fact that we are being very stringent when it comes to, uh, rigor in the underwriting. Um, which basically is showing up then in our in our own, uh, Dynamic approach.

To the opposite. I would say we have a lot of growth initiatives um which are leading to a very high level of internal growth as an example in in Germany or in uh Latin America to take like a very different Market where uh we we are really tapping into the into the market momentum. Also leveraging into uh new tools, new practices uh in terms of distribution to support uh to support to support the growth. And another example of that more on the commercial side will be

Partners where you can see as well. Um, the very high level of growth. We are having, which is building on the also, on, on a good retention, and new business as well. Yeah.

Thank you.

Thanks Andrew. Um, next question is from Ian Ian Pierce, uh, from um axan. Go ahead in

Hello, thanks for taking my questions. Um, the first 1 was just on the motor combined ratios in the 92.2 that you reported in in q1. Um that's a significant Improvement on what you reported for for last year and a massive 1 on 2023. I'm just wondering if you see that as a sustainable number and particularly with the the rate increases that you're you're talking about in in uh, the first 3 months of the year, if you expect that number to continue to improve in in in the remainder of the year and the second 1 was on the um the organic Capital generation. So obviously very strong number but you've flagged some 1 off in the life and health. Um segment from from non-operating variances, I sorry non-economic variances could you just talk on what they are and how big that that benefit is? Um, thank you.

So I think like maybe I start with the operating Capital generation question. So like we have like this 6 percentage Point growth. Right of our 6 6 percentage point of operating Capital generation I would have this 1 the life positive variances are almost 1 percentage point of operating Capital generation. This is why I was mentioning the fact that I think these above 20% uh, the 20 percentage point of operating Capital generation is the right reference point for the year as we have already announced. Right? So we are basically fully on track for um, for the, for the capital operating Capital generation. We, we had announced, I think those positive ions on the left side, they are just reflecting on some of the, um, uh, some of the. So they are, first of all, the outcome of both positive and negative uh, of some negative. Also life variances we have seen, there are mainly related to some of the adjustment of, um, of our um,

Uh, of our, uh, Labs assumptions as an example, also some uh, some correction, some expectations of having, uh, I mean of lower sorry, lower level of inflation. We have observed against, uh, our own assumptions. So, it's correcting, basically, for the effect of more conservative assumptions, we had in our life and health, uh, uh, operating, uh, operating, uh, results versus what has materialized.

Which is a very good sign which basically means as well that we were maybe a bit too conservative on some of those operating Capital generation emergence, um, in the previous years which are now being corrected. If you want naturally, as we adjust, uh, some of our assumptions against reality,

and then I think on,

Uh, motor.

Um,

Anything particularly positive or if that's the Baseline that we should be earning through the rate increases that you're, you're getting at the start of this year. Uh, from yeah I am. No. I think so. Basically, what we see in the in the motor Market in general is a is a lot of of discipline in terms of, in terms of pricing as in many actually, in particular of the European market, there is still need, uh, for, uh, for well, behaved environment. As we continue to see some inflationary strength, uh, which are a bit sticky in particular, on the, on the, on the motor Market, as you know, and basically, this is the same as what I mentioned last year, we had anticipated some of those effects, so we continue to benefit from, uh, from this environment. And we also see that being earned as well into, um, into our profitability. But I would not expect that to change, uh, fundamentally, uh, in the, uh, in the upcoming, uh, quarter.

Okay. Um, thanks Ian.

Um next question is from Venit um Venit my ultra from uh media Banker. Um go ahead Venit.

Yes. Good afternoon. Thank you very much. Hope you can hear me, uh, just 1 on the live, please. Uh, is on the normalized CSM which is, is has grown very strongly. Um, so, you know, it's 1.9%, I think the annual Target is about 5, so I'm just curious whether there's anything 1 or fish here. I mean, you have mentioned Gap chain in life at some 1 off as well. And also we feel very, very strong growth in life. Uh, so just curious to hear about

CSM and growth in life. Um, a very quick 1 on the uh the German combined ratio uh where I'm just sort of following up here because if if it is linked to the motor recovery, um just you just described and there's an 80 basis, point Improvement year on year in Germany.

Uh, which is quite strong. So I'm just cross checking with that, all motor. And if I can just follow up a little bit on the sensitivities, there seems to be an increase in the cross effect.

Uh from 3% at 42 to 5% and in the past, we talked about how it was a good achievement to reduce it. So I'm just curious if this is just Market volatility hitting that number or something else to note. Thank you.

thanks a lot, uh, on the, um,

On the CSM development. I think there is, I mean there is nothing particular to be uh, to be highlighted in the in the CSM development is. I mean, I think the main point to be highlighted is that the CSM? The normalized CSM growth is connected with uh with the development of our value of new business, which is always a bit higher in the in the first quarter compared to the to the first first, I mean to the further development into the the other quarters in particular, because you have some businesses, that we knew more in the, in the, in the, in the on, on the 1st of January. So typically, you will have some protection and health business in the French Market as an example. But you have other markets like that where you, you have these, um, uh, more new business. If you want coming up in the, in the first part of the year, that then is being, uh, is being, uh, is coming through in the normal icsm growth. So that's why we always see that pattern, uh, that we have a higher level of normal icsm.

Those in the first quarter usually show a lower level of a normal ICSM growth. As an example, in the third quarter, which is traditionally a bit lower compared to the other quarters, is an example.

Uh, then I think, uh, you were asking a question around, uh,

around the combined ratio in Germany, right? That's what you were asking.

Just following up whether it's all motor driven Improvement.

So the question was, is it all motor driven? Is that the question?

Yes, yeah. Okay right.

And then your last question was around sensitivities, as well.

Market.

It's gone up a little bit from 3% to 5%. Yeah, indeed. Uh, so that, but there is nothing particular to be highlighted here. Uh, it's just like, you know, sort of noise from the from the gross effect. So it's really, really small, uh, and uh, it's actually even a bit lower. I was actually slightly lower in the in the first quarter indeed, but there is no single 3 right into it.

Okay, thank you.

uh thanks Anita and um I'll note that you snuck in 3 questions there but anyway uh

So uh, next question uh, is from William, uh, William Hawkins from KBW. Go ahead William.

Thanks, Andrew. Hi, Cleary. Um, a couple of questions also on the live business, please. Um, inside B19, can you help me just understand the outlook for the expected enforced return, the $748 million? Um, can I just multiply that by 4 and assume in the future that it rises in line with the CSM, which feels simple but hasn't recently been the case? So that's $748 million, which is actually quite flat year on year and is actually down about 8% on the fourth quarter. Um, and whilst your stock isn't that sensitive to...

Interest rates. You, you you'll notice on the next slide, refer to interest rate, sensitivity, and and lower over return assumptions. So I'm just, you know, just trying to get a feel for, you know, is that 748? A stable base? I can roll forward or do I need to be clever, probably do, um, and then secondly, or something like this. Um, yeah, has Market volatility in a had any impact on the as life us operating profits. And, and again, do we have any way of of gauging sensitivity to that? Um, you know, April has been a, you know, a volatile month for equity and and in the past that can have etching effects in in as life. So, is there anything that we need to be calling out for that please? Thank you. Yeah.

Uh, thank you very much. Uh, so basically on your first question on the expected enforce return,

Uh, indeed, I think, uh, you know, like, you know, how these expected reinforced written is made of, right? It's related to both our vfa business and our BBA business. So, in the, in the vfa business, this is based on the market rate we expect. And then the expected, uh, overwritten, we expect to see and on the BBA business. We are, we are using a locked, in a locked in rate, right? So I think the reason why the expected enforce, uh, return in general is lower this year compared to last year is related to the fact that, uh, um, we, I mean, uh, interest interest interest rate, uh, are moving down. Uh, that's basically. Uh, what is, uh, what is mainly driving, uh, driving. These ones. So, I think last year I had provided as well. Uh,

To you. What what was the formula? I think the team can can provide that again to you. But in a nutshell, what, what you do for? I mean, to estimate, our overall expected expected return, you take for the vfa business, what is our Market, what what is the market rate? And just to give you a sense, it moves, uh, the the risk-free rate basically move from 3.4 last year to 2.3 this year, so that would be the main driver of these affect, uh, and then you have some waiting effects that you need to inject that the team can explain in details to you. And when it comes to the locked in rate on the VBA side, it also went down a little bit from 4.5 to 4.3%. That's also explaining why, uh, the the expected enforce return is, is lower. So, for more details, you can reach out to the team. They will give you the exact formula, but that's the overall direction. And then on, uh, on easy life. Um,

Uh, you are right uh, that we can uh, I mean, some Market volatility can impact indeed the edging cost for our product, uh, and in the a life, uh, portfolio, um, for most of our business, uh, those uh, change can be managed within the product fure, um, we do. I mean, we use things like, you know, the crediting or the the participation rate as an example. So it's basically, this logic is applied to the to our entire book, except for the historical League Legacy variable and YouTube,

Comes at perspective.

Brilliant, thank you very much.

Uh, thanks will. Um, next question is from Hadley. Um, Hadley Cohen from Morgan Stanley. Uh, go ahead. Hadley.

Thanks very much Andrew. Uh, hi Clary. Um, just a couple of quick questions remaining from my side, please. Um, firstly and apologies. If I've missed this, um, in the, um, the valuation result another, um, in PNC. Um, I think it was, um, just below minus 800, um, for fy24. Um, and I think you said at the time, it was in line with normal expectations, but I think

Guidance is now for minus 5 to 600 million a year, um, on a normalized basis. I'm just wondering, um, what the what, what's changed there? Um, and if, um, there's an offset somewhere that we should be mindful of, um, and then my second question, is in relation to slide B9.

Um, which is very useful. So, um, thank you very much but, but more specifically on that. Um, just wandering around your us asset exposure, I guess, Beyond those assets backing the, um, your us liabilities. Um, how are you thinking about your us exposure? Um, on the SS side, more broadly right now does it structurally still make sense to have um the exposure to the extent you do?

Thank you.

So I think, um,

so I think your first question was on the valuation results and other right where we see indeed um lower I mean a lower uh

Like we Sorry on the normal expectation. For the year, uh, will be something around 500 to 600 million annually. And this is basically lower uh, lower for for these. Um, it will be lower. Now, going forward as uh, we we have been reclassifying some of our VSA business, you know, basically, from PNC to life and health. So, as some of the, some of the businesses moved away from from the segment, it is no longer going to impact the valuation results and others. So that's why you should use that guidance, more of 0.5 to 0.6. Um, uh, for for the, for the full year nonetheless, uh, we had, uh, we also had a negative effect effect that came through, um, in the in the, um,

Uh, in the, in the, in the quarter as well, which is linked to the very, very small level of S6, uh, uh, ethics variation. We see uh, on on some of our business which uh which basically has also impacted impacted that number obviously uh, as well. These, you know, these element on the valuation results and other is is off.

Uh, in the by the income, by the interest income, obviously that you need to take as well into account when you are going to do the correction overall. Yeah.

I think the team can also provide you with a more aligned line item if you want to do the full assessment on that side.

And then you were asking in general on on you.

With your question. So I think it's in general we have our portfolio that are very uh, very Diversified and we we don't take and if you look at the overall page where we are showing our, we are thinking about it in general, we have these very um uh very structured approach of uh of um uh of matching our assets and our liabilities as much as possible. You see that? Uh, and then we we take uh, some some structured, uh, decision when when it comes to certain type of of asset classes typically on the equity side. So our listed Equity would be helped. Uh in general, our alternative portfolios are Edge in the in the PNC segments except for the private Equity, uh, exposure where we have decided economically that it was not making sense uh to to Edge uh to Edge that portfolio. And this is this portfolio. You see, creating a bit of uh uh Market movements in the in the non- income. Non sorry non-operating. Um, non-operating side.

Makes sense in terms of risk, return profile, and also volatility management.

Thank you.

Uh thanks Hadley. Uh next question is from uh Cameron Cameron Hussein from uh JP Morgan um go ahead Cameron.

Cameron, are you muted?

I I hope I'm I'm unlisted. Yeah, you are. Um, perfect. Thanks Andrew. Yeah, sorry, it was a, it's a, it's a, it's a problem. I have sometimes. Um, just the first question is just in the direction of traveling commercial is that obviously sounds like the person's side. Still has some Tailwinds behind it. Uh, in terms of mostly coming through on the commercial side, you know, prices have peaked and now slowing down. How should we expect aliens to behave in that environment? You know, do you think you're really following to defend margin? Um, or do you think they can mind radio shows will inevitably kind of trend up, just really in some kind of, you know, what your approach is going to be, because it looks like in q1, you cut volume about, so it seemed to defend me margin. Um, the second question is, uh, just to follow up clarification on. Will's question a while back. Um, you told us about kind of, um, you having mid single digit flows quarter to date, which I assume probably includes a bit more than April.

Um, could you maybe tell us how the PIN code AUM? Has moved caught today. I I just don't want to get a surprise in Q2. I've seen some of the FX and other asset movements might might outweigh the cost of State flow just to just trying to figure those things out. Thank you.

Yeah, so I think on the second question, I mean, clearly understand. I cannot provide you with such level of details. That clearly not something that is available at this point in time. Then I think your question on Commercial, right? Uh, I think commercial, what is very important for my perspective? Is, first of all, to look at the structure of the islands portfolio, when it comes to commercial, we have a, I think a very different different book, compared to many of of our peers. This is made made of the large corporate, uh, book which is basically the agcs book. Then we have Islands trade. So the credit Insurance book. We have the mid-core portfolio and also we have also the islands report for you. That is part of this overall made up of our uh, PNC commercial and Specialty portfolio and clearly the dynamic of those different businesses is different and also the cycle effect in those various portfolios is as well, uh, different

On a, uh, on where we are. So I think the the point you were making is uh, more related as an example. Uh, to a GCS where I was mentioning we see in general that we are at a good level of rate adequacy that has reduced uh, clearly but still it's not, you know, negative rate adequacy. So there is space for growth in particular in areas where we feel quite strong like uh, specialty will be an area. But also the multinational business where we have a lot, we can play with or art as well. Uh, where there is also a lot. We can offer in that in that business on trade side. Uh, clearly in general the uh I mean like the

We we are more cautious on the, on the underlying assumptions. As we see. Also some of the underlying risk, uh, increasing, but the, the quality of the underwriting, currently. I mean, the quality of our underwriting is very strong clearly as always, but what we see as well is that the emergence of of profit is also very strong, uh, in the, in the current environment. So we will see no reason to also take, uh, you know, negative assumptions. When it comes to the uh, to

Uh, to the profitability, on the trade side, Beyond some normal level of normalization, overall, and Meetup is also in a very different stage, depending on the various Market with some markets, being more challenging than others. And it's very connected with what I was mentioning before. So, mainly, I would say, UK or Australia would be markets. Uh, which are more challenged, uh,

Since you bought for you.

Thank you very much. Thanks Cameron.

Um next question is from Andrew um Andrew Green from autonomous. Um go ahead Andrew.

I think you might be muted, Andrew.

Hello.

Andrew, are you muted?

No, we can't. Uh, we can't hear you. I'm afraid. So we'll, we'll come back to you. Um,

if we could move to,

the next question then um, is um from Henry heathfield from Morning, Star, uh, go ahead Henry,

A good, um, good afternoon. Can you hear me?

Yes, we can.

Oh, thank you. Um, good afternoon and thank you for taking my questions just um,

Uh, small, um, couple of questions, please. Um, I was wondering Amory if you could talk a little bit more about what happened to Performance fees in Pimco,

Um, I think in the past it's been highlighted that in cue. Well they tend to be a bit heavier loaded in Q4 but it doesn't look like

Um, that's entirely the full picture here. So I was wondering if you could just kind of run through that a bit and then incorporate other, that's kind of, um,

Uh looks to be coming in quite a bit below your 800 million full year Target. So, I was also wondering if you could talk a little bit about um what's driving that? Thank you.

Yeah, maybe on the corporate segment and other, there is really no thing in particular to be to be highlighted, you know, it's always an area where we are definitely very cautious when we, when we set our Outlook. So, the level of Consciousness, if you want, uh, on the spend on the corporate, uh, corporate segments are being confirmed for the, for the quarter.

Uh, so for the, uh, for team Co, for the level of performance of PIMCO.

I mean, as, as I mentioned and you rightfully said, so as well. Um, performances are always, uh, volatile right in in nature. And last year, uh, it was particularly strong for for our first quarter. Um, maybe just to give you a sense on how to think about it like in the previous uh 10 first quarters, we had on average, the performance fee, share of around 4% of our total revenues, um, in the so with the range of 2% to 6% of the revenues, uh, Associated to the performance fees in the first quarter,

After 2025. So, the year we had 2% uh, of um of performance fees in against the total total level of Revenue. So it's basically within the range, but you see it at the low end low end of the range. And if you, if you follow that same logic for the full year, um, uh, for over the last, the next, uh, the last 10 years, actually, we have achieved a performance fee. Share that is um in terms of percentage of total revenues that is between 4% and 10%. And so we expect to be within that range for 2025. There is nothing I can say more at this point in time because obviously there is a volatility that is also connected to the volatility of the market in the performance fees.

Okay, thank you, thanks Henry. Um, next question is from farad's farad, changazi from Kepler. Um, go ahead for

her. Hello. Hi. Uh, thank you for taking my question. Um, just very quick follow-ups left, um, on 72 Capital generation. Uh, it looks like the life underlying Capital generation was about 1.1 billion euros. Um, is that a good level to build from or will it be a bit higher due to the Assumption change? I'm not sure if it's including, or excluding and experience there. Um, and another 1 just on um, your extra Capital Management. Actions uh you just did concentrate. Trying

And, of course, uh, but again, can you give us any insight into other management actions? We will be implementing in 2025, uh, to increase on C2 Capital generation. Thank you.

So I think on, you know, on the implementation of the action for our organic capital for our operating Capital generation in the year, I cannot really, uh, give you uh, give you an answer, you know, if you look at the full toolbox um, that I mentioned in the Capital Market Day, clearly we are working on.

Some of them will start bearing fruit as well this year, but also, some of them will clearly provide, uh, an uplift much later on. Either towards the end of the plan or even, like, you know, uh, outside of the plan horizon. So at this point in time, I can really not give you uh, more details except reassurance that we are really working very actively on it and we see uh, a lot of momentum in the uh, in the organization around the topic.

Uh, then I think you were could I just could? I could I just follow up on that. You said some outside the plan but we are still still on track for the 2425.

Operating Capital generation Target of course.

Um, yeah, yeah. So that's the 2027 Target. Yeah, so the the target is just to be clear, is more than 20 on the metric. You see that's 6 for q1 more than 20 is? What we said is the target for your, um, 25. And then, um, yeah, the the target is actually 2027 24 to 25,

Yeah. Also, I mean I would have those

I mean, we are working on many different levels, right? Some of the levers, uh, also will be related to getting some regulatory approval, so obviously that will take time and is also linked to the fact that, uh, there is a lot of preparatory work. And also, uh, so that will take time to emerge. There are also a lot of other actions we.

Which we think should provide, you know, um, uh, benefit earlier on but you also have, you know, a lot of underlying other effects. Like I don't know, the mix is contributing to that some of the diversification benefits and so on and so forth. So it's it's very difficult to give a very precise impact levers by levers and exactly when they are going to earn. So I think at this point in time, even a level of ambition, that is strictly Superior to what we had last year is for my perspective, a good, a good guidance. Now,

And then I think you were asking a question on the solventi to, uh, operating, uh, Capital generation for the life segment on the Standalone basis, or, or like, basically, how much of the, uh, correction we should be taking, uh, out of the, uh, positive. Uh, positive variances, right?

Yes, that's correct.

So I we, we do not, uh, split in, uh, in absolute as part of the overall, uh, outcome the uh, the operating, uh, Capital Generation. Um, because I mean, again, you have these mixed effect, and you have also the diversification effects that is, that is coming through, uh, in the, uh, uh, in the operating Capital generation. So what I will do is that I will take the overall numbers we have shared and then you can reduce it. Uh, I mean,

A little bit from the almost 1. Percentage point of positive variances, we have been sharing with you that is coming from the life side and then normally you will have a positive additional. Um,

Uh, positive additional elements that is going to come through from the earnings of the scrum Set, uh, uh, structure into the, uh, into the the life, uh, the life operating, uh, capital capital generation. Uh, but, um, which we have not yet reflected at this, uh, at this point in time? Yeah.

Okay, that's great. Thank you very much. Thank you. Okay, thanks. Thanks for your hard work. Um, the next question is from James, um, James Shack from City. Uh, go ahead, James.

Thanks, good afternoon. February Andrew. Um,

I, I just want to ask about the the uh, sort of underlying loss ratio. Um development. If you like, for the on discounted attritional um, loss ratio X, that cats, so that 10 points uh, based on points and Improvement year on year, you do give us the the the total combination between retail and commercial but really interested in what's happening on the underlying Trend. So um can you split out? Um what the trend was between retail and commercial on the underlying loss ratio for me, please, in in, in q1.

Um, and then secondly um just in terms of cyber insurance, can you just remind me, what your premium sizes in cyber, um, and what line sizes, uh, what line minutes, you tend to put down, please, thank you.

Uh, sorry, could you repeat your question on Cyber? I think I got it. I think it was. You wanted the roughly the, how big we are in cyber and and typical line size of retention. Is that right? Yeah, that's right. Yeah. That's right.

Maybe maybe I first answer your question globally, right on the attritional uh on the attritional on the on this country that we know loss ratio. Um so I have I have provided the guidance for the year end results. Um that we expect you know if if you take all the elements, I have been mentioning. We expect our attritional loss ratio to be within the 71 to 71.5 uh um Corridor in terms of in terms of experience and actually what we have uh what we have seen in the first quarter and as published I think on the on the page we are at 71.5. So we are well within our Corridor of and discontented attritional attritional loss ratio.

Which is also slightly improving, uh, compared compared to last year. Um, and then when you look in the underlying, actually, we have, we have also further additional effects, uh, is that we have, um, we have the harsh transaction, that is contributing, uh, negatively to the, uh, to the undiscounted that traditional loss ratio. And we also have the transfer of, um, of our of the health business that move from, um, uh, from the pnt segment to the to the life and health segment, that is also contributing negatively to the undiscounted attritional loss ratio. So, if I bring all of that together, what we see is a sort of 30 beeps Improvement of our and discontent that with no loss ratio year on year. Um, and then, um,

And and basically it means that we are well within our expectations for uh, for the end. This country, that we know loss ratio for for the year at this point in time in the in the quarter. Yeah. And then I think more generally on your question on what's happening between retail and commercial in retail, we really see the full full earning of our underwriting action that is coming through. Uh, the undiscounted that with no loss ratio. We still very strong level of stability in the end discontinued with no loss ratio on the commercial side. And the reason why the commercial loss ratio or combination ratio overall is higher is what I mentioned, we had, I mean much, much higher level of netcat load in the quarter for the commercial business and also remember the discounting effect, on the commercial side. So basically the reduction of the discounted benefits on the commercial side.

Is much higher because the commercial business tend to be longer, uh, compared to a longer duration, compared to the retail 1. And that's basically why you have these higher negative effect of the reduction of the rates on the, uh, on the combined ratio for commercial.

Then I think you were asking for, um,

Uh, for for cyber, for cyber insurance. So overall we have approximately um uh, on on Standalone, cyber and Tech Pi, we have approximately uh uh, 350 um, million of, uh, of, uh, gpw. Um, so, and we indeed, see the softening I was I was referring to, as part of the overall cyber development of cyber. We take a very, very cautious approach when it comes to our underwriting, on the, on the cyber cyber side. So we have small, uh, Paris, uh, Paris limits.

Which are basically between, uh, 10 million and 15 million depending on the businesses. So, when it's new business is rather than, and when it's renewals, it's more 15. And in addition to that, we have a very, very conservative Insurance structure, uh, that is made of, uh, several layers, um, which are first aggregating, and so on and so forth. So, basically we have a Cota share, we have an event, uh, and an aggregate Excel, uh, cover in place. So we are extremely well protected when it comes to cyber risk overall.

It's already helpful. Thank you so much. Thanks, James.

And and now we have our our last question, which is a follow-up question. Uh from Michael uh Michael huttner from Baron B. Go ahead, Michael.

Thank you so much. The 1 is, uh, plays but but also knowing whether we're ahead of time or whatever on the expense ratio 24.1 which is a

It feels like a huge improvement on last year. Um, and then the, uh, the second one is, uh, on Life. Yes. And then I'm sorry, I'm being really nitpicky; you said the Life RV was fantastic in your really lovely financial supplement. It is good at 14%, but it's actually down on all the quarters last year when it was 16%. Um, if you think it's relevant, just to say, but if you know of anything, it'd be interesting. Thank you.

Since we're focused on the expense ratio trajectory and then um we we've actually came down off on quarter of relative to that. Thank you. Yeah. Understood

Okay, uh, very good. I think like, uh, 1 of the main driver for the, for the life AOE being being down. Um, as you as you mentioned, right, is related to the fact that the numerator has been impacted by the tax provision for badge. So, that's the main explanation if you want the exact uh, details, uh, you can

you can list with the team they will basically uh, give you the exact effect, uh, but the main driver is, is clearly Bad. Judge, what I think is super important, Michael is the quality at which we are under writing, basically our new business and clearly our life and health new business, um, uh, work or basically, like to know where it's positioning against, uh, as well, or solventi to, uh, Roe expectation. Is, well above, 15% across the portfolio. So we have a very, very strong um, performance at which we are underwriting our life business. So we are very confident on the quality as well of the future profitability that are going to emerge from our life business.

Um, and then, uh, I think your other question, uh, was, uh,

Pin expense ratio in the PNC expense ratio. I think, for the quarter, we have a 50 beeps, uh, Improvement of the pnt expense ratio, not all of that is related, uh, to productivity, obviously, uh, we have a mix effect as always, uh, in the in the PNC expense ratio and the second special effect is related to. Um, also the arch, uh, transaction. That is still creating noise, uh, a bit between the attritional loss ratio as I have just mentioned and the expense ratio, uh, basically, uh, uh, offsetting a bit each other. So that's, uh, that's what, uh, that was driving. Also partially, some of the improvements of the of the expense ratio. What is more important is that fundamentally? We see the underlying expected Trends. Uh, to deliver against of our expectation of, uh, of expectations of minus 30 bips, uh, year on year associated with our productivity initiative.

Fantastic. Thank you very much.

Um, great thanks. Um uh, thanks Michael. And and that was the last, uh, question. Um, maybe before closing. If I could just remind you, uh, Munich is a very nice place in late spring, um, we have in a couple of weeks time, our inside Alliance session, um, which will be focusing on our Commercial Business, our health business, um, as life and also some technology. So I'd encourage you

To to sign off if you haven't or we can give you even more details. Uh, and with that uh thank you very much. Uh and that concludes our q1 25 call. Thanks.