Q2 2026 Allianz SE Earnings Call
Speaker #1: Money: very strongly regulated, very well regulated, with a very good rule of law. So we are big fans, and we have finally had the opportunity to invest in both areas.
Speaker #1: ladies and gentlemen, welcome to the Allianz Conference Call on the Allianz Group Financial Results for the second quarter and first half of 2026. For your information, this conference call is being streamed live on allianz.com, and YouTube.
Speaker #1: By the way, a coincidence that it's happening literally within a few days of each other, but it's no coincidence that we want to strengthen both the live side and the asset management side.
Speaker #1: A recording will be made available shortly after the call. At this time, I would like to turn the call over to your host today, Oliver Bäte, Chief Executive Officer of Allianz SE.
Speaker #1: Please go ahead, Oliver.
Speaker #2: Thank you, Andrew. And thank you, investors, for taking interest. I know you have already had a couple of calls.
The experience that we've had, uh, in the US because a life, uh, in the World Market will be a big asset to bring to Singapore just as an example. A little more detail to that on page A4 where we are showing some details. I don't want to go through this slide actually. Um, you could probably read faster than I can speak to it, even though I speak very fast. Um, just as a reminder pin, for buyer of minorities has been a long-term plan, it's happening now because we have reached the point where we can do it 5 years, after we stopped issuing, um, the options, we have the right to call them and we have agreed with the PIN for leadership that this is a good time. And to do this very, very, uh, good investment for many reasons, including a very decent return on a business. We know very well and that's doing exceptionally well, and we are very happy to and very proud to partner with the OB on Asset Management, a very strong Bank, by the way.
The way, not just the massage in Singapore, but in some important Southeast Asian markets. So that's
Uh, quite important on the, uh, left hand side again, some uh, uh, uh, information on hspc important, is to point out if I may say so, um, under the owners of fhbc, this franchise has massively transformed in a very short period of time is not a bank Assurance agreement alone. That is important because agpc has doubled down on building out a wealth management. Uh, in partnering with aliens in Singapore, They just added another 100 relationship managers to build out Wells. But it has other distribution structures that are important as well agents and more importantly um independent financial adviser. So it's multi-channel and we want to build that out further and it's not just life. It's also a health insurance platform from which we would like to build. So we're very happy uh as we see we think we're going to have very good returns and uh across these Investments. And by the way, a very good mix low risk.
A bit higher risk so that we make sure we you can as investors rely on us getting a decent, uh, return on investment on these growth investors.
So, let me try and go to page A5.
Uh, as a summary then, um, I'm already done, I love this slide. Uh my favorite and the deck because it nicely shows that we are not relying on a, a single cylinder. We've been saying it over all of the years that you not. Not every machine can really work all of the time, we're in the fortunate position at the moment that all our engines are powering the group results to have a nice, uh, the versified portfolio and, um, we believe we will be, uh, in a good position to hit our outlooks. And, uh, the midpoint not just for the earnings Outlook, but the midpoint for our strategic cycle, we are exactly 18 months. IE, 50% into the 3 year cycle so as we can say nicely so far so good.
Thank you very much, forever, and maybe moving into section B. So, good afternoon everyone. As mentioned by Oliver already, we had an excellent set of results for the first half, where all the segments are contributing, again demonstrating the rigor we put in the execution of our capital market deliveries, including from leveraging AI.
Billing on q1. We reach the 54% of full full year operating profit midpoint and we have an excellent level of 702 ratio. We are very confident clearly against our yearly and our Capital Market data gets. So on this page, you can see starting by the right left corner that are total business volume is at 99 billion Euro at the end of the first half with an internal growth of 4.3% in q1, we were at 4 in Q2, we had 6% internal growth so clearly there is an accelerated momentum in terms of internal growth in our numbers, you can see as well in the underlying that we have a very strong performance as an example. Asset management is at 19% growth in the second quarter.
26 is building on a 10%, internal growth that we have achieved in the first half in 2025. So if you bring the 2 together we achieve a high single digit level of growth over the last 2 years.
The development of our operating profit demonstrate from our perspective, both our technical excellence. And, as well, our ability to grow profitably, we emerge at a 9.4 billion level of operating profit, which is our highest level ever for our first house. And we have been growing that operating profit by 9% compared to last year. Which is an excellent level to, which all segments are contributing including our health and protection business. So the health and protection business, you get more details as we are building on the first transparency. We have been providing providing in the first quarter this year, so it's basically display transparency in the, in the backup of this document and you will see there that we have a 9% of underlying growth which is also an excellent level.
Our shareholder cornet income emerged at 6.4 billion euros. And um, you you have seen that already that in the year on year comparison of the net income. We have many effects. Uh this year at at the first half we have a effect coming first from the disposal that we have seen both uh last year and this year. And we have also the effect from the rest.
Structuring as, uh, as mentioned in the first quarter, we are leveraging, uh, the gains we have. Uh, we are generating on the sale of budget of the day with that judge to advance our AI-driven transformation.
So if you address for both effects, meaning the disposals and the restructuring of the excess restoring our shareholder Coronet income, grew by 9%, which is an excellent loan.
Now, if you uh, also further look into the analysis presentation, you will get more details on our estimate for non-operating profit. For your end, as you know, there is quite there is quite some natural volatility in that number that is linked in particular, to the hyperinflation effect, but it's important to note that in addition to the approximately 600 million of further budget. Uh, further offset of the budget again.
Further restructuring could be expected in the second half in line with past experience as an example. The minus 200 million that we have seen as per the first half of 2026,
Now, coming back, uh, to this, uh, to the development of our core EPS, you can also see that our adjusted core EPS is up 10%, which is better than our target range of 7 to 9%. So also at an excellent level.
Resilience continue to be very strong with our solventi ratio at 225% as well. Our operating Capital generation is uh very good at 11 percentage Point fully in line with um our expectations for the year.
So we have a very healthy level of coverage and also a very high Financial flexibility into our numbers. This supports very well, the transaction that we have announced recently. So moving to PNC on page before, uh, here you can see our excellent level of profitability. You can see as well, the very good level of internal growth. Uh, we have with high quality performance across the portfolio. When you go into the further details,
So our total business volume is close to 50 billion for the first half. Our level of internal growth is is 6% and as part of that internal growth commercially is at 4% and Retail is at 7% That's 7% is very good for my perspective and what you see as well in the underlying is that volume growth is building up from q1 to Q2 Q2 is at 3% volume growth in retail.
Our internal goals is as well. Well spent uh you can see in the further details as an example. Uh the very strong performance of Germany that is at 6,000. Also even Q2 is at 7 European, latam is at 13 and we see as well, the continuous very strong dynamic in our platform business where direct is at 11% and partners is at 10%.
The portfolio.
Our combined ratio is at 91.4% for the first ALS, and our operating profit is at €4.9 billion, which is up 9%. This is a record level of profitability for the first time.
And this record a level of profitability is delivered. Both via the technical result and as well as the investment results.
Both Commercial and Retail have a very strong level of combined ratio, as you can see as well.
And if you, if you look further into the, into the details of our insurance technical result that you will see first that are underlying loss ratio is essentially flat year on year against a very strong prior year base. From my perspective, this is a very good result that has been achieved while we have also added to our inflation buffers in particular in commercial out of question.
Our question is similarly reflected in our lower level of runoff versus the prior year. In total, if you take those two elements together, the extra buildup of inflationary reserves we have performed in the first half represents approximately one percentage point of combined ratio.
Our expense ratio, as well as mentioned, by Oliver continues, moving toward our long-term Target and we achieve 30 bits reduction year on year of the expense ratio.
In terms of transformation, we continue to be very focused as an organization on revisiting our processes end to end leveraging, AI starting and putting the customer at the center. We are rolling out numerous tools as an example to improve ultimately. Our growth via better Services also rate adjustment. As an example. What we see there is that we are embedding AI to help the productivity of our agents. We are growing the AI assisted search and brand visibility. We are also, um, achieving uh, automated code and buying capabilities, where we see as well, that the fun of, um, success is improving also quarter after quarter. And on Commercial, we continue the focus that we had presented. Also already in the first quarter mainly on helping growth as an example, through faster response and booking times um to support the development of
The business.
So, if you look at PNC, at the end of the first half, we continue to develop growth at an excellent level of profitability. Clearly, we are confident in our ability to leverage our technical strengths and as well, uh, our Diversified portfolio to navigate the current environment and to deliver strong performance.
Moving into Life and Health on page B5, overall here we see good results for the segment at the end of the first stage, which is a good recovery in the second quarter from a number of negative effects that we had observed in the first quarter. So the momentum is good, with growth of our key indicators in line with our expectations.
The value of new business is at 2.4 billion Euro, which is approximately stable if you adjust for the ethics effect, and as well for the, uh, the impact of the GV of the disposal of the GV, with unique credit, um, also adjusted. Our vnb is at 4% and our PV and VPS at 9% in the second quarter of stand alone. So clearly a good momentum there. The high quality and the Diversified profile of the growth. Is also uh supported um by a healthy, share of protection health and New Link in the underlying
Uh, we have some examples of that, if you go into the details of the portfolio, uh, we have a c that is showing double digit growth on top of a very strong, uh, previous year in the US. The sales are up in US dollar term despite, uh, promotion that was running last year. And the second quarter in particular, in the ra segments, uh, we are doing very well with a 13% growth in the second quarter. Uh, and in Italy, we continue to see a very impressive development. If you adjust for the, uh, disposal of the GV, with unique credit, our volume as an example, with financial advisors, is up, 16% in the second quarter.
Is as we covered very well from the q1 market affect fully in line with our sensitivity. So you see very well, the briefing of the CSM in the first 10.
These improved momentum is as well. Clearly translating itself into the development of our operating profit, which is up 5%, ethics adjusted and emerging at 2.9%, just to illustrate these recapture of momentum as well, into the operating profit. The operating profit was down 2% in q1. So you really see well, uh, the positive development there.
In Q2 as well. We see that the operating profit is developing, uh, positively across widespread base of operating entities, we see as well that our investment results, uh, include uh, the reversal of some of the market. Uh, volatility we have seen, uh, in particular coming from the US in the first quarter. And we also see in the investment results in uh, in Q2. Um, the first time dividend coming from this video and concept.
So overall, for the first half, we have good results with strength, nicely diversified across the portfolio. We are pleased with the improved momentum, which leaves us well on track for the full-year guidance.
We need to be 6, uh, and that's also 1 of my favorite page of The Deco. All we see the excellent personal results of the asset management business. Here, we see a record 19 flow of 84 billion euros. We see the double digit revenue and profit growth emerging from the asset management segment. And this is coming from both asset managers, which are contributing their
Our annualized organic growth is at 8%. PIMCO is at 9%, HGI is at 7%, and this is clearly an impressive level, which is at the high end of the industry, in particular for active asset managers.
Clearly what we see there as well is that we have a nice uh Regional diversification of emergence of the uh of the net flows. We see as well. The product Innovation that is coming from the both asset managers which is clearly supporting as well. The good development of the margin and we see that quarter after quarter, we continue to add value to our customers, our performance is very good. We have 93% of our asset and our management that are outperforming their Benchmark on a 3 year age.
I think it's fair to say as well that while the environment for Asset Management uh, is not so straightforward right now. Uh, with many questions as an example on the direction of rates on credit markets, on AI financing Etc, our asset management business continues to respond very well with, uh, differentiated offering and that's also 1 clear element that is contributing to their, to, their success, uh, and in July, actually as we speak or and as we speak, we continue to see flows and that are continued emerging uh, following the same Pace uh, in comparison to what we have seen in the first half.
Our revenues grew by 16% at Q2, adjusted as mentioned, you can see as well. Very resilient level of margin. Our operating profit is up by an impressive 19%. I think it's adjusted to Q2, and the good development as well of the cost income ratio is supportive of the overall development of the operating profit against the revenue growth.
So we are very happy with the performance in our asset management business and, as well, the fundamental strengths we see there provide confidence for the future. In addition, building on those strengths, we have pursued the two transactions already mentioned by Oliver in the asset management space, and we are going to extract from that future value.
Google Drive.
Moving to page B7 uh, where you can see the very clean development of our solvent ratio for the first half. Uh, we are emerging at 225% of solventi ratio, which is our highest level since 2018 and this is also uh you can see as well. Sorry on this page very consistent delivery of operating Capital generation which is at 11% and actually almost uh
Exactly at the same level for q1 and Q2. And this is fully in line with our Target of at least uh 22 percentage point for the full year.
And liquidity of the MMA or the transaction we have announced is highly manageable and we will, as well generate, uh, overtime attractive returns from those operations, which are going to further, support our positive development. So our resilience is very strong. Uh, we see high ability to manage, uh, the volatile environment environment in, uh, in our in our resilience overall, as already mentioned by Oliver. This is clearly a focus for us as an organization. Um, and this is a fundamental way. Uh, we are operating our business, uh, into
if we move to page V8, uh, to wrap up,
Here, you will see that, uh, first, uh, and, uh—and just as a repetition of what I said on my first page—halfway through the year, we are very confident in our ability to deliver against our 2026 outlook. We are very, very well on track.
Uh, but in addition, I, I want to spend a bit of time, uh, reviewing our status against our 3 year strategic cycle. As we are exactly midpoint, uh, through the, um, through the Capital Market, the journey. Um, what you can see on the left hand side, is that, in terms of financial kpis, we are very well on track, both our growth and our profitability across. All segments are very supportive of the development of our core EPS growth and also the development of our core Roe,
For both, we are trending ahead of our targets, as you can see, on the Solvency II operating capital generation.
We are also performing well against our own expectations, right. Clearly there is still a way to go and we knew that uh and we are pushing on the levers, we have identified, the work is ongoing and the work is going very well. Uh, so we are confident on our ability to deliver their
In terms of the Strategic, uh, delivery against our 3, main events on driving smart growth. I think you have seen in the document a lot of good illustration when it comes to, as example, setting flows. But also development of the operating uh profit of protection and health on the PC retail volume growth. We see progress in our numbers at the end of the second quarter, we were at 3% volume growth which is uh at the low range of what what is our targets to achieve 3 to 4% volume growth, uh, as part of driving smart growth? So there is still work needed uh, together with as part of our growth plan initiative, in order to be able to deliver including leveraging AI to support our journey.
When it comes to reinforcing productivity.
Here we are on track again to our Target very clearly, but even more importantly, I think what we see across the organization is a lot of fundamental work. Uh in terms of rethinking the processes uh from customer Centric Manner and also harnessing AI to advance the productivity across the organization and this is very important uh not only to deliver on the targets right now, but also for the next strategic cycle and for the fundamental transformation required, on the way, we are servicing our customers. Also, when it comes to the productive to make our product affordable for the future.
Finally, on resilience, a lot of elements are ongoing, as I was already mentioning, together with the fact—and I want to maybe re-emphasize the point I was making on the PMC business—that we are actively managing the cycle, which is clearly part of building resilience. And also, on claims and patience, given the uncertainty that is currently ongoing and associated with the inflationary environment, we have built extra resilience. As an example, in the first half of the year,
So overall, it was an excellent six months. We are very well on track to deliver on our Capital Market ambitions. We want to continue building resilience while sustaining profitable growth and also tapping into new technology across the value chain. So, with that, I thank you all very much for your attention. And I hand over back for questions to you, Andrew.
Uh, great. Thank you. Uh, Clare Marie, okay? We are ready for questions. So, just to remind you, uh, you can either use the torque request button if you, um, use the web to to join. Or I think it's Star 5 if you're joining by phone.
Logistical issues.
Okay, let's go with that. I think our first question is from Michael, Michael Huttner of Berenberg.
Go ahead, Michael.
Thanks so much and congratulations. Lovely numbers, um, 2, 1. Um, could you all these deals that you've done? Um, I'm sure you. You you've got the numbers right there at your hand and and I I don't, can you give us the kind of the performer impact, uh, both in Sy and operating profit, whatever metrics? Um, you think we use. I know you. You, you might use slightly different ones. Um, the uh, the second is on, um,
AI. Um, and I
So the benefits are coming through which is lovely. Uh, the the bits, we I can't quite figure is, is the cost of it. So I just wondered, if you can give us an idea of of, uh, either the costs or how you account for it, or the in, in the expense ratio, or whatever. And, and, and in particular, if, if um, if suddenly we all decided AI would we didn't like it. Uh, is there a kind of potential? Write down risk. Thank you.
Um, okay. Um Clarity. Do you want to take the first question and then yeah. Yeah sure. So just uh, because the line was not so good on our side but you are mostly interested into the solvent. The ratio effect of the 3 d, right?
Yeah, not just some that's easy. I want to know the operating profit. Yeah, yeah, of course. No, I wasn't sure that. So I think like, um,
So those, um, I mean, for for all those, I mean, we are very rigorous in the way we are. We are doing m&a as as, you know. So for each of those Capital deployment, what we always ensure and we are looking at is at delivering, a double digit level of Roi in the medium term and here, what is a bit tricky. Obviously, to give you the exact number is that, uh, we we need to wait for the deals to be completely to really tell you what's going to impact overall as part of our trajectory. But we'll do that once. Uh, once we we we get there, I think just to give you maybe some indications for each and every of those uh of those deals if you start with um, with a pinco M unit which is maybe the straight forward 1. What what will happen depending on the, on the share of of the overall, uh, net income, we are getting associated with the minority with the bout of minority. You will get an equivalent effect.
Into the into the net income. So like the, the, the level of the, the minimum level of extra, uh, ownership of pinco, we are going to get this 4.4%, which corresponds to the, to the former employees, and they are. And we may have a higher take up also with, with the current employees. Um, but
Then basically, that that positive effect will not come into the operating profit, but will come into the net income and you can expect from 2027 onwards to have already there, a triple digit benefit to come into the into the into the net 19 come.
Then for, uh, for uh, you, uh, this is, uh, this is currently a business, um, where, uh, where we have actually maybe I to give you like, directly the, the effect both for UOB and for the HSBC Singapore, we have not yet closed. The closing will happen, uh, later on and then what you should expect is more starting 2028. I would say to, to start seeing triple digit positive impact in terms of operating profit from which, we expect also to see quite some fast growth over time because this is definitely a growth Focus. I think once we get the further detailed, uh, we will we will be happy to provide you with with more insight.
And then your other question uh, was around. Uh, what is um,
Uh, what is the effect of AI right and from the restructuring? I believe that was a question. Yeah Michael I didn't quite get. What was your second question? The cost of AI or
Yeah, yeah, the cost of AI but but also how you account for it is it applies.
Straight off as it's in the PNC just to have a feel for it.
So, are we activating the investment into Ai? And if we are on the wrong Tech, do we need to write it down at some point.
An example.
Uh, and we are. Uh, but obviously also leveraging it very much uh, on the uh, PNC side. As I was already mentioning. And there we have very strict approach. Uh, when it comes to everything that is activation of, of those new technology where we are very strict across across the organization, to minimize, uh, possible. Uh, I mean because simply like, these new tech is much much faster compared to all historical uh, historical development. Um, and maybe because uh, connected to, to your question, what is also very important is that the restructuring we have already already done, right? Will come, uh, with uh, ultimately a very good level of return as well, so we expect to have an overall return that is above 20% for the restructuring that have already been booked, uh, today.
Good. Thank you.
Okay. Thanks Michael. Um the next question is from Andrew uh Andrew Baker from Goldman Sachs. Um, go ahead Andrew.
Great thanks. Uh, thanks for taking my questions. Uh, first 1 just on the life and health investment income, I believe there was 87 million of dividends from vidiem and sconcept 3.
Is it fair to assume a similar level of dividends going forward or anyone else to consider in this? And I guess can you just confirm that? We should expect these dividends to come through annually. Just in 2q.
And then secondly, just curious on the alternative reinsurance capacity capabilities that you mentioned. Are you seeing any material differences in either rates or terms and conditions between what you can get on the alternative reinsurance side that you've developed versus what's available through? Traditional capacity? Thank you.
So I think on the, on the dividends uh basically the highest contributor to the to the dividend we have received is coming from veeam. As you know, um, we we are addressed an investor. Uh, so we are just a shareholder of of the idiom so we don't know. Uh, what will be the level of dividends and what would be the pattern of dividend as well? And also, what we are received, uh,
This year for multiple reason is is more than a yearly dividend. So so likely also uh lower on the on the steady state basis. But again, we don't know what should be the right, the right level.
And then you were mentioning on uh on alternative uh reinsurance. So I think indeed. Um I mean
we we raise, uh,
I think the main play, uh, with this alternative Alternative Insurance approach is actually to, uh, to ensure that we have a diversification of capacity and diversification of capacity at high quality, uh, and a very good level of rating. So so that's, uh, 1 1 angle to it. Um, and then, I mean, the overall environment when it comes to, uh, to competition. For, uh, for insurance capacity is obviously more on the uh, uh, on, on our side. As we are a net, net buyer of insurance as opposed to the other way around at this point in time.
Great. Thank you.
Uh, thanks Andrew. Um, next question, is from far far, far changazi from a capital of R. Go ahead.
Hello. Uh thank you for taking my questions. Um, I can just touch upon the plan and where we are still in retail volume growth. Uh, I think uh year to date. The category is 2.5% versus uh plan ambition, 3 to 4%. Um, if some highlighted geopolitical concerns and you take inflation buffers. Um, so do can we? Or can we not expect a volume acceleration in h226 and the view of this? Does the plans ambition of 3 to 4% uh retail volume growth still stand.
uh and again, just a plan related question on um Sony to uh Capital generation uh
Could you remind us again of the management actions? You've taken already along with the recurring uplift in capital generation of dates?
And any update if there is visibility on a future actions within the plan, period. Thank you.
Um, because it's a very good 1. So first, we had a slow start in the in the year. It's uh, improving in the second quarter and I hope that we are making progress throughout the year. What is good? Um, because it's a effect between how much do we get in? And then how much do we retain? So the customer acquisition side is actually going very well. What is not yet? According to plan at least from my expectation is the Improvement in retention that we had planned to do and there's 2 or 3 drivers for that there is rising price elasticity in the customer side. And as we are very, very focused on making sure we reflect increasing, uh, claims inflation into pricing. We need to do, uh, even more to balance that with higher retention. So helping clients, for example, to adjust their deductibles that covers in order to make sure for the ability is balanced with margin, even more and that's something as a muscle, that as an organization, we have to train and the
Second component that is important, the, the low growth, particularly in the core of your your of disposable income is further than increasing sensitivity. So people are actually also ensuring less overall. So that's a, a very good call a good question and we need to do uh, quite a bit of more work, but the good news is customer attraction to Our Brands. Super strong. The upside is higher retention.
Yep. Um, so, on your question about the capital, uh, capital management action.
Um, so so yeah, we have already done a lot when it comes to um, really looking at the portfolio. Portfolio performance Capital intensity ratio of of the businesses. So a lot of work has been going there which has been very helpful. I think to also revisit and question if we were uh performing or developing the business with the right level of of capital consumption and this is what has been fueling uh, quite a lot.
Uh, some of the positive developments over the last 18 months. Uh, we are working in parallel on a couple of more fundamental levers. And you may remember, you know, from the Capital Market, they presentation where in particular showing the share of what is the business that is operating on the internal model as opposed to the standard model. So there is quite some work ongoing to move more of our business into the internal model that will give us a further uh support when it comes to the capital intensity of our of our business. And that's where we know the work is ongoing. We are working also closely with our regulators and we are confident, it's going to get there. And by the way, there will be also further benefits after 2027. But that's what is also creating that sort of um 1 of effect.
A little bit later on.
Okay, thank you farad. Um, the next question is from Venit. Um, Venit mehrotra
Uh, of media, Banker. Um, go ahead Venit.
Yes. Good afternoon, thank you very much. I hope you can hear me. Um, I'll take I'll take 1 question which is on the internal growth. Um and and more curious about commercial lines where there's been a bit of up and down, I mean for Q was not so good. In 1 Q was a bit of a jump and now again we have a 1% um and I can see I mean I can see some of these numbers a GCS
minus 1.8, but also maybe UK has a minus sign and I, I don't know if it's linked to the commercial topic, but if you could just comment on Commercial and
Maybe also throw in a comment on these 2.
OE which are showing a negative internal growth, that would be very kind. Thank you very much.
Sure. Um, so I think indeed you are right. There is, uh, there is quite some volatility in the numbers, in particular, when you look at the q1 versus Q2. Um, and this is also linked to some technical aspects in the uh, in the underlying. So, for me, what I will do, uh, and I think that the most interesting way to look at it is more to look at the first, the first overall together and what you, you see.
First of all, you will have um uh the the Miko business, which is actually performing in a, in a robust manner, in the overall environment. With also a good level of rate overall, um, at at the first half as the first half level,
You will have, uh, in the case of, uh, Partners. A very, very good Dynamic, uh, which is, uh, which is fueled, as well with, uh, with different part of the business, which are responding quite well. But in particular, I think, uh, uh, the travel business is, is doing well as an example, and then you will have a trade that is doing well in terms of volume growth in particular building on the on the Diversified picture between, uh, between shorty and and credit. Uh, but what we see overall is that the rate environment continues to closely follow, uh, uh, in the, in the credit part, uh, the uh, uh, the current economic environment, we are operating into and then, in the case of edcs, uh, we have, uh, we have a rapid rapid softening. In particular in the, uh, we have observed. The Rapids of turning in the, in the second quarter, in particular, around property around.
The natural, uh, resources, um, and construction as an example, as a type of business, but the, the team is doing a very good job also at continuously tapping into the the areas where they can perform well, uh, in terms of, uh, in terms of technical Excellence. So, I think overall, I'm, I'm happy with the picture I see in commercial and how the various parts of our, uh, comprehensive commercial book are responding in the environment.
Thank you. Can I just also ask my second question on the inflation, please?
Uh, the inflation buffer that's coming in. The commercial book, isn't it? The comments and all that.
Yeah. So so basically overall for the overall book, we have built 1 percentage Point uh of uh inflation uh inflation or further influence further inflation buffer into our numbers. So it's an increased level um and uh and it's mainly into commercial but it's not only into commercial
Thanks Vitae. Um, next question is from William uh, William Hawkins of KBW. Go ahead William.
Hello everyone. Thank you for taking my questions. First of all, could you talk a bit about your view of the sustainable growth rate for Life, new business value, please. Um, you're still down in the first half and I I know the reasons for that but I'm kind of wondering what you think you can accelerate to, you know, this is your sizes at 5 to 10% or or could you do better than that um and sorry to be very short term. I'm not very clear about the seasonality of your new business value. So is the second half expected to be better than the first half or are the structural headwinds
Um, and then, secondly, all of around your slide on A3. I appreciate. This is a very big topic. So just asking you for a key top of head views, but after the Singapore deals, how do you view alliance's? Positioning for growth in Asia, do you think you've kind of taken your main actions now? So it's all about execution or is there other stuff you need to do to be really comfortable with your footprint and growth potential?
Thank you.
Very much you want to kick off first and sure. Sure. Um, so indeed you are right, it's a bit, it's a bit noisy. But the way I will think about it is that you can also now is the last quarter where we have seen the effect associated with with um with the so you can take uh the second half of last year as being a reference in terms of TV and BP. And you can apply our expected uh uh growth rate of uh 5% as we have communicated in the Capital Market this. So I think that should give you a good order.
Of magnitude.
Can I take a second 1? Yeah, go for it? Yeah.
So thank you for the question. So this was very important for us because we again we had a a gap in Singapore, we established presence there in 91, we never really had a strong operating business on the life and health side in Singapore itself. And as you know, we've been trying for a while to build a proper Beach head that reflects the power of the brand. So this this has been achieved. If you are asking for additional Investments, we always are open. So, we are happy, uh, with now having closed that chapter, but there's tons of opportunities in Asia still coming.
In terms of materiality though, we have to say Singapore has been 1 of the most important things to be looking at because relative to the National size, you would say, why do you invest in something that has only 6 million people, or 6 and a half million people? Now, it is the most important market for wealth growth market for wealth and Southeast Asia. So that was essential, but we're never done.
That's great. Thank you.
Thanks William. Um the next question is from Andrew, Andrew K of autonomous. Um go ahead Andrew.
Good afternoon, everyone. Um, I just had a couple of questions. Um, firstly, your restructuring Provisions this year, which looked to be about possibly 1.3 1.5 billion. By the time you finished, could you tell me how much of that is rating off software as opposed to so active investment? And can you give us a sense as to what the return on that in so billion plus investment will be as the next couple of years? So that's the first question. Second question is a very small 1, um, your Corporate Center, losses are just 20.1% of your target for the full year. Um, can you give us a sense as to where you think that'll land this year? Because it's clearly not going to be 800 minus 800 million
Yeah, so on the uh, on the rest. So as mentioned Andrew overall, from what we have already performed in terms of restructuring, at this point in time, right? We have, we have the 200 million of debt losses on that 1. We expect to get 40 million op more on a full year basis. Obviously, at the end of this year we will already have seen 3 quarter of the of the benefit coming through and for uh for the 400 million of of acceleration of decommissioning of it system. Um associated with AI um that we have that went through. In the in the second quarter, you should expect to see something approximately like 70 million euro of operating profit to prompt through forward uh, through lower future. Monetization um, that and then I think from what is going to to come, uh, to come on top, I would expect as well to see further.
Opportunities, uh, Associated benefits benefits as things go forward, right?
And then I think you were, uh, on the corporate centers. There is as always, a lot of seasonality, as you know, in the in the Corporate Center. We see usually 40% of the cost coming in the first half of the Year, 60 of the cost coming in the second half of the, of the year, um, this year, as well. In addition given the inflationary environment we have seen higher benefit coming from the uh uh inflation in bonds. Um, so there is always a conservative has been the 800 of the in the 800 million euro. Negative, we are seeing there. I think you can, you can take some assumptions. But, uh, but in particular, I think you can reflect as an example, the effect of the infection in bonds, as an example.
Fact, um, Andrew I I love your question, can I give a bit of strategic conference uh, contact if that's okay. Also to
Our friend because for go, for it. Yeah, very important. So there was a, obviously, a reason when we said, um, that the bad judge disposal will be reinvested. Um, and what we mean by that is that the AI Revolution Will fundamentally change the way we will build and deploy software that has 2 components 1.
Uh, we need to continuously, look at the, uh, Investments that we've made today then are, are there valuable tool? Can we use the new tools already to expedite restructuring and that basically means transforming the operations and the tech stack that's involved,
Eration of what we're doing in order to make sure that our, uh, Ops space stays economically viable. Right? And if you don't have at the end of day at some point, the tech assets and the balance sheet, where anyone would ask himself or herself, what's that actually really worse, right? So thanks for the question because it's quite, um, uh, quite a very important point for us. And we're doing everything to not just get the benefits, but making sure we, we invest and re restructure a properly to stay future ready. So, thank you for the question.
Okay.
Um thanks Andrew. Um the next question is from Ian um Ian Pierce from BMP um go ahead Ian
Hi, thanks for taking my questions. Um, first of all, just the following following up, on, on this restructuring, uh, stuff. And, and the benefits going forwards. Um, first part of it is sort of
if you're to have further positive experience, including your running ahead of plan, do you see opportunities to go, further? Would you be willing to go further on this? Obviously, if it's generating a 20% return that's, that's pretty attractive. So so would you like to do more and reinvest any further positive experience you might have into into some further restructuring. Um and is it is it mainly the reduction in amortization that is the main benefit or should we be expecting other items as well? And maybe you can just elaborate on that.
And the second 1 is is just on the, on the cash position and liquidity buffers that that you have at the moment because there's obviously been a lot of there are going to be a lot of ins and outs on cash.
Uh, with the Acquisitions and and disposals. I was just wondering if you could give us an update on where you see yourself sort of uh on on disposed on the funding of of these these deals. Thank you.
um, so basically start
Question on uh, on cash. Um, so if you if you look at it. Uh, overall right? Uh, and maybe you start, uh, if if you start from what we had shared with, with all of you as part of the Capital Market day where we are seeing that, we have a conservative dict buffer of approximately 8 billion euros, what we meant at that point in time with the conservative liquidity, buffer of 8 billion euros, is that we had more than 8 billion euros. And I think you can use that as a starting point to do, uh, to do the math and see where we are after. After the acquisition, uh, we have we have announced or the transactions we have announced. So I I think you can easily take uh, the the dividends the share buyback. Uh, and then, uh, and then also take into account, the fact that we have received in terms of a proceed from the 2,000 approximately, uh uh uh like uh 3 3 billion uh 3 more than 3.
Million euros and so on and so forth. And then if you do that, what I think you can see very easily is that we we land in a similar order of magnitude compared to the to the conservative liquidity buffer, we have been announcing. So overall what it means. And that's also what I was mentioning when I was presenting is that both from a servant the ratio? And from a liquidity perspective we can really do uh those transaction in a in a very good manner also because we have been very conservative when it comes to MMA and we have not undertaken MMA for a long period of time, Beyond small things that we have been doing on an ongoing manner.
And then, uh, uh, when, uh, when, when it comes to, uh, to the question, uh, you were, you were asking on further further type of actions. I think we don't, uh, you know, we don't, uh, dictate what is the type of restructuring to do or not to do. Uh, they, they come also like they come associated with the transformation and what we think is Meaningful against the transformation we are performing for me. Uh, what is, uh, what is very interesting is that as we are pushing, uh, with AI? And as we are pushing in terms of transformation of our processes, what we see clearly is that there is more and more opportunity in terms of what can be transformed and where we can create more accurate value, uh, for our, for our shareholders. Ultimately. So that's why I think beyond the operating profit effects that as an example is associated currently.
To some of the accelerated decommissioning uh uh we have been mentioning, I think more building on the point of Oliver what is creating or we believe is going to create a lot of value is a modernization of the environment, allowing us more flexibility and faster ability to evolve as well in the future.
Okay. Um thanks Ian. Um the next question is from Henry Henry heathfield from Morning Star. Um, go ahead Henry,
And yes, thank you very much for taking my questions. Um, just to from me, I was wondering if you might be able to give me
Um, the discrete quarter-to-quarter rate change on renewal within Property and Casualty, if possible.
And then secondly, on the attritional loss ratio, I was also just wondering if you might be able to give—
Um, a bit more colour on the 50 basis point change between, um, Q2 this year and Q2 last year.
Thank you.
Doing good. I think it's the accounting changes referring to
sorry. Um,
Firstly, for Henry, sorry, just to clarify, you wanted the renewal rate change discrete Q2. I think we, we only provide the 6m YTD,
Um, and um, which which and you have the 6 and you have the Q3, and there's some exchanges and I'm not sure, we'll go for discrete Q2. And your second question was the nutritional loss ratio Delta, uh, Q2 or year 1 year or 6 m?
Uh, Q2 you on you, okay, fine.
Okay. Uh, so basically, uh, like just to provide you with, uh, with the 6m, uh, the 6m range change on renewal, right? So you can see that on page fit. Well, right? So it's basically 3.3% for the for the rate change and the delta in, um, attritional loss ratio. You can also find on page c14. Uh, so basically it would be um, will be uh 0. Sorry. 4.7 0.7%, uh, in uh, in the quarter. What I think, just to put that quarter, Delta into perspective, you have 2 elements, you need to have in mind, that is 1, which is associated to an accounting change, uh, between, uh, at 3, uh, at which no loss ratio and runoff ratio, which is approximately 0.4 percentage points that you need to correct to. So that would basically reduce that Delta uh and then uh and then you will have also the build up of the inflationary.
Reserve. I was mentioning that is contributing to that, Delta for me. What is also again, uh, important to, to have in mind is the fact that last year, second quarter was a very low level, as well, for the undiscounted that which non loss ratio. So, if you want to, have a good sense of the development, you should better refer. I believe to the full year, uh, full year 2025, uh, to understand the positive development. So that's why
I was mentioning that I'm very happy with the development of the attritional reflection.
So just for clarification, would that be how much?
Um, of inflationary Reserve. Build up, is there in that Delta is that
So we are, we are not displaying the exact.
...ratio overall between both, uh, and this country that we know. Loss ratio and runoff ratio for the Alfia, we have put through one percentage point of inflationary reason...
Okay, thank you.
Thanks, Henry. Next question is from Ben Cohen at RBC. Go ahead, Ben.
good afternoon. Thanks for taking my questions. I had 2 questions please. Um the first is on Asset Management. I think this is the the fourth quarter now in a row where you're comfortably better than your sort of 61% cost income ratio Target for the division as a whole. I just wonder if you could give us some Outlook in terms of how you see that improving going forward and and maybe the sort of the leverage uh to sort of Topline growth. And my second question was, I guess a sort of a bank Assurance question. I just wonder the opportunities and risks.
Um that you see from the kind of bank m&a that we're seeing playing out at the moment in in Germany and in Italy. Um, do do you think that there might be opportunities coming out of that? Is there any risk to any of the the distribution Arrangements that you have, thank you.
Um, Clary, do you want to take the cost income? And Oliver, do you want to talk about Commerce or the bank insurance threats, or, I think, what Ben was referring to in terms of any changes to bank ownership, etc.?
And then there are some seasonality effects that are also coming through later on in the year.
And Oliver, I think.
You're on mute? No, no. Thank insurance.
Just trying to make sure but mine sneezing here is not on online, so thanks on the question. So 2 or 3 comments, Sharon Bank Insurance remains a super important topic globally for allion. It's a very important distribution Channel and it's growing. They are very different reactions to things like Danish compromise and others by region, as you can see from HSBC. Um, as just as an example, they are very, uh, focused on where they do Bank Assurance, uh, themselves and production in, in Hong Kong. And they're very clear where they need will Fast Partners like aliance and Singapore's an example of that. So, there is no sort of singular trend. On banks are insourcing Insurance production, or Outsourcing uh, Insurance production. Uh, 1 thing is what you would like to do. What capital regimes, tell you what to do. And the other 1 are you actually capable of doing uh uh what you may want to do on paper second of this conversation?
Particularly in Europe, the Danish compromise is, uh, a farce. In terms of Regulation, it's just simple Capital Arbitrage, by the way, it's relevant economically. Just for you to know mostly in capital intensive life. Insurance particularly, where there is a lot of risk that is not put under Capital. What do I mean, you still have the Doom Loop risk in Europe? Where capital is not required for investing into domestic government debt. As a reminder, we believe that just not wrong from a regulatory standpoint because, um, it, it creates huge risks, if, and when we have
A government debt crisis, and we may have one in the future, too. We believe we are very well positioned to deal with that because, at the end of the day, the quality of the product,
The service and the brand behind it will determine the success. We saw in our mix of channels, we feel very well positioned. Um, the Practical example is, uh, uni credit Italy, uh, 1 year, after we ended the joint venture, we're almost as where we were before because of the strengths that we have in Italy with our IFA and agency distribution. So thanks for the question, it's highly relevant, but we feel well positioned. And by the way, we have more inbound inquiries in working with banks than we have
Risks. And it's so I expect us to grow very successfully with our bank Partners. In a few examples, are going to come over the next few years HSBC is just 1 of them.
Thank you. Thanks been um, okay. Michael. Um, you have a follow-up. Um, question and and I'm I'm being generous on this, um, this summer's day. So go ahead. Michael huttner from Baron Berg.
Thank you so much, and back to the topic of software and stuff. So I was trying to ask two questions which are related, and on the balance sheet you have an 18.65% rate. Basically, that's the question. I just want to have a kind of max number, if you like.
Sorry, what was your second question?
That was it? I couldn't think of it. Oh yeah. No. I do have a second question, 1 of your peers. Uh, yesterday, uh in tears and neighboring country growing fantastically in Germany. And I was thinking how can how can that be? How is alienating a competitor to grow? So you probably know who, who, who I'm referring to. But uh, I I'd be interested to understand why why you haven't covered all the bases in there.
Sorry, I I let's answer your first question first, and then you might have to ask you to. I didn't quite understand your second question. So, the first question software, yeah, software on the balance sheet, right? Something like 3.5 billion at at this point in time. So it's going down, uh, obviously after what we have done and also as mentioned by Oliver, we are very strategic on the way. Uh we we are um, capitalizing software in the sense that we are really, we have reduced drama dramatically the way we are capitalizing software as well. Yeah.
Letting this opportunity go by. I, I obviously, you can't say what your competitor is doing, but I was just wondering whether there's bits of growth that you're missing.
I think it's a bit difficult to answer because I don't know what they are exactly going going. After obviously we feel very confident about our opposition in Germany across our businesses.
And yeah if it's live I think it's also self-centered with what Oliver was mentioning right? When you look at the size of Finance lab and the ability of Finance lab and to operate at a certain scale and cost level is very difficult to replicate by uh by competition.
Thank you. Maybe if I can, uh, add to what Clar just said. Germany is an example, but it's an interesting one.
Um, when you as a broker or a bank, advising a client in German on, buying a pension product.
And you don't have the best performing company in terms of customer benefits, in terms of unit costs.
And terms of brand on your advisory schedule. You are exposing yourself to me, selling advice and we, We Them serious. So it's really interesting that a lot of these and I personally expect therefore, um, a lot more changes to the bank Assurance market and its agreements. You have to not just be big, you have and have great technology and great products.
You have to have all of it. Yeah, so scale will matter but what matters more is customer value. This is not true yet in every Market. There are some markets in Europe, where stuff is being sold. That's not very good for consumers. Because the level of rigor, by Regulators to look at distribution practice is very different Market by market, but let's bear that in mind. We often think about supply side Dynamics. My personal point of view. After 1015 years of capital regulation, uh, colleagues and investors, we ain't seen nothing yet on consumer, protection regulation. That's about the company. And the only answer is to be loyal to leader in what you do.
Yeah, so I think you're playing too many games in terms of people trying to in-house stuff. You have to be good. By the way, last comment I believe is against strategic AI, which even exacerbates the pressure on integrated product providers and sellers to improve quality, because today, when you are asked, uh, intelligent models, you are getting really good answers to things that you couldn't get answers to in the past. So my point of view is, I don't believe in the closed shop by finite prep across all channels all the time. It does not work.
Okay, thanks, Michael. Um, and the final question, um, is from William Hardcastle at UBS. Go ahead, Will.
Thank you. Um, just coming back to something you said earlier, Oliver, on the customer—elasticity increased in retail. I guess, is there any potential that some of this is structural, with greater insight and pricing trends perhaps available through AI? And what prevents the younger customer, in particular, from essentially behaving like a UK motor market in that environment? Just coming back to the actions you're taking to try and improve that retention. And then, it should be a very quick answer—hopefully, just any initial comments on the July weather events that have happened across Europe. Thank you.
Good, Oliver. Do you want to, um, kick off?
You're on mute.
Okay.
Hang on, we seem to have a technical issue. Um, Play, do you want to start on the July? Yeah, it would, it would take the July weather and then we see if we can fix on the, uh, on explaining more. What is a dynamic on customers? Uh, so, so basically, and also, I'm happy to take it, uh, on the, uh, on the July weather. You’re right, we have seen, uh, quite a lot of secondary period activities, uh, across Europe with—
Wildfire with the wildfires. But also hail as an example, across Germany and Italy as an example. So, it's a bit too early to to assess. What would be, what would be the impact for us? Um, but I think stands, we, we expect the overall cat load of basically cat loss to be within our quarterly quarterly cat load.
The question on price.
Absolutely, just coming back to your customer last. 50 point on retail, I'm trying to understand, if, if any of this could be structural with customers, being able to use more AI to, to see competition in pricing Etc. And the danger of that could extrapolate to be a bit more like, UK motor, um, across Europe or and then just trying to understand the actions.
You're now starting to undertake or, or are undertaking to improve that retention.
Yeah, it's a really interesting debate. Way of always internally, depends—what country you come from. Andrew is also from the UK and therefore, you know, we get the question. My personal point of view is as follows: um, AI has the ability, depending on the price—by the way, we shouldn't forget—a lot of these tools are provided for free at the moment, and customer behavior may change.
in in scale, in particular, depending on what the price of the token on the user of the tools would be
So the first observation is you get richer information. Back when people ask, for example, as in the UK often, what's the cheapest car insurance? Because it's considered a commodity, you get more differentiated questions and answers on, how good is the claim service? What's the reputation of the brand and things like that? By the way. Also spill over effects from other products, which is very important for us to know, which means you cannot be strong in 1 product area and we can the neighboring areas. So it makes it things more complicated in the multi-product.
Environment. Because for example, the llms tell the customers you should be asking for a bundle bonus if you have both home and motor, right? So it's a longer conversation, we need to talk about it at the time, my personal point of view. It's, it's not a threat, it's a huge opportunities.
Because you can really in the positive sense, teach the llms to do look at more than just price only and we already see the second thing, which is a huge opportunity that we already see. Where are? We are performing strongly on product service and brand the conversion. Ratios.
They are a lot higher than on traditional search.
So the effectiveness again, depending on how expensive the tools are going to be, can be significantly higher. I've seen conversion ratios three to four times higher, uh, into the Allianz brand than before. So yes, they are threats, particularly if you're weak on a product or service. If you cannot re-offer clients' choice in terms of optimizing risk cover versus price and versus service, then we need to be a lot more concrete about why it's worth paying for something. But it's also a tremendous opportunity to differentiate beyond browse, okay? Um, thanks William, thanks Oliver. Um, we have no more questions, so, um, thank you for your interest. I know it's been a
It's been a long week. Have a nice summer break. This concludes today's analyst call on our Q2 2026 financial results. My team and I are available for follow-up questions. Thanks for your participation, and goodbye.
