Allianz Se Unsp/Adr

Good morning everyone and welcome to Allianz's third quarter and nine months 2025 media conference call. Thank you for joining us today. My name is Frank Stoffel, Head of Financial Communications and Valuation Relations and I'm here at our headquarters in Munich with our Chief Financial Officer Claire-Marie Cosle-Poutre and our Group Head of Communications Lauren Day. Today's conference call is scheduled for 60 minutes, and as usual, we will answer your questions following our presentation. With this, it is my pleasure to hand over to our CFO, Claire-Marie Kostelputre.

Thank you very much, Franck, and good morning to all of you. I'm very pleased to report on another very strong quarter for the group, which is building to an excellent contribution to the year and our three-year plan. Our results are supported by both an ongoing top-line momentum and an attractive margin development. Across the organization, we are working on our three strategic levers of smart growth, productivity, and resilience, with first signs of materialization into our numbers. As you can see on page A4, year-to-date, our business volume growth continues to be very strong at 8.5%. As previously, this growth is diversified from a segment perspective and within the segment, across businesses and geographies, which gives us a lot of strength for the future. Our operating profit is now up by more than 10% year-to-date. The number FX adjusted would even be 13%. Here as well, we see positive developments in all our segments. Our core net income growth is accelerating compared to the first half of the year, Year-to-date, it grows by 10.5%, or actually 8%, adjusted for the disposal gain of the live TV with Unicredit in Italy that we did book in the second quarter, and as well the anticipated tax effect of the disposal of our stake in Bajaj that we did book in the first quarter. Our core EPS, adjusted for these exact same two effects, is now up 10%, which is very strong and ahead of our 7% to 9% target range. Similarly, our core ROE is above 18% and well ahead of our target level as well. Our solvency ratio emerged at 209% and our operating capital generation continues to be very strong, which gives us flexibility for current and for future capital deployments. Given the excellent performance of the organization at the end of September, I'm very happy to indicate that we have adjusted our outlook upward yesterday night. and that we expect to lend the full year at least at 17 billion euros operating profit. Of course, the year is not over, and we can still see net cuts or market movements, but clearly we are very confident with the overall outcome. Let me move to page A5 and let's have a look at our P&C business. Here we have another excellent quarter, which is building on previously excellent quarters. We are achieving another record level of operating profit, now 15% up versus last year, as you can see on the right-hand side of this slide. Year-to-date, our total business volume is at plus 8%, which is excellent. This 8% growth is ahead of our assumed medium-term growth rate of 6% to 7%. Approximately half of the growth is volume, and the rest is price. Compared to the first half of the year, the volume growth has been accelerated from both retail and commercial. Our internal top line growth for the third quarter is in line with what we have seen for the second quarter, as is our rate change on renewal for the full book, which is now at around plus 5%. We have achieved a very good level of combined ratio at the end of the third quarter, at 91.6, with both retail and commercial performing, as you can see. Also, you can see in our material how broadly spread the performance remains. In particular, I'm very happy with the development of our attritional loss ratio, with more than one percentage point of progress year-to-date. This has been particularly driven by our retail business, with the benefit of the underwriting and pricing actions which are running through. Also, our constant focus on productivity continues to deliver, with our expense ratio down by around 30 bps, just below 24%. And the third quarter was very mild from a natural catastrophes perspective, but we booked no runoff overall. So we further increased our reserve confidence during the quarter. Overall, our P&C business is doing excellently. We see volume growth, which reflects a mix of strong ongoing developments, especially in retail, and targeted growth in commercial as we manage the cycle. Our profitability is not just a reflection of more benign natural catastrophes, but also very strong attritional improvements, relentless focus on productivity, and significant prudence when it comes to the recognition of runoff. Let me now move to life and health on page A6, where you can see that we are fully on track to meet our targets there. The numbers are as well more impacted by FX and PNC, and you may remember that we have disposed the Unicredit GV, which is now showing up in the numbers as of the third quarter. Our value of new business is up 4% with our PVNBP up 5% at a very stable new business margin, which is as well above our 5% ambition level. So we see good developments across the businesses. Our life new business can always be a bit lumpy and last year our third quarter was extremely strong where we had benefitting from various promotions. You may remember that our US life business was up 60% last year in the third quarter and we also had some large ticket transactions in particular at Allianz Leben last year in the third quarter. So I think to get a good sense of the fundamental growth in new business of our life and health portfolio, this is actually really good to look at the two years development between the 9M 2025 and the 9M 2023, where we have been growing by 20%, which gives us an estimated annual growth rate of approximately 10% FX adjusted, which we also consider is the right level of appreciation if you just purely were normalizing the number between 9M24 and 9M25. 25. If you look in more details at the profile of our business development, you will see as an example that we continue to grow at 93% in our preferred line of business, that our health business in Germany continues to show exceptional momentum, once again, with year-to-date new business profit up 56%. Italy is also worth a special mention to highlight, with a growth of 13%, excluding the Unicredit business, with the vast majority of that business coming into UnitLinked. Let's move to the contractual service margin. And as you know, the net CSM development is a much better indicator when it comes to the real reflection of the future stock of profit to be earned by us. The net CSM year-on-year is up 5% or is at 8%, I think it's adjusted. This is clearly well on track for our targets, as is the normalized growth of the CSM, which is just under 4% at the end of the third quarter. Our life operating profit emerged at 4.2 billion, growing 6% adjusted for FX. This puts us well on track against our targets. Overall, our life business momentum is good, our new business profitability is at a very attractive level, and our IFRS profitability is emerging as expected from a very diversified portfolio. Let's move to asset management on page A7. And here you can see how structurally our business is doing well at navigating the market environment, delivering outstanding net flows, performance, and profitability. We had our best third quarter ever in terms of net inflows at €51 billion, which brings the annualized year-to-date growth rate to around 7%, which is a very impressive level. Net flows in the third quarter are positive, both at PIMCO and AGI, across various strategies, platforms, and geographies. Our asset management franchise continues to be supported by the performance we deliver to our clients, with 92% of our third-party asset and our management outperforming their benchmarks on a trailing three-year basis at the end of the third quarter. If you look further in our material, you will see that our third quarter revenues are up 9% FX adjusted. The revenues are supported by the higher average asset under management, the continued resilience in fee margins at both our asset managers, together with performance fees in solid territory. Overall, this leads to revenues at 6.2 billion at 9M, which translates into 2.4 billion of operating profit for the segment. This is supported by the continued focus of both our asset managers on productivity, which is fueled by cost discipline, the operating leverage as we grow our revenues, overall resulting in a cost-income ratio improving 60 bps year-to-date, now below 61%. So overall, on asset management, we see an attractive diversified franchise with growth momentum and profitability. Let me move to page A8, where you can see the development of our solvency ratio, which is characterized by a continued very strong operating capital generation, which is fueled by the excellent performance of our P&C business in particular. This capital generation continues to support our attractive payout, both dividends and share buyback, together with some of our recent capital deployment, like the investment into Viridium or the partnership with the Royal Automobile Association in South Australia. As part of our capital market decommitment, we are focusing on the implementation of our capital management framework and we are confident to achieve our full year objective of more than 20% in terms of operating capital generation. Our sensitivities are almost unchanged at a low level and continue to offer confidence of the resilience of our profile. So overall, we are in a very good position, both in absolute level, sensitivities, and our ability to generate solvency through our business portfolio. While we benefit from some positive one-offs in our operating capital generation this year, there are fundamentally a lot of positive elements to be appreciated there this year so far. Let's move to page A9. And page A9 is focusing on the special event we had this year. As you can see, we are celebrating the 25-year partnership between PIMCO and Allianz, following the completion of our first investment into PIMCO back in 2000. We thought it's very worthwhile to do a zoom on this. And clearly, it has been an exceptional partnership we are very proud of, which has generated considerable value. Let's move to next page to have a look at that, at some metrics. PIMCO has, for instance, grown its asset under management sevenfold, its operating profit ninefold, the latter now making up nearly 20% of Allianz Group operating profit. PIMCO is as well adding value, so it's strong management of almost 50% of the group's assets. PIMCO's franchise, as a leading active fixed income manager, has been underpinned by consistently strong investment performance. Here again, at the end of the third quarter, for example, 97% of our asset and our management were outperforming on a three-year basis. As I have already mentioned, PIMCO has seen outstanding flows this year and continues to capture a high market share of the flows seen by the industry into active fixed income strategies, together as well with the support of some of the more recent initiatives, as an example the active ETF product that I also already mentioned in the second quarter. We continue to look for ways to further increase the synergies between PIMCO and the wider Allianz Group, as we leverage the benefits of an integrated asset management and insurance group. The relationship is very symbiotic. Alongside PIMCO being a manager of our general account assets, Allianz insurance businesses can see new strategies for PIMCO and help expand distribution as well. PIMCO as well is supporting and benefiting from our third-party capital optimization vehicles like Sconset that we have deployed for Alliance Life in the U.S. Beyond all of this, and what may be less identified in the case of PIMCO, is how innovative this business is. The success of PIMCO lays as well in its ability to constantly look across the business at new and better ways of acting or investing. You have many examples of that actually also in the presentation of Christian Strahl in the Capital Market Day presentation. So looking ahead, and as we outlined at the Capital Market Day last year, we are very positive about PIMPO's future as a leading active manager with skills in both the public fixed income markets and across a broad range of alternative strategies, which are a fast path of its business. The focus is mainly on asset-based finance strategies that support the real economy, as an example, the investment in data centers. So after 25 years of success, we clearly look forward to many more years of working together, sizing those opportunities and delivering excellent performance to our clients. Let me wrap up on page A11. So clearly we have an excellent year so far where our delivery momentum continues across all our segments. Here I want to take a small pause to say a big thank you to all our employees for their work and engagement in delivering such results. Together, we are working on executing the capital market delivers, including the focus on higher capital generation and the strengthening of the resilience. As part of that, both the fundamentals and the diversity of our business continue to give us confidence, even if the environment can be volatile or uncertain. With all of this in mind, and given the performance achieved at the end of the third quarter, we have confirmed yesterday in our ad hoc a 17 to 17.5 billion range for the outlook. This is subject to the traditional caveats, but clearly we are very confident. With this, I would be very happy to take your question, and I hand over back to you, Franck.

Thank you, Claire-Marie. We are now very much looking forward to taking your questions, but before we start our Q&A session, let me, as usual, remind you of the housekeeping items. We will answer your questions in English, but if you are more comfortable to ask your questions in German, please feel free to do so, and we will repeat it back in English for everyone else on the call to understand. If you want to ask a question during the Q&A session, press star five if you have joined via telephone or press the talk request button on the web audio call. As usual, if you are on an IP-based telephone, this may cause technical problems for you. If this is the case, please email our colleagues at media.contact at allianz.com and we can assist you with your setup or we can take your question and, of course, ask it on your behalf. The first question of the day comes from Michael Flemmig, Börsen Zeitung. Mr. Flemmig, your line is open.