Allianz Se Unsp/Adr

Good morning, everyone, and welcome to Allianz's first quarter 2026 media conference call. Thank you very much for joining us today. My name is Frank Stoffel, Head of Financial Communications and Valuation Relations, and I'm speaking to you from our headquarters here in Munich. I am joined today by our Chief Financial Officer, Claire Marie Coste-Poutre. Before going into the presentation, let me briefly cover the usual housekeeping items. We will answer all questions in English. However, if you feel more comfortable asking your question in German, please feel free to do so. We will then repeat the question in English for everyone else on the call. If you want to ask a question during the Q&A session, press star 5 if you have joined via telephone or press the talk request button on the web audio call. If you are on an IP-based telephone, this may cause technical problems for you. If this is the case, please email media.contact at allianz.com, and we can assist you with your setup. Or we can take your question and ask it on your behalf. Today's conference call is scheduled for 60 minutes, and as usual, we will answer your questions following our presentation by our CFO. With this, it is my pleasure to hand over to Claire Marie.

Thank you very much, Franck, and good morning, everyone. Let me start with an overview of the group results for the first quarter of 2026. So the overall picture from my perspective is one of a strong start to the year, which allows to reaffirm our full year outlook of an operating profit of 17.4 billion plus minus 1 billion euros. We can confidently do so despite an elevated market volatility and a more uncertain macro environment. Across our three strategic levers, growth, productivity, and resilience, we continue to execute with discipline and to deliver towards our ambition. Moving to the numbers on page A4, here you can see overall our business volume continues to show steady internal growth, driven in particular this quarter by our P&C and asset management segments. The live business was resilient against the first quarter of 2025, where business volumes were particularly high back then. Our operating profit momentum is excellent, nearly 7% year-on-year, where we see more benefits from the diversification of our business model. Here we see in particular a double-digit growth in P&C, which is reaching a new record level of operating profit, an excellent performance in asset management, which is up 6% or 15% if you adjust for ethics, and life delivered a resilient performance even if it has been impacted by ethics and the disposal of the joint ventures with Unicredit and Bajaj. Our net income includes the impact of the completion of the Bajaj disposal for 1.1 billion euros net. As a reminder, we have indicated in the fourth quarter that we will neutralize this accounting gain over the course of 2026 through strategic and productivity actions and reinvestment into higher yielding instruments. Only a modest offset of €150 million net was booked in the first quarter and more will follow through during the year. Adjusted for the budget impacts, our underlying core net income achieved a strong increase of 7% year-on-year, with an ROE of 18%, and an excellent EPS growth of 9%. So, beyond these exceptional effects, the fundamental performance is very strong and fully on track towards the capital market day ambitions. Finally, our solvency to ratio ended the quarter at 221%. This is a very resilient level with well-contained market volatility and a consistently delivered strong operating capital generation. Let's move to P&C on page A5, where you can see, first of all, that our top-line momentum continued at a pace that is in line with 2025. Our internal growth is at 7%, with a split roughly 50-50 between price and volume. As you can see in the further detailed pages, the growth across the P&C portfolio remains well diversified. Maybe some standout contributors for this quarter, you will see as an example that our platform businesses, such as Island Partners and Direct, have been both growing double-digit. We have a strong new business in Germany, and we have also selective growth in commercial, where pricing meets our hurdle rate. Across the organization, we continue to focus on our growth triathlon, new customer growth, increased cross-selling, and churn reduction. Our underwriting profitability is excellent, with a combined ratio at 91%, supported by both retail and commercial. This outcome reflects a broadly benign NACAT environment for the quarter, but more importantly, a robust underlying underwriting performance and an ongoing improvement in the expense ratio. The sustained top-line momentum and the further improved combined ratio drives our 11% operating profit growth, reaching an excellent 2.4 billion euro operating profit. The investment result is broadly flat. We also continue to leverage AI across the P&C value chain, as we have been explaining also in the first quarter results, from marketing and distribution of new business, through to claims management, so basically broadly. The main focus is on customer experience and also distinctiveness of our products offering, so that we can fuel our growth trajectory. A couple of examples maybe of what we have further tapped into during the first quarter. As an example, on Islands Partners, we have onboarded several new large OEMs relationships which are fully supported by agentic AI tools, in particular on the roadside assistance side, which is by significantly scaling our straight-through processing of claims. In Italy, in France, and Spain, as an example, we have AI tools that are supporting our agents to provide training or real-time support in assessing the risk. We are AI experts, and this is boosting customer service and productivity at the point of sale. Similarly, in commercial, our submission hub, allows for a much faster and higher quality answers to submission via preparation, enrichment, and best allocation to underwriters. This is generating significant impact both in response time and conversion rate. So overall, I'm very pleased with the P&C performance this quarter. We see good growth, excellent and robust underwriting profitability across both retail and commercial. Let's move to life and health on page 86. where the underlying performance of the segment is, from my perspective, considerably stronger than the headline momentum might suggest. The new business comparison versus previous year is impacted by a very high base in the first quarter 2025, which included large tickets in Germany, Strong Thailand sells her head of regulatory changes on medical riders, and the Unicredit GV business, which has been disposed in the second half of 2025. Adjusted for those impacts and the FX effects, the underlying new business volumes are slightly up, and the new business value is broadly stable, with an attractive mix with protection health and unique link contributing to 60%. To illustrate a bit some of those strong developments versus last year, in Italy, as an example, the new business value is up, net of minorities and including associated fees, with strong uniting growth through financial advisors. New business in Asia, excluding Thailand, is up 12%, and we see a continued strong momentum in Germany with a continuing double-digit new business value growth. On the live CSM development, we can see that despite the lower new business value, the expected in-force return still exceeded the release, generating a healthy 1.7 normalized growth. Our life operating profit was impacted by ethics and the Unicredit Vita and Bajaj disposals. Adjusting for these, the underlying life profit was slightly up. Overall, the life performance has been resilient in the context of a demanding comparison with last year, perimeter changes, and the market volatility seen in the quarter. We remain focused on achieving attractive risk-return profile on our new business, and we are confident we will deliver in line with our capital market day targets. Moving to page A7 and the asset management business, There, we had an outstanding start to the year against volatile capital markets. Our net inflows in the first quarter reached a record level for the first quarter, with strong growth at both FIMCO and AGI. Overall, the net inflows of 45 billion euros correspond to an annualized organic growth rate of 9%, diversified across regions and asset classes. Some illustration of this, at PIMCO, we see continued strong traction beyond the more traditional fixed income strategy for its expanding active ETF suite and broad-based demand also across Asia and Europe. At AGI, we see inflows across multi-assets, fixed income, equities and alternatives with new mandate wins in Asia in particular. The product proposition of our asset managers continues to be strongly supported by our value creation for our customers via our investment performance, with at least 90% of outperformance on a one- and three-year basis across our sub-party AUM. We generated 2.2 billion of revenues, up 12% as it suggested, driven by the growth of our asset and our management. I'm also very pleased with the productivity focus at both asset managers that is evident in an excellent cost-income ratio, delivering more than 850 million of operating profit, up 15% on an ethics-adjusted basis. It was a volatile period for capital markets in the first quarter and there was a lot of debate around topics such as private credit. Overall, our asset management businesses have been selective and very mindful of liquidity considerations even when growing their private and alternative offerings. Their focus in the alternative and private credit space is differentiated and focus around the real such as infrastructure or asset-backed finance. Overall, the current focus on credit and liquidity risk is a tailwind for our asset managers to continue to demonstrate the strength of their offering. Let's move to page 8, looking at our solvency ratio development. Highlands further emerged with a strong solvency ratio at 221%, with a 2 percentage point increase versus year-end in a volatile market environment. I think on this page, beyond the announced bad charge, share buyback, and the usual dividend accrual effects, the additional interesting points for me are the fact that, first of all, we have a very contained market impact, and secondly, that we have a very consistent operating capital generation. So clearly, the underlying drivers of the solvency developments are very strong in a quarter with volatility. Let's move to page A9. Here, I'm very pleased actually to announce that from this quarter onwards, we will be including in the backup slides actually additional disclosure providing insights into the performance of our health and protection business. As a reminder, we set out a target at the Capital Market Day to grow the operating profit of protection and health by a category of 7 persons through to 2027 to reach a 2.2 billion operating profit by then. Our protection and health business is currently split across P&C and life segments with different product features leading to different technical accounting treatments. Our disclosure will develop over time, but it is designed to give more insight into the components of profits and the nature of the products we are selling. On the left-hand side of this slide, we provide some more details on the products in the value segment. This is a broad offering with some key highlight products like our new dental offering in Health Germany or our Health Travel Coverage Attorneys Partners, both being accounted in different parts of the split between short-term and long-term products. Across the protection and health businesses, we combine a strong global oversight on underwriting standards, products, and pricing with customization to local market needs. In particular, we have global coordination for our health business through Allianz Digital Health. This was showcased at our Allianz Insights session of June 2025 and a good reference material from my perspective if you want to get more insights on our health business. All our businesses have initiatives in place, as you can see in the middle of this page, to further grow and to strengthen technical excellence. Some examples of that would be as an example that they cover a broad increase in use of digital channels for selling and customer servicing, the use of AI to increase the ability of agents to more quickly educate themselves and to better sell our health proposition, and more systematically leveraging cross-sell opportunities to sell health alongside our P&C products. Let's move to page 8M that is actually showing some financial highlights for the business and also illustrate the new format we will use going forward in the backup. You can see the very good momentum in the operating profit, growing 10% year-on-year adjusted for the disposal of the Unicredit GV. On profitability, you can see a healthy combined ratio of around 93% for the short-term business booked within the P&C business, driven in particular by attractive margins in health. For the business book in life and health, our new business and new business margin are at a good level, but impacted by some scope effects, in particular the disposal of the Unicredit GV, the lower level of sales of medical riders in Asia, and some additional tax on health insurance premiums in France. The normalized CSM growth of around 1.5% for the long-term business is healthy, and we would expect the business to deliver full-year normalized growth at least in line with the whole life segment. So overall, the health and protection market is a huge market with significant growth potential, also as we see selective disengagement of states in that space. We see strong appetite for our products, also supported by our ecosystems. We are very well positioned and very confident in our ability to meet our capital market day targets here too. Let me now recap on page A11. So, overall, we had a strong start into the year. If you normalize for the positive effect of the sale of our stake in our GDs, with bad judge, we deliver an excellent 9% core EPS growth, which is at the high end of our capital market day commitments. Similarly, our productivity and resilience focus is as well visible in our numbers. I can thus confidently reaffirm our outlook for the full year at 17.4 billion plus minus 1 billion euros. And before I hand over back, Franck, I would like to thank all our employees for their work and their engagement in delivering our results this quarter again. With that, I thank you all for your attention and I hand over back for questions. Franck.

Thank you, Claire Marie. Before we start our Q&A session, let me briefly recap the housekeeping. If you want to ask a question, press star 5 if you have joined via telephone or press the talk request button on the web audio call. If you are on an IP-based telephone, this may cause technical problems for you. If this is the case, please email media.contact at allianz.com and we can assist you with your setup or we can take your question and ask it on your behalf. Just a few moments for the questions. A question has reached us via email. It's from Stefan Kahl at Bloomberg, and we will read it out on your behalf. Stefan is asking, how important is Asia-Pacific for Allianz's growth ambitions in insurance? Does the company pursue any deals in the region, particularly in organic growth?

Thank you very much, Franck, for that first question. So our M&A focus, as we have mentioned, is along, I would say, three lines, right? The first one is looking at P&C. and is looking at making sure we are at the right scale in the markets, and we need to understand markets in the broad sense of the term, where we are not in the top three or top five, where we definitely need the scale to be capable to operate our machine, we believe, and to gain the traction we want to gain. And an interesting development from my perspective along those lines is that last year we have been looking at multiple M&A options, and what was clear is that we have an ability to go organically that is very strong and sometimes is really not making sense against other options in the market that are offered that are definitely too expensive. That is what we are capable of delivering ourselves. The second angle is a geographic angle, so typically Southeast Asia would be one in terms of further rebalancing our geographical distribution across markets. So Southeast Asia is a prominent one from that angle. And you know that as well from what we have been looking at in Singapore, in particular historically, But that's an important area of focus too. And the last angle is more related to distribution in general. So that's basically the way we are looking at M&As across our portfolio. And there is nothing in particular. To be honest, we don't comment on specific elements.

Thank you, Camarie. The next question comes from Tom Sims from Reuters. So, Tom, your line is open.

Yes, hello, can you hear me?

Loud and clear.

Splendid. Thank you, and good morning. First, a question about artificial intelligence. Some big financial firms are hoping to get access to anthropic smithas. Is Allianz one of them? And if so, when do you expect to be able to use it and what preparations or precautions are you making if you consider it some sort of a security concern? And second, a question about private credit, and forgive me if this is something that you've already elaborated on in detail in the past, but what exactly is your private credit exposure and where exactly is that located? And if you can quantify it in some way and maybe whether you're seeing any redemptions at funds. Thank you.

Sure. Maybe let me start with your second question related to private credit. I can refer to you as well, you know, and in our full year publication in the analyst presentation, we have a page called C51 where we provide full transparency into our non-traded, basically private debt portfolio. where you can see basically the way we are operating. And maybe before I elaborate on the structure of that portfolio, let me start with the fact that we have been operating in the private debt environment for many, many years. So for us, it's an area where we feel comfortable to operate, and it's also an area where we feel comfortable to operate because when you think about Basically, the credit risk is a risk we know well and we understand well. We are the owner of PIMCO. We are also the owner of Allianz Trade, which both are dealing extensively with credit risk. So that's an area we understand particularly well. Now, if you look at the structure of our private debt portfolio across the Allianz Group, as displayed on this page, C51, you will see that a large part of that portfolio is actually very boring and very plain, vanilla portfolio. More than almost 50% of that portfolio is real estate related. As an example, 27% of our portfolio will be retail mortgages, where we expect actually pretty low return, between 3% and 4%, so that's not aggressive type of returns we are expecting there. And those are retail mortgages we are operating since many, many years, mainly in Germany and in the as an example. Then we do have also some infrastructure debts, and the infrastructure debts, they are actually also of low risk. They are more than 85% investment grade, and they are really long-dated infrastructure debts, most of them also with a guaranteed coupon feature, which are really supporting the quality of the investment. We also do have a private placement part of our portfolio, which is also almost exclusively investment-grade, which is highly diversified, with more than 1,500 companies, with a strong focus on the US and Europe, and that's almost exclusively managed by PIMCO, AGI, and also Voya. So the riskier part, if you want, of our non-traded debt portfolio is the middle market lending. where we expect also higher return commensurate to the slightly higher risk we are taking in that portfolio, so between seven and eight persons, that's what we expect. And this is a portfolio that is extremely diversified and that we have been operating historically only with very few and selected partners we like, and we have a dedicated way of operating that portfolio, which means usually we are the sole lenders on the risk. so that we can operate in particular the work out if there is a need to operate the work out in a different way, which is securing also the level of losses we are planning with. So just to give you a sense of the quality of that portfolio, so historically that portfolio has been operated with 20 bps loss experience while we are pricing, so we are expecting in what we are pricing for more than 100 bits of loss experience. And at this point in time, we don't see new movements or relevant movements to be mentioned that we have experienced in the first quarter. So there is no deviation, if you want. That is what I have communicated at your end when it comes to that portfolio. And any further details you would want to go into for that portfolio, please don't hesitate. We are happy to answer. Now, coming to your question on Entropic, so indeed you're right, we have a specific partnership with Entropic that covers a number of elements, and please understand that we are not in a position to comment on what are the specific features of our relationship with Entropic, so we are not in a position to comment. But maybe what I can add to your question is that we are extremely engaged as a group on managing, monitoring, understanding the cyber risk. Clearly, cyber risks are evolving extremely fast. So we are developing options solutions constantly, and we are also engaging constantly with the best possible providers and peers to be able to basically operate and ensure that we are well coping with that raising risk environment.

Okay, thanks. That sort of sounds like you're testing it now. Is that the right assumption?

I cannot comment on that. Okay, thank you very much.

Thank you, Tom. Our next question comes from Susanne Scheer from Handelsblatt. Susanne, your line is open.

Good morning. Can you hear me?

Loud and clear.

Good. There was one interesting question at the shareholders meeting, namely how you want to measure whether investments in AI and digitalization will pay off in the future. Could you please give a little bit more insight on that? And a second question regarding cyber. Why did you decide to give the commercial business to Coalition? Is the segment not attractive enough for Allianz to operate it on your own? Thank you.

Thank you very much, Suzanne. Let me maybe start with your second question regarding coalition or the partnership with coalition. So I want to start first by being very clear that we have not sold our cyber business. We have entered into a partnership. with coalition, which basically is bringing benefits to both partners and a strong value proposition to our customers. It allows greater capacity to offer this important coverage, which we are convinced is a very important risk. We need to provide support towards or against to support our customers. But as you know, this is a risk that is extremely technical and that is also extremely fast evolving. And so we have decided to partner with Coalition, which is well known for its excellent technical expertise and service capabilities in the cyberspace, which includes, as an example, best-in-class underwriting based on sophisticated stress assessments that they have a proprietary and quite distinctive way of doing. So what we have decided to do is actually we have decided to delegate the underwriting under certain conditions to Coalition. But the business is actually underwritten on our own balance sheet, and this is a partnership we are very happy to engage into and to sign, and we expect it to last at least 10 years. From our perspective, definitely, this partnership is enhancing the expected profitability and the scalability of the IONS commercial offering associated to cyber. Also, we expect this extension to support in reducing volatility. And on the side of coalition, they clearly benefit from the access to our network, which is extensive, obviously, across our geographies. They also benefit from our brands and also from our various expertise when it comes to underwriting capabilities. So we really think it's a very good marriage of basically partnership, and Allianz is clearly providing the capacity to support the growth in a very important market and to be there for its customer on that dimension as well. Then maybe on your first question on AI return, So the way we are leveraging AI currently is, as I mentioned, right, so basically we are leveraging AI all along the value chain with the view of enhancing our processes. and also the customer experience and the quality or the distinctiveness of the products we are offering to our customers. So it allows also to do hyper-personalization of certain features which are adding a lot of value to the customer experience. So while we are looking at multiple KPIs when it comes to the performance of our business, Also, how more productive the business is becoming and those types of dimensions. AI is just one component out of it. So we are looking at it comprehensively, I would say, and not in a standalone, isolated manner because that would not really make sense to us against our overall ambitions.

Thank you, Susanne. The next question comes from Florian Müller, Financial Times. Florian, your line is open.

Thank you so much for taking my question. It is on the impact of the conflict in the Middle East slash Iran war. Did Allianz... have any impact and how do you see it going forward in your business? Where exactly do you see the biggest risks and what do you do in order to mitigate them? Thank you.

Thanks a lot. So indeed I think when it comes, so maybe like starting from the point of the situation in the Middle East, we don't own direct operations in the Middle East and we don't have operating entities based in the Middle East. So clearly our exposure to the Middle East is much more related to our global lines of business. And what we see is that, first of all, there was quite a good risk management and anticipation of raising stress associated to the Middle East related to those various entities, so Islands Partners, Islands Trade, and AGCS, Islands Commercial in particular. And what we have experienced in terms of... in terms of losses was actually small and really well within our risk appetite and the type of exposure we are ready to take. So I think from a direct standpoint, there is not much to highlight as being a core concern to us. Where we are more exposed is definitely more to the macroeconomic development and basically to the consequence of the situation in the Middle East. For the first part of the year, actually, even rising interest rates and a bit of a stronger US dollar was a positive to our numbers. But basically going forward, I think the key critical items will be the management of these volatility in general, where we feel well equipped with because we have strengthened our resilience, we have a strong solvency ratio, and we have tightened our sensitivities. But as well related to inflation, obviously, and the fact that we are looking at the inflation trends as always, I would say, but even with more accuracy as we speak so that we can monitor and optimize and react as appropriate within our businesses.

Okay, thank you.

Maybe one last item on inflation. So we are obviously monitoring, ready to react as appropriate. But what I wanted to add, which I think is a very important aspect as well, is the fact that we are constantly working a lot on ways to minimize the effect of inflation, in particular leveraging our ability, as an example, to tap into our platform business or into SOLVED, as an example, that is providing opportunity for us to provide distinctive features in terms of absorption of inflation into the cost of claims, as an example. So that's definitely a very important aspect on which we are always working, but we are even further doubling as we speak, together with the productivity dimensions, which is a very important way of tackling also inflation beyond the steering and the reaction that we are ready to do, obviously, and we have demonstrated we are good at doing in the past as well.

Thank you. Our next question comes from Herbert from the positions monitor. Herbert, your line is open.

I have three questions. One is on page E10 you show that pricing for AGCS has gone down. Could you give a similar figure for the whole Allianz Commercial Group because AGCS of course is underwriting this part of Allianz Commercial? Second question, in November Allianz Partners announced that they would shed more than 1,500 jobs due to more use of AI. Has that been completed and is that other initiatives in that respect expected from Allianz companies? And the third question, you became a shareholder of Iridium, the runoff specialist in Germany. Last year and in that connection, you mentioned in March 2025 that you might move portfolios, Allianz Life portfolios to Viridium. Is that in the making? Are those German portfolios or what is it that you might move to Viridium?

Thank you very much. Maybe starting with your question on overall rate change on the overall commercial portfolio, we are at plus 2% for the quarter, so actually it has increased a bit versus year-end 2025. And that's actually also linked in particular to the mid-com business, where on the mid-com business overall we are at plus 4%. plus 4% in terms of rate change and renewal. So you can see that in the diversified book of Allianz Commercial, we have very different dynamics when it comes to the rate environment.

I didn't get the... Sorry, I didn't understand what point... Where did you get the increase from, mainly?

Mainly from the mid-core portfolio. So within the mid-core portfolio, we are at plus 4%. Now looking at Veridium, so your question on Veridium. So as you know, we are a shareholder of Veridium, so we have no direct influence when it comes to their strategy and what they want to do in particular. You are right with the fact that we are constantly looking on our side at ways to optimize the risk-return profile of the group. And also at the Capital Market Day we had highlighted that we have a couple of historical life back books which are not at the type of return we would like to see generated by those portfolios. So we continue to work on those portfolios to really find the best possible solution, either via reinsurance, Viridium is like our divestment, like what Viridium would be providing as an example. So there is nothing for Allianz Leben, definitely, and for multiple reasons, first of all because performance and overall risk return profile of the Leben portfolio is extremely strong, but also even if you were to step back from that and look just at the key features, The unit cost at which Inoxleben is operating is absolutely best in class. So there is no way a competitor like Veridium could make sense against that level of unit cost as an example in terms of play. So that's not an angle definitely for Inoxleben portfolios. Then on your last question, which I think was related to... So basically, coming back to our AI approach, the way we are looking at AI is via this optimization of our processes all along the value chain. and looking at where we can add most value to the customer and where the human in the loop basically is adding value also in terms of touch point from the customer experience perspective. And so what we are doing associated with that one is that and basically The main angle we want to achieve associated with this one is the fact that we are fueling growth because we are increasing customer satisfaction and we are also increasing the distinctiveness of our products. supporting us from that angle. What we do in addition, basically beyond tapping into our scale, into our brand and into our networks which is very important, we also are upskilling our talents and providing access to the tools and also to the new learnings which are essential as part of as part of the AI development. Just to give you a sense, we have been spending more than 100 million euros both in 2024 and 2025 to train in general our population and also to give them access to those tools. So now, when it comes to Islands Partners, I think they are currently basically working and executing on their journey. And beyond Islands Partners, I think there is nothing I need to report at this point in time. We can come back to you with the exact details for Islands Partners, because I don't have them with me right now. So basically I would expect smooth execution on their side.

The question was whether they have done it already, and at the time they said between 1,500 and 1,800 jobs. Has there been more clarity now whether it's 1,500 or 1,800?

We will come back to you because I don't have the numbers with me, so I cannot tell you exactly.

Thank you very much.

You're welcome.

Good, thank you Herbert. The next question comes from Maximilian Volz Plato. Maximilian, your line is open.

Hello, can you hear me? Yes, we can hear you. Thank you very much. I have a question besides from the raw numbers. Which sales channels will gain in importance over the next five years and which will lose ground both globally and specifically in Germany? And what conclusion do you draw from this? Thank you very much.

Thanks a lot, Maximilian. So you are right that definitely the fact that we have a strong and diversified distribution networks are basically really playing a key role when it comes to achieving our growth ambition. And today we have a broad distribution mix. We have obviously tied agents, we have brokers, we have direct, we have banks, we have partnerships, we have cooperation. And this mix is actually very different market by market, but it is definitely very important. So when we look at it globally today, brokers and tied agents are the most important distribution channels for us. On P&C, direct is also very relevant and is definitely growing. It's now accounting for almost 10% of our premium generation already. And as I was mentioning, it's actually growing double-digit. In life and health, the banking channel is also highly relevant and is accounting for basically a bit more than 15% of our life and health premium generation in 2025. So I think if you look... into the future, which is difficult to do, right? Also, because when you think about it, we have been, I think, as an insurance industry, we have made many predictions on what's going to happen, and as an industry in general, we were quite wrong. I think what we expect is that the share of business that is going to be initiated online will grow, obviously, substantially, and our ambition is definitely to further develop all of those channels As we speak, we have a lot of actions and work that is happening in various geographies and also in some of our more global lines when it comes to also how we are going to initiate and interact like the action and the engagement with our customers within the LLM. So it's actually very interesting. and a lot of developments are already happening, not all of them being live because we have also quite a number of very interesting more legal considerations associated to having, yes or no, as an example, a broker license within those channels. So coming back to the looking ahead, so we definitely expect that much more business will be initiated online, and we are very comfortable then with the will then decide how he wants to interact with us. So we are ready to welcome the customer and we will be ready even further to welcome the customer whatever way he wants to engage with us. And in particular, I think the traditional agents will remain very relevant because it can reach customers who value advice and also more personal touch. It can also be not always meeting physically. It will also be certainly meeting via a digital interface if they want. And through the direct channel and the platform channel, we are reaching out and we will reach out further to customers which are more price sensitive or prefer to have a purchase that is independent and quick online also with a lot of embedded features that make it very easy to purchase and to engage with us. Now, when you look at Germany specifically, I think in terms of distribution channels, we will distinguish between tight agents, brokers, banks, and online distribution, such as Announce Direct. Through these channels, we reach a broad customer base, as well as specific target groups, online and through personal face-to-face interactions, clearly. And what we observe is that in the past, the vast majority of insurance passages was currently made through personal interaction with an intermediary. So what we see is that as we speak, and it's a bit counter-intuitive, is that there is no massive change in the way people are engaging. So they start differently, but then they come usually to an agent to have this conversation, to decide via an intermediary, and that we expect to continue in Germany in particular. And we see actually also very few differences between age groups. And among the younger customers, like the one under 30, most insurance contracts are concluded with a personal contact. At the same time, we know that many customers today have at least one digital touchpoint with Allianz before taking out a policy. And the variety of these search points continues to grow. So really what we see is this expansion of contacts, but then this conclusion via personal contact. And so I think the conclusion is that also in Germany, we do not expect a radical shift between cell channels in five years from now, but we are ready to have those engagements to start the conversation whatever way and then to conclude the conversation whatever way. For my perspective, that's the most important, and we are ready to do that in a very advanced manner, I would say.

Thank you very much. So to sum it up, you don't think that there will be a big switch from Germany business, as example, to Allianz Direct because of the online boom, I call it.

No, I think the way we see it is that basically both Allianz Direct and Allianz Fair are actually, all the German businesses are working smoothly together. And we generate exchanges. Basically, we start conversations and then we offer to the customer what he wants. And I think that's the most important thing. And we expect that there is space for both sides, given the different profile of our customers. And strangely enough, that has not evolved massively over the recent years, despite the fact that it was already available. But maybe to take another angle to what I was saying is that we have recently launched on the side of Allianz Direct. a product for non-motor that is 100% AI-fueled, if I may put it this way, as a product. So you can really start the conversation with an AI agent and conclude entirely on the LMS Direct platform with your non-motor product buying. And this is actually working also extremely well. We have 30% of our customers that have started this way that have concluded the buying of the product entirely fueled by an AI agent. So I think what it is saying is that there is space for the two. You need to welcome the customers whatever way, and then you need to ensure that there is a super smooth integration of the digital world together with the physical world so that you can ensure that good experience from a customer perspective.

Thank you very much for your answer.

Thank you, Maximilian. Our next question comes from Jean-Philippe Lacour, AFP. Jean-Philippe, your line is open. Jean-Philippe, we can't hear you. Please feel free to share your questions with us via email. Thank you. The next question then comes from Michael Flammig, Börsen Zeitung. Michael, your line is open.

I have three questions, please. Inflation, India and Germany. We talked already about inflation. Inflation inspections have risen sharply in the short space of time. We saw this happen back in 22, at the time Allianz took a while to adapt, I think. Will inflation infect Allianz profitability over the next six months? To India, there are offsetting measures of 200 million euro in top context with the sale of your stake in India. Could you explain what you did in the first quarter? And Germany, perhaps you could put the business performance into context. Thank you.

Thank you very much. So I think on inflation, first of all I would not agree with you that we have not reacted well back then. I think as an organization we did react well and we also did react in multiple instances ahead of the market, which also allows us to be quite well positioned to also reap the further benefits of this being ahead while also competitors are to follow up. So I would say at this point in time, when I look at the overall pricing environment, first of all, we believe that in most markets, actually, we are pricing ahead of inflation, so we feel comfortable with the assumptions we have taken and with the way we are proceeding within our various markets. Obviously, that's a conversation that requires to be quite nuanced across geographies, across line of business, because not everything is equal everywhere. But I think the long story short is that we are well positioned and we feel comfortable where we are. And now what we do is that we do this super tight monitoring together with our local operating entities. So at local entity level, there is this very strong cooperation between the pricing teams, the claims team, and the reserving team to be in the situation to identify what's happening and basically to react actively if there is a need to react. At the same time, Our ability to react is very strong. We have also further enhanced our technical excellence. We have the ability to be even further nuanced when it comes to pricing action, as an example, and also the frequency of the pricing actions has further evolved, even if you compare to 2022. So I think that's from a pricing perspective. As I was mentioning as well, we work a lot, and I think we are also very well positioned from that angle on productivity and on leveraging everything we can do with providers like SOLVED and its provider to also minimize some of the impact of inflation into our products. And the last dimension from a pricing or product perspective is the fact that we are also innovating with further products which are more steer products, so that would be the case at Allianz Direct, which is, as an example, offering a product with a further discount, but where basically in case of claims experience, you are steered in a very comfortable way from a customer perspective so it's adding a lot of value from a customer experience angle but it's also allowing us to basically have the cost of the claims under control and as such allowing a much better basically overall pricing for that product. So that's basically for the for the inflationary angle. And overall, we feel extremely well positioned also for the rest of the year. And as mentioned, we are just monitoring it carefully. Now coming to India and indeed the usage of the proceeds. So what we have communicated is that we will use the proceeds for various buckets. One broad one is related to the acceleration of our strategic deployment and also the investment into productivity, AI, and so on and so forth. So that's one angle to it. And the second one is also further basically debt realization on our investment portfolio to benefit further from the higher-earning environment. So in the first quarter, we have realized 200 million of debt losses into our portfolio, mostly supporting the P&C business. So that's going to basically support further the investment results of the P&C segment in the second half of the year and also as we move into 2027. And that's basically what we have done at this point in time. So on the net basis against the 1.1, we have spent 150 million, if you want, and the rest will come during the year. And then I think you had the last question around the overall performance of the German business, which basically had a very good – first on the renewal side, we have seen a very strong renewal in the first half of 2020. in the first of January of the year so it was a very strong first start into the year so we have a very good level of internal growth of more than 5% for that business And then when it comes to profitability, also excellent level of profitability of our life business on the PNC side with a combined ratio of around 88%, which is supported as well with the fact that we had a lower level of natural catastrophes in this quarter. That being said, we had a lot of frost in the first quarter, which basically led to quite some increased frequency in what we call the weather-related type of business. But as you can see, not impacting the overall profitability of that business. So we are very happy with the development of the business. really good growth and a very nice level of profitability so well done to the team in general so I hope that answer or you want also a broader views on our other life business our other German business also including life I wasn't sure if this is PNC only or more no it's ok thank you very much thank you thanks a lot

Thank you. Our next question comes from Ben Dyson, S&P Global Markets. Ben, your line is open.

Hi, good morning. One quick follow-up on Allianz Commercial's arrangement with Coalition on cyber. I just wonder if you could say how that will change Allianz Commercial's existing cyber underwriting team and whether it will need to shrink because more of the front-end underwriting is being handled by Coalition. Thank you.

So I will not go into all details, but basically we have two different elements associated to that. There is part of the team that is basically being transferred to the underwriting team to work together with coalitions, and also we have some level of expertise that we retain for our cyber activities. also related to the reinsurance, which is a very important aspect as well of the overall risk management of the cyber risk.

Thank you.

Thank you. And Jean-Philippe Lacour has shared his question by email. Jean-Philippe is inquiring, what are the net costs of the severe floods that have hit France in February?

So it's actually like a mid-double-digit level for Alliance France overall. So an impact, but also well within what we would expect related to NACAT exposure overall.

Thank you. There are no further questions in the queue. Thank you for everyone who has put forward questions. Of course, we are ready to help. Just for your calendars, we will report our second quarter and first half 2026 financial results on August 7th. And in addition, we would like to remind you of our media barbecue on July 7th here in Munich. We look forward to welcoming as many of you as possible in person here at our headquarters. This concludes today's media call on our 1Q2026 financial results. Thank you for your participation and goodbye.

Thanks a lot.