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?