Allianz Se Unsp/Adr

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. A recording will be made available shortly after the call. At this time, I would like to turn over the call to your host today, Oliver Bate, Chief Executive Officer of Allianz SE. Please go ahead, Oliver.

Thank you, Andrew, and thank you, investors, for taking interest. I know you had a couple of calls already, so we are trying to keep it mercifully short and focused in order to make sure we make the best out of your time. So page A2 is where I would like to start. Just as context, and that you're all aware of, we are in a very volatile environment, not just geopolitical tensions, but also enormous nervousness, investor nervousness around who's going to win and lose from AI, including the people that are actually spending hundreds of billions on building AI infrastructure. And therefore, just as a reminder, we are very, very focused on our three strategic priorities, which we've outlined the last Capital Markets Day, driving smart growth, reinforcing productivity now with the help of AI getting implemented into the core of the company and further strengthening our resilience, which has now reached a new height. Just as another reminder, Allianz has made it a deliberate choice to try to lead on a number of factors that we believe are important in such a really volatile environment. The first is the trust of our stakeholders, not just shareholders, but particularly society and customers at the core of it and our own people. So we are the number one in the Edelman Trust parameter. We've also captured the number one position on the Evident AI Index for insurance as a leader in not just understanding but implementing AI in our business. and what we believe is super important in a GenTech world is to have the strongest brand that emanates the trust of consumers. And again, we are by far the most valuable brand in the inter-brand ranking and also true for a number of other brand rankings. So we believe we are well positioned to deal with this global challenge, but we are humble enough to understand that the world can be a very difficult place and we cannot do well all the time and always. Now, let's move forward. Page number A3, please. What's really interesting to see in the first six months, and I'm going to talk about six months, not the quarter. It's obviously important for you to re-address your questions on the Q2. I'd like to talk about what we've done on the two businesses that we outlined. We report on three reporting segments, but the two businesses that we strategically differentiate, protection and retirement, We are on track on all of the key parameters across the portfolio. Productivity further 30 bps down and that is also what we should be seeing by the end of the year. Since 2018, we have been continuously delivering and I'm very confident we keep on delivering. Why is this important? It gives us the flexibility on pricing and on reinvestments into the brand and distribution and in growing the business. Apropos, our platform business continues with very strong growth momentum, as promised and as indicated before. A reminder, mid-corp combined ratio at 88%, super strong, despite the pressure we're seeing on reinsurance markets in large corp. We are expanding our footprint in some of the important segments. The partnership with Coalition is One, accessing alternative reinsurance capacity via Lloyd's, coming at very attractive rates, even relative to other items is important. And Health and Protection stands at 1.2 billion, which is also a nice level. On the protection side, we're happy. The other side of the coin, retirement, we have a couple of things that are important. Record net inflows. Inflows continue throughout the years, and by the way, continue as in the first half also in July. We are further supported by excellent investment performance, as you can see over that, and we are supporting further growth with investments into building our ownership In asset management, both in PIMCO with the purchase of the M units and our investment in UOB asset management in Singapore. That combined with the acquisition of HSBC in Singapore helps us to establish a decent presence in one of the most important wealth markets In Asia, we believe Singapore has a strong future ahead in an environment where people will be nervous where to put your money. Very strongly regulated, very well regulated, very good rule of law. So we are big fans and we have finally had the opportunity to invest in both areas. By the way, a coincidence that it's happening in Chile. within a few days of each other but there's no coincidence is that we want to strengthen both the life side and the asset management side and Singapore has a lot of innovation opportunities The experience that we've had in the US with AZ-Live in the wealth 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, you could probably read faster than I can speak to it, even though I speak very fast. Just as a reminder, PIMCO buyout of minorities has been a long term plan. It's happening now because we have reached a point where we can do it five years after we stop issuing the options. We have the right to call them and we have agreed with the PIMCO leadership that this is a good time and to do this very, very quickly. A 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 EOB on asset management, a very strong bank, by the way, not just domiciled in Singapore, but in some important Southeast Asian markets. So that's Quite important, on the left-hand side again, some information on HSBC. Important is to point out, if I may say so, under the ownership of HSBC, this franchise has massively transformed in a very short period of time. It's not a bank assurance agreement alone. That is important because HSBC has doubled down on building out Wealth Management in partnering with Allianz in Singapore, they just added another 100 relationship managers to build out wealth. But it has other distribution structures that are important as well, agents and more importantly, independent financial advisors. 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 as we see, we think we're going to have very good returns. And by the way, a very good mix, low risk, a bit higher risk so that we make sure you can as investors rely on us getting a decent return on investment on these growth investments. So let me then go to page A5. As a summary, then I'm already done. I love this slide. It's my favorite in the deck because it nicely shows that we are not relying on a single cylinder. We've been saying it over all of the years that 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 diversified portfolio. And we believe we will be in a good position to hit our outlooks and the midpoint, not just for the earnings outlook, but the midpoint for our strategic cycle. We are exactly 18 months, i.e. 50% into the three-year cycle. So as we can say nicely, so far, so good.

So thank you very much, Oliver, 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 segments are contributing, again demonstrating the rigor we put in the execution of our capital market delivers, including from leveraging AI. Building on Q1, we reached 54% of full-year operating profit midpoint and we have an excellent level of solvency to ratio. We are very confident clearly against our yearly and our capital market day targets. So on this page you can see starting by the Right left corner, that our 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 four. In Q2, we are at 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 very strong performance. As an example, asset management is at 19% growth in the second quarter. This level of growth in the first half of 2026 is building on a 10% internal growth that we have achieved in the first half in 2025. So if you bring the two together, we achieve a high single-digit level of growth over the last two years. The development of our operating profit demonstrates 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 a first half, 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 in the first quarter this year. So it's basically displayed transparently 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 core net income emerged at 6.4 billion euros and you have seen that already that in the year-on-year comparison of the net income we have many effects this year at the first half. We have effects coming first from the disposals that we have seen both last year and this year. and we have also the effect from the restructuring. As mentioned in the first quarter, we are leveraging the gains we are generating on the sale of Bajaj, of the GV with Bajaj, to advance our AI-driven transformation. So if you adjust for both effects, meaning the disposals and the restructuring or the excess restructuring, our shareholder core net income grew by 9%, which is an excellent level. Now, if you 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 some natural volatility in that number that is linked in particular to the hyperinflation effects. But it's important to note that in addition to the approximately 600 million of further offset of the badge-age gain, 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 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 solvency ratio at 225%, as well our operating capital generation is very good at 11 percentage point, fully in line with our expectations for the year. So we have a very healthy level of coverage and also very high financial flexibility into our numbers. This supports very well the transaction that we have announced recently. So moving to PNC on page B4, here you can see our excellent level of profitability. You can see as well the very good level of internal growth 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 6%. And as part of that internal growth, commercial is at 4% and retail is at 7%. That 7% is very good from 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 growth is as well spread. You can see in the further details as an example, the very strong performance of Germany that is at 6%, also even Q2 is at 7%, Eastern Europe is at 7%, 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%. Also in terms of pricing dynamic, we see a resilient environment overall. In retail, we are at 5%. In motor, we are at 7%. And commercial continues to present quite a diverse picture and where we are clearly focused on cycle management with good opportunities we continue to see across the portfolio. Our combined ratio is at 91.4% for the first half, and our operating profit is at 4.9 billion, which is up 9%. This is a record level of profitability for a first half. and this record 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 look further into the details of our insurance technical results, there you will see first that our 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 caution. Our caution is similarly reflected in our lower level of runoff versus prior year. And in total, if you take those two elements together, the extra buildup of inflationary reserves we have performed in the first half represent 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 bps 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 or 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 achieving automated quote and bind capabilities where we see as well that the funnel of 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 to support the development of the business. So if you look at P&C at the end of the first half, we continue to deliver growth at an excellent level of profitability. Clearly, we are confident in our ability to leverage our technical strengths and as well 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 half. We see good recovery in the second quarter of 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 FX effect and as well for the impact of the disposal of the GV with Unicredit. Also adjusted, our VNB is up 4% and our PVNBP is up 9% in the second quarter standalone, so clearly good momentum there. The high quality and the diversified profile of the growth is also supported by a healthy share of protection, health and unit link in the underlying. We have some examples of that if you go into the details of the portfolio. We have a CE that is showing double digit growth on top of a very strong previous year. In the US, the sales are up in US dollar term despite promotion that was running last year in the second quarter. In particular, in the Ryla segments, we are doing very well with a 13% growth in the second quarter. and in Italy we continue to see a very impressive development if you adjust for the disposal of the GV with Unicredit. Our volume as an example with financial advisors is up 16% in the second quarter. We see as well a good level of development of our normalized CSM, which is at 2.7%. And this is fully in line with our full year outlook. And also the absolute level of CSM has recovered very well from the Q1 market effect, fully in line with our sensitivity. So you see very well the breathing of the CSM in the further detail. This improved momentum is as well clearly translating itself into the development of our operating profit, which is up 5%, FX adjusted and emerging at 2.9%. Just to illustrate this recapture of momentum as well into the operating profit, the operating profit was down 2% in Q1, so you really see well the positive development there. In Q2 as well, we see that the operating profit is developing positively across a widespread base of operating entities. We see as well that our investment results include the reversal of some of the market volatility we have seen in particular coming from the US in the first quarter. and we also see in the investment results in Q2 the first time dividend coming from Viridium and Sconset. So overall for the first half we have good results with strengths nicely diversified across the portfolio. We are pleased with the improved momentum which leaves us well on track for the full year guidance. Moving to B6, and that's also one of my favorite pages of the deck overall. We see the excellent first half results of the asset management business here. We see record net inflows 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 there. Our annualised 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 regional diversification of emergence of the net flows. We see as well the product innovation that is coming from 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 three-year basis. I think it's fair to say as well that while the environment for asset management is not so straightforward right now, with many questions as an example on the direction of rates, on credit markets, on AI financing, et cetera, our asset management business continues to respond very well with differentiated offering. And that's also one clear element that is contributing to their success. And in July, actually, as we speak, we continue to see flows that are continued emerging following the same pace in comparison to what we have seen in the first half. Our revenues grew by 16%, FX adjusted. As mentioned, you can see as well a very resilient level of margin. Our operating profit is up by an impressive 19%, FX adjusted too. And good development as well of the cost income ratio is supportive of the overdevelopment 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 on the asset management space and we are going to extract from that future value over time. Moving to page B7, where you can see the very clean development of our solvency ratio for the first half. We are emerging at 225% of solvency ratio, which is our highest level since 2018. And this is also, you can see as well, sorry, on this page, a very consistent delivery of operating capital generation, which is at 11%, and actually almost Exactly at the same level for Q1 and Q2, and this is fully in line with our target of at least 22 percentage points for the full year. As mentioned, for the future, the aggregated impact of both in terms of solvency and liquidity of the M&A, or the transaction we have announced, is highly manageable and we will as well generate over time attractive returns from those operations which are going to further support our positive development. So our resilience is very strong. We see high ability to manage the volatile environment in our resilience overall as already mentioned by Oliver. This is clearly a focus for us as an organization and this is a fundamental way We are operating our business in two. If we move to page B8 to wrap up, here you will see that first 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. But in addition, I want to spend a bit of time reviewing our status against our three-year strategic cycle as we are exactly midpoint through the capital market day journey. 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, and we are pushing on the levers we have identified. The work is ongoing and the work is going very well, so we are confident on our ability to deliver there. In terms of strategic delivery against our three main levers, on driving smart growth, I think you have seen in the document a lot of good illustration when it comes to, as an example, third-party net inflows, but also development of the operating 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 at the low range of what is our target, which is 3% to 4% volume growth as part of driving smart growth. So there is still work needed together as part of our growth triathlon 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 against our target very clearly. But even more importantly, I think what we see across the organization is a lot of fundamental work in terms of rethinking the processes from a customer-centric manner and also harnessing AI to advance the productivity across the organization. And this is very important, 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 make our product affordable for the future. Finally, on resilience, a lot of elements ongoing, as I was already mentioning, together with the fact, and I want to maybe re-emphasize the point I was making on the P&C business, that we are actively managing the cycle, which is clearly part of building resilience. and also on claims inflation given the uncertainty that is currently ongoing associated to the inflationary environment. We have built extra resilience as an example in the first half of the year. So overall this was an excellence for six months. We are very well on track to deliver our capital market ambitions. We want to continue building resilience while sustaining profitable growth and also while 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.

Great, thank you, Claire-Marie. Okay, we are ready for questions. So just to remind you, you can either use the talk request button if you use the web to join, or I think it's star five if you're joining by phone. And again, if you've got any problems, we're happy to take emails to me or any of my team if you have logistical issues. Okay, with that, I think our first question is from Michael, Michael Hutner of Berenberg. Go ahead, Michael.

Thanks so much and congratulations, lovely numbers. Two, one, could you, all these deals that you've done, I'm sure you've got the numbers right there at your hand and I don't. Can you give us the kind of the per-form impact, both insolvency and operating profit, whatever metrics you think we use? I know you might use slightly different ones. The second is on AI. So the benefits are coming through, which is lovely. The bits I can't quite figure is the cost of it. So I just wondered if you could give us an idea of either the cost or how you account for it or in the expense ratio or whatever. And in particular, if suddenly we all decided AI, we didn't like it, is there a kind of potential write-down risk? Thank you.

OK. Claire-Marie, do you want to take the first question?

Yeah, sure. So just because the line was not so good on our side, what you are mostly interested into is the solvency ratio effect of the three deals, right?

Yeah, not just, honestly, that's easy. I want to know the operating profit. Yeah, yeah, of course. Yeah, yeah, that's fine, that's fine.

No, I wasn't sure. So I think, like, so those, I mean, for all those, I mean, we are very rigorous in the way we are doing M&A, as you know. So for each of those capital deployments, what we always ensure and we are looking at is 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 we need to wait for the deals to be completed to really tell you what's going to impact overall as part of our trajectory, but we'll do that once we get there. I think just to give you maybe some indications for each and every of those deals, if you start with With the PIMCO-M unit, which is maybe the straightforward one, what will happen, depending on the share of the overall net income we are getting associated with the buyout of minority, you will get an equivalent effect into the net income. So the minimum level of extra Ownership of PIMCO we are going to get is 4.4% which corresponds to the former employees and we may have higher take-up also with the current employees. But then basically 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 net income. Then for UOB, this is currently a business where we have Actually, maybe to give you directly the effect, both for UOB and for the HSBC Singapore, we have not yet closed. The closing will happen later on, and then what you should expect is more starting 2028, I would say, to start seeing a 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 details, we will be happy to provide you with more insights. And then your other question was around what is the effect of AI, right? And from the restructuring, I believe that was the question.

Yeah, Michael, I didn't quite get... Was your second question the cost of AI?

Yeah, yeah, the cost of AI. But also how you account for it. Is it capitalised straight off? Is it in the P&C? 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?

So basically, I think, I mean, we are tapping into AI across the organization. That's also, as an example, that's also the case in asset management. And that's also one driver of the very strong improvement or the good development of the cost income ratio, as an example. and we are but obviously also leveraging it very much on the PNC side as I was already mentioning and there we have very strict approach when it comes to everything that is activation of of those new technology where we are very strict across the organization to minimize possible, I mean, because simply like this new tech is much faster compared to old historical development. And maybe because connected to your question, what is also very important is that the restructuring we have already done will come with ultimately a very good level of return as well. So we expect to have an overall return that is above 20% for the restructurings that have already been booked today.

Thank you.

Okay. Thanks, Michael. The next question is from Andrew Baker from Goldman Sachs. Go ahead, Andrew.

Great. Thanks. Thanks for taking my questions. First one, just on the life and health investment income, I believe there was 87 million of dividends from Viridium and Sconcet Re. Is it fair to assume a similar level of dividends going forward? Are there any one-offs 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 dividends, basically the highest contributor to the dividend we have received is coming from Veridium. As you know, we are just an investor, so we are just a shareholder of Veridium, so we don't know what will be the level of dividends and what will be the pattern of dividend as well. and also what we have received this year for multiple reasons is more than a yearly dividend so likely also lower on a steady state basis but again we don't know what should be the right level. And then you were mentioning on alternative reinsurance. I think the main play with this alternative reinsurance approach is actually to ensure that we have a diversification of capacity, and diversification of capacity at high quality. and a very good level of rating. So that's one angle to it. And then the overall environment when it comes to competition for reinsurance capacity is obviously more on our side as we are a net buyer of reinsurance as opposed to the other way around at this point in time.

Great, thank you.

Thanks, Andrew. Next question is from Fahad, Fahad Changhazi from Kappa Shrivro. Go ahead, Fahad.

Hello. Thank you for taking my question. Can I just touch upon the plan and where we are still in retail volume growth? I think year-to-date, the CAGR is 2.5% versus plan and vision 3 to 4%. You've highlighted geopolitical concerns and you've taken inflation buffers. So can we or can we not expect a volume acceleration in H226? And in view of this, does the plan's ambition of 3% to 4% retail volume growth still stand? And again, just a plan-related question on Solvency II capital generation. Could you remind us again of the management actions you've taken already along with the recurring uplift in capital generation to date and any update if there is visibility on future actions within the planned period. Thank you.

Okay, sorry, your line wasn't great. You want retail volume growth update and cap generation. Yeah, I can do that. Okay. Yeah, go for it. Oliver, you take the first one. Claire-Marie, the second one.

Yeah, thank you, Andrew, and thank you for the question, because it's a very good one. So first, we had a slow start in the year. It's improving in the second quarter, and I hope that we are making progress throughout the year. What is good? Because it's an 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 two or three 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 claims inflation into pricing. We need to do even more to balance that with higher retention. So helping clients, for example, to adjust their deductibles, their covers in order to make sure affordability is balanced with margin even more. And that's something and some 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 of disposable income is further increasing sensitivity so people are actually also ensuring less overall so that's 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 brand is super strong the upside is higher retention

Yeah, so on your question on the capital management action, So we have already done a lot when it comes to really looking at the portfolio, portfolio performance, capital intensity ratio 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 performing or developing the business with the right level of capital consumption. And this is what has been fueling quite a lot Some of the positive developments over the last 18 months. We are working in parallel on a couple of more fundamental levers and you may remember, you know, from the Capital Market Day presentation we were in particular showing the share of what is a 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 support when it comes to the capital intensity 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 benefit after 2027, but that's what is also creating that sort of one-off effect a bit later on.

Okay, thank you Farhad. The next question is from Vineet Malhotra of Mediabankr. Go ahead, Vineet.

Yes, good afternoon. Thank you very much. I hope you can hear me. I'll take one question, which is on the internal growth. And I'm more curious about commercial lines, where there's been a bit of up and down. I mean, 4Q was Not so good. Then 1Q was a bit of a jump. And now again, we have a 1%. And I can see, I mean, I can see some of these numbers. AGCS is minus 1.8, but also maybe UK has a minus sign. 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 two OEs which are showing a negative internal growth. That would be very kind. Thank you very much.

Sure. So I think indeed you're right. There is quite some volatility in the numbers, in particular when you look at Q1 versus Q2. And this is also linked to some technical effects in the underlying. So for me, what I would do, And I think that the most interesting way to look at it is more to look at the first half overall together. And what you see if you do first half overall together is actually that the volume growth is actually flattish. That's what you see in the underlying. And then you have a very nuanced and diverse picture across our various parts of the portfolio. First of all, you will have the mid-core business which is actually performing in a robust manner in the overall environment with also a good level of rate overall at the first half level. You will have in the case of partners a very good dynamic which is fueled as well with different parts of the business which are responding quite well but in particular I think the travel business 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 diversified picture between shorty and credit. But what we see overall is that the rate environment continues to closely follow in the credit part the current economic environment we are operating into. And then in the case of AGCS, we have a rapid softening in particular. We have observed a rapid softening in the second quarter in particular around property, around natural resources, and construction as an example as a type of business. But the team is doing a very good job also at continuously tapping into the areas where they can perform well in terms of technical excellence. So I think overall I'm happy with the picture I see in commercial and how the various parts of our comprehensive commercial book are responding in the environment.

Thank you. Can I just also ask my second question on inflation, please? The inflation buffer, that's coming in the commercial book, isn't it? There's a comment somewhere on that.

Yeah, so basically overall, for the overall book, we have built one percentage point of inflation, or further inflation buffer into our numbers, so it's an increased level. And it's mainly into commercial, but it's not only into commercial.

Thank you. Thanks, Renate. Next question is from 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? You're still down in the first half, and I know the reasons for that. But I'm kind of wondering what you think you can accelerate to? Business of your size is at 5% to 10% or could you do better than that? 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 there structural headwinds? And then secondly, Oliver, around your slide on A3, I appreciate this is a very big topic, so just asking you for key top of head views. But after the Singapore deals, how do you view Allianz'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.

Claire-Marie, do you want to kick off first?

Sure, sure, sure. So indeed you're right, it's a bit noisy, but the way I would think about it is that you can also, now is the last quarter where we have seen the effect associated with the Unicredit GV, so you can take the second half of last year as being a reference in terms of PV and BP, and you can apply our expected growth rate of 5% as we have communicated in the capital market day. So I think that should give you a good order of magnitude.

Can I take the second one, Andrew? Yeah, go for it. So thank you for the question. So this was very important for us because, again, we had 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 beachhead that reflects the power of the brand. So this has been achieved. If you are asking for additional investments, we always are open. So we are happy. with now having closed that chapter, but there's tons of opportunity in Asia still coming. and we will always continue to look at it as we have said in the past always on a market by market asset by asset basis sorry that I don't give you I have a gap in this country or a gap in this in terms of materiality though we have to say Singapore has been one 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 six Thank you, William. The next question is from Andrew, Andrew Crean of Autonomous. Go ahead, Andrew. Good afternoon, everyone. I just had a couple of questions.

Firstly, your restructuring provisions this year, which look to be about possibly 1.3, 1.5 billion by the time you finish. Could you tell me how much of that is writing off software as opposed to active investment? And can you give us a sense as to what the return on that sort of billion plus investment will be over the next couple of years? So that's the first question. Second question is a very small one. Your corporate center losses, are just 21% of your target for the full year. Can you give us a sense as to where you think that will land this year? Because it's clearly not going to be minus $800 million.

Yeah, so as mentioned, Andrew, overall from what we have already performed in terms of restructuring at this point in time, we have the 200 million of debt losses, on that one 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 three quarter of the benefit coming through. And for the 400 million of acceleration of decommissioning of IT system associated with AI that went through in the second quarter. You should expect to see something approximately like 70 million euros of operating profit to come through forward through lower future amortization. And then I think from what is going to come on top, I would expect as well to see further positive associated benefits as things go forward. And then I think you were on the corporate centers. There is as always a lot of seasonality, as you know, 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 year. This year, as well, in addition, given the inflationary environment, we have seen higher benefit coming from the inflation-linked bonds. So there is always conservatism in the 800 million euro negative we are seeing there. I think you can take some assumptions, but in particular, I think you can reflect as an example the effect of the inflation-linked bonds, as an example.

Andrew, I love your question. Can I give a bit of strategic contact, if that's okay, also to our friend, Mr. Crane?

Go for it.

It's very important. So there was obviously a reason when we said that the budget disposal will be reinvested. And what we mean by that is that the AI revolution will fundamentally change the way we will build and deploy software that has two components. One, we need to continuously look at the investments that we've made to date and add Are they valuable? Two, can we use the new tools already to expedite restructuring? And that basically means transforming the operations and the tech stack that's involved. And the third one is how do we have to think about the longevity of investments into technology? And that's something that we need to debate a bit more into the future. Is it really useful to activate software for a decade where you have no idea how software will look in 24 to 36 months? The last one I don't want to discuss today because it's more for the broader investor community to have a look at it and what people do. We are therefore using the very strong games that we have to make sure we do everything we can in order to keep our tech stack not just technically but economically updated. So it's exactly right how you're looking at it. It's not a one-quarter thing. It is an acceleration of what we're doing in order to make sure that our op space stays economically viable. And you don't have, at the end of the day, at some point, the tech assets and the balance sheet where anyone would ask himself or herself, what's that actually really worth? So thanks for the question, because it's quite a very important point for us. And we're doing everything to not just get the benefits, but making sure we invest and restructure properly to stay future ready. So thank you for the question.

Okay. Thanks, Andrew. The next question is from Ian. Ian Pearce from BNP. Go ahead, Ian.

Hi, thanks for taking my questions. First one is just a following up on this restructuring stuff and the benefits going forwards. The first part of it is sort of If you were to have further positive experience and clearly you're 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 pretty attractive. So, would you like to do more and reinvest any further positive experience you might have into some further restructuring? And is it mainly the reduction 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 one is just on the cash position and liquidity buffers that you have at the moment because there are going to be a lot of ins and outs on cash with the acquisitions and disposals. I was just wondering if you could give us an update on where you see yourself on disposal and the funding of these deals. Thank you.

So basically, starting maybe with your second question on cash. So if you look at it overall, right, and maybe if you start from what we had shared with all of you as part of the Capital Market Day, where we are saying that we have a conservative liquidity 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 the math and see where we are after the acquisition we have announced, or the transactions we have announced. So I think you can easily take the dividends, the share buyback. and then also take into account the fact that we have received in terms of proceeds from the two disposals approximately more than 3 billion euros and so on and so forth. And then if you do that, what I think you can see very easily is that we lend in a similar order of magnitude compared 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 solvency ratio and from a liquidity perspective, We can really do those transactions in a very good manner. Also because we have been very conservative when it comes to M&A and we have not undertaken M&A for a long period of time beyond small things that we have been doing on an ongoing manner. And then when it comes to the question you were asking on further type of actions, I think we don't dictate what is the type of restructuring to do or not to do. They come associated with the transformation and what we think is meaningful against the transformation we are performing. For me, what is very interesting is that as we are pushing 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 accretive value 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 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, thanks Ian. The next question is from Henry Heathfield from Morningstar. Go ahead, Henry.

Yes, thank you very much for taking my questions. Just two from me. I was wondering if you might be able to give me the discrete quarter two 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 a bit more colour on the 50 basis point change between Q2 this year and Q2 last year. Thank you.

I think it's the accounting changes referring to. Sorry. Firstly, Henry, sorry, just to clarify, you wanted the renewal rate change discrete Q2. I think we only provide the 6M YTD. And you have the 6M and you have the Q3 and there's some mixed changes. I'm not sure we'll go for discrete Q2. And your second question was the nutritional loss ratio delta Q2 year on year or 6M?

Q2 year on year.

Okay fine.

Okay so basically like just to provide you with the 6M rate change on renewal right so you can see that on page C12 right so it's basically 3.3 percent for the for the rate change and the delta in attritional loss ratio you can also find on page C14 so basically it would be will be 0.7% in the quarter. But I think just to put that quarter delta into perspective, you have two elements you need to have in mind. There is one which is associated to an accounting change between attritional 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. 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 important to have in mind is the fact that last year second quarter was a very low level as well for the undiscounted attrition on loss ratio. So if you want to have a good sense of the development you should better refer I believe to the full year 2025 to understand the positive development. So that's why I was mentioning that I'm very happy with the development of the attritional loss ratio.

So just if I can clarify, would that be how much of inflationary reserve build-up is there in that delta?

So we are not displaying the exact effect of the inflationary reserve into the attritional loss ratio. Overall, between both undiscounted attritional loss ratio and runoff ratio, for the half year, we have put through one percentage point of inflationary reserve.

OK, thank you. Thanks, Henry. Next question is from Ben. Ben Cohen from RBC. Go ahead, Ben.

Good afternoon. Thanks for taking my questions. I had two questions, please. The first is on asset management. I think this is 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 maybe the sort of the leverage to sort of top-line growth. My second question was I guess a sort of a bank assurance question. I just wonder the opportunities and risks that you see from the kind of bank M&A that we're seeing playing out at the moment in Germany and in Italy. Do you think that there might be opportunities coming out of that? Is there any risk to any of the distribution arrangements that you have? Thank you.

Claire-Marie, do you want to take the cost income? And Oliver, do you want to talk about the bank insurance threats, or I think that Ben was referring to in terms of any changes to bank ownership, et cetera?

So basically, cost-income ratio, we have said strictly below 61. I think it's still a good reference to use strictly below 61. You are right. I would expect we continue on a good path, but we are also always dependent on some seasonality effect there that are also coming through later on in the year.

Oliver, I think You're on mute, please.

No, no, bank assurance. Just trying to make sure, but my sneezing here is not online. So thanks on the question. So two or three comments. Bank assurance remains a super important topic globally for Allianz. It's a very important distribution channel, and it's growing. There are very different reactions to things like Danish compromise and others by region. As you can see from HSBC, just as an example, They are very focused on where they do bank assurance themselves and production in Hong Kong and they're very clear where they need world-class partners like Allianz and Singapore is an example of that. So there is no sort of singular trend on banks are insourcing insurance production or outsourcing insurance production. One thing is what you would like to do, what capital regimes tell you what to do and the other one are you actually capable of doing what You may want to do on paper. Second obvious conversation, particularly in Europe, the Danish compromise is 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 Thank you very much. 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. So in our mix of channels, we feel very well positioned. The practical example is Unicredit Italy. One 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 added. So I expect us to grow very successfully with our bank partners. And a few examples. are going to come over the next few years. HSBC is just one of them. Thank you.

Thanks, Ben. Okay, Michael, you have a follow-up question. I'm being generous on this summer's day. So go ahead, Michael Hutner from Berenberg.

Thank you so much. And it's back to the topic of software and stuff. Two questions which relate. So in the balance sheet you have 18.6 at the year-end in intangibles, and now you've got 18.8, probably not quite the same number. So out of that, how much is software, which you could kind of write off and reinvest at this lovely 20% rate? Yeah, 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, that was it. I couldn't think of it. Oh yeah, no, I do have a second question. One of your peers yesterday, in peers in a neighboring country, are growing fantastically in Germany, and I was thinking, how can that be? How is Allianz letting a peer competitor grow? So you probably know who I'm referring to, but I'd be interested to understand why you haven't covered all the bases there.

Sorry, let's answer your first question first, and then we might have to ask you, I didn't quite understand your second question, so first question, software?

Yeah, software on the balance sheet, right, is something like 3.5 billion at this point in time, so it's going down, obviously, after what we have done, and also, as mentioned by Oliver, we are very strategic on the way we are. Thank you very much. Thank you very much. I think it's a bit difficult to answer because I don't know what they are exactly going after. Obviously we feel very confident about our positioning in Germany across our businesses. And if it's live, I think it's also self-answered with what Oliver was mentioning, right? When you look at the size of Allianz Leben, the ability of Allianz Leben to operate at a certain scale and cost level is very difficult to replicate by competition.

Thank you. Maybe if I can add to what Claire Marie just said. Germany is an example, but it's an interesting one. When you as a broker or a bank advising a client in Germany on buying a pension product, And you don't have the best performing company in terms of customer benefits, in terms of unit costs, in terms of brand on your advisory schedule, you are exposing yourself to mis-selling advice. And we're damn serious. So it's really interesting. that a lot of these, and I personally expect therefore 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 product. 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 10, 15 years of capital regulation, We ain't seen nothing yet on consumer protection regulation that's about to come. And the only answer is to be a loyalty leader in what you do. So I think we'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 again strategic. AI will even exacerbate the pressure of integrated product providers and sellers to improve quality because today when you ask intelligent models, you're getting really good answers to things that you couldn't get answers in the past. So my point of view is I don't believe in the closed shop. I sell my crap across all channels all the time. It does not work.

Okay, thanks, Michael. And the final question is from William, William Hardcastle, UBS. Go ahead, Will.

Thank you. 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 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.

Oliver, do you want to kick off? You're on mute. Okay, hang on, we seem to have a technical issue. Claire-Marie, do you want to start on the July?

Yeah, I will take the July weather and then we see if we can fix on the, on explaining more what is the dynamic on customers. So basically on, otherwise I'm happy to take it. On the July weather, you're right, we have seen quite a lot of secondary peril activities across Europe with wildfires, but also hail, as an example, across Germany and Italy. as an example. So it's a bit too early to assess what will be the impact for us. But as things stand, we expect the overall cat load, basically cat loss, to be within our quarterly cat load.

Oliver?

Could you repeat? Sorry, that's why I had put on mute. I couldn't really hear the second part of the question. Could you repeat it for me?

Go ahead, Will. Can you repeat the question on price elasticity?

Absolutely. Just going back to your customer elasticity point on retail, trying to understand if any of this could be structural with customers being able to use more AI to see competition in pricing, et cetera. and the danger that could extrapolate to be a bit more like UK Motor across Europe and then just trying to understand the actions you're now starting to undertake or are undertaking to improve that retention.

Yeah, it's a really interesting debate. We have always entirely depends what country you come from. Andrew is also from the UK and therefore, you know, we get this question. My personal point of view is as follows. AI has the ability, depending on the price, by the way of AI, we shouldn't forget a lot of these tools are provided for free at the moment and customer behavior may change. 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 spillover effects from other products, which is very important for us to know, which means you cannot be strong in one product area and weak in the neighboring area. So it makes things more complicated in a 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. So it's a longer conversation. We need to talk about it at the time. My personal point of view, it's not a threat. It's a huge opportunity because you can really, in a positive sense, teach the LLMs to look at more than just price only. And we already see. The second thing, which is a huge opportunity that we already see, where we are performing strongly on product, service, and brand, the conversion ratios 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 into the Allianz brand than before. So yes, there are threats, particularly if you're weak on a product service, if you cannot really offer a client's choice in terms of optimized risk cover versus price. and Versus Service. And 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 price.

Okay. Thanks, William. Thanks, Oliver. We have no more questions. So, thank you for your interest. I know it's been a long week. Have a nice summer break. But this concludes today's analyst call on our 2Q2026 financial results. Me and my team are available for follow-up questions. Thanks for your participation and goodbye.