Allianz SE (OTCPK:ALIZF) Q3 2023 Earnings Conference Call November 10, 2023 8:30 AM ET Company Participants Oliver Schmidt - Head of Investor Relations Giulio Terzariol - Chief Financial Officer Claire-Marie Coste-Lepoutre - CFO elect Conference Call Participants Andrew Ritchie - Autonomous Research Peter Eliot - Kepler Cheuvreux Andrew Sinclair - Bank of America William Hawkins - KBW Ashik Musaddi - Morgan Stanley Vinit Malhotra - Mediobanca Iain Pearce - Exane BNP Paribas Michael Huttner - Berenberg Olive ...

© Allianz 2023 Group financial results 2023 Allianz Investor Relations App Apple App Store Google Play Store Munich November 10, 2023 Content/topics Allianz (1) Group financial results 3Q 2023 Glossary Disclaimer Note: The financial results are based on the new IFRS 9 (Financial Instruments) and IFRS 17 (Insurance Contracts) accounting standards, which have been adopted as of 1 January 2023. Comparative periods have been adjusted to reflect the application of these new accounting standards. GROUP FINANCIAL ...

Allianz SE (OTCPK:ALIZF) Q2 2023 Earnings Conference Call August 10, 2023 8:30 AM ET Company Participants Oliver Schmidt - Head of Investor Relations Giulio Terzariol - Chief Financial Officer Conference Call Participants Andrew Sinclair - Bank of America Peter Eliot - Kepler Cheuvreux Andrew Ritchie - Autonomous Research Michael Huttner - Berenberg Vinit Malhotra - Mediobanca William Hawkins - KBW Thomas Fossard - HSBC Ashik Musaddi - Morgan Stanley Oliver Schmidt Good afternoon, everybody, and welcome to ...

Financial Data and Key Metrics Changes - The operating profit for 2022 was EUR13.8 billion under the new IFRS 9/17 accounting standards, compared to EUR14.2 billion under the old method, indicating a slight decrease [4] - Net income was over EUR300 million lower under the new basis compared to the old basis, reflecting lower operating profit and increased volatility in capital markets [6] - Core net income, adjusted for fair value swings, was approximately EUR7 billion, which the company will use to monitor performance moving forward [7][8] Business Line Data and Key Metrics Changes - In the Property-Casualty (P&C) business, operating profit increased by EUR600 million, primarily due to the net effect of discounting and unwinding in a higher interest rate environment [9][10] - The Life/Health segment saw a substantial decrease in operating profit, attributed to technical effects and accounting mismatches due to the new IFRS standards [12][14] - The Asset Management segment reported subdued revenue, but operational KPIs showed improvement, with positive flows at AGI and PIMCO in Q1 [21] Market Data and Key Metrics Changes - The solvency ratio improved to 206%, indicating strong capital levels and liquidity [23] - The combined ratio for the P&C business improved to 91.9%, which is better than the outlook for 2023 [27] - The Life business production dropped by 12%, but when adjusted for discounting effects, the decline was only 6% [33] Company Strategy and Development Direction - The company continues to focus on capital deployment through buybacks and investments in future growth, maintaining a balanced approach between returning capital and investing in business capabilities [23][59] - The company is adapting its hedging strategies to align with the new accounting standards while ensuring economic stability [61][62] - There is a strong emphasis on maintaining high-quality performance across all business segments, with a focus on managing inflation challenges effectively [25][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong underlying performance of the business, expecting to maintain momentum into the second quarter and beyond [48] - The company anticipates achieving its outlook for 2023, with a positive outlook for both the P&C and Life segments despite some challenges in the Asset Management area [20][22] - Management highlighted the importance of maintaining a robust capital position while continuing to invest in innovation and operational excellence [24][36] Other Important Information - The company announced a buyback of EUR1.5 billion, reflecting confidence in its capital levels and liquidity situation [23][48] - The new business margin in the Life segment is increasing, indicating a healthy level of new business despite production declines [34] Q&A Session Summary Question: On the P&C business, how can comfort be provided regarding prudence in reserves? - Management suggested reviewing historical performance and consistency in results to gauge prudence in reserves [50][52] Question: Why was EUR1.5 billion chosen for the buyback, and what are future plans? - Management indicated that the buyback aligns with their strategy of balancing capital deployment and investment in future growth, without committing to specific future buyback amounts [51][59] Question: Can more details be provided on the hedging changes in the Life segment? - Management clarified that hedging strategies were adjusted to align with the new accounting standards, which may introduce some volatility but are designed to maintain economic stability [61][62] Question: What is the outlook for Life persistency by geography and channel? - Management reported good persistency across major markets, with no significant concerns regarding lapses [75]

FY 2022 Group Financial Results (IFRS 9/17 vs IFRS 4) - Total business volume reached EUR 153.3 billion under IFRS 9/17, comparable to EUR 152.7 billion under IFRS 4 [3] - Operating profit was EUR 13.814 billion under IFRS 9/17, compared to EUR 14.164 billion under IFRS 4 [3] - Shareholders' core net income was EUR 6.738 billion under IFRS 9/17, versus EUR 6.984 billion under IFRS 4 [4] - The combined ratio in the P/C segment was 93.3% under IFRS 9/17, a decrease from 94.2% under IFRS 4 [5] - New business margin in L/H segment was 5.9% under IFRS 9/17 [6] - The Group's IFRS 9/17 leverage stood at 24% [34] 1Q 2023 Group Financial Results - Total business volume was EUR 46.0 billion, with a +3.5% internal growth [37] - Operating profit reached EUR 3.731 billion, a +24.2% increase [37] - Shareholders' core net income was EUR 2.173 billion [38] - The combined ratio improved to 91.9%, a -1.9%-p change [39] - Third party net flows in Asset Management were EUR 14.2 billion [111]

Financial Data and Key Metrics Changes - The company reported a record profit of €14.2 billion for 2022, significantly exceeding the previous outlook of €13.2 billion, demonstrating strong resilience in a challenging environment [4][38]. - The solvency ratio improved to 201%, indicating a strong capital position, with a focus on reducing volatility and enhancing resilience [7][49]. Business Line Data and Key Metrics Changes - Property and Casualty (P&C) segment achieved an operating profit of €6.2 billion, an 8% increase from the prior period, supported by stable combined ratios and higher investment income [40][59]. - Life/Health segment reported a record operating profit of €5.3 billion, with a strong new business margin of 3.8%, reflecting successful efforts in both in-force and new business [41][61]. - Asset Management generated an operating profit of €3.2 billion, which, while lower than previous periods, was considered resilient given the challenging market conditions [42][72]. Market Data and Key Metrics Changes - The P&C segment experienced a revenue growth of 9.5%, primarily driven by pricing adjustments in response to inflation [50]. - The life segment saw a decline in growth rates, with a reported -17% growth, but adjusted for one-offs, the decline was only -8%, indicating a more stable underlying performance [60]. Company Strategy and Development Direction - The company emphasized a disciplined capital management strategy, committing to returning excess capital to shareholders while maintaining a focus on growth and resilience [9][32]. - There is a clear intention to enhance productivity across all segments, with ongoing efforts to transform the life business from a spread-based to a fee-based model [21][66]. Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2023, projecting an operating profit of €14.2 billion, with specific targets of €7 billion for P&C and €5 billion for Life/Health [75][76]. - The company is preparing for potential challenges in the Asset Management segment due to lower asset bases but remains optimistic about inflows and performance improvements [78]. Other Important Information - The company has committed to addressing the impacts of the Structured Alpha incident, ensuring client compensation and reinforcing risk management practices [14][15]. - A significant focus on sustainability and climate change initiatives was highlighted, with progress reported on commitments to sustainable development goals [29]. Q&A Session Summary Question: Outlook under IFRS 17 and assumptions for Asset Management - Management clarified that the outlook remains consistent across accounting standards, with a focus on conservative assumptions for growth and combined ratios in P&C [80][81]. Question: Cash flow and pricing strategies in challenging markets - Management acknowledged the importance of cash flow and indicated that pricing strategies are being adjusted to improve performance in markets like Spain and the UK [89].

Financial Performance Highlights - Allianz achieved a record operating profit of EUR 142 billion, a 6% increase year-over-year[4] - The Group's total payout to shareholders amounted to approximately EUR 65 billion, including a proposed dividend of EUR 1140 per share and a EUR 2 billion share buyback[4,7,8] - Shareholders' net income increased by 19% to EUR 6738 million[28] - The Group's solvency ratio stood at 201%[4,7] Segment Results - The Property-Casualty segment experienced strong revenue growth of 12% and an operating profit of EUR 62 billion[4,10] - The Life/Health segment achieved a record operating profit of EUR 53 billion[10] - The Asset Management segment reported resilient revenues of EUR 82 billion and a solid operating profit of EUR 32 billion[10] Sustainability and Environmental Targets - The company is ahead of schedule on environmental targets, including a 25% reduction in the carbon footprint of proprietary investments from 2019 to 2022[20] - Renewable electricity usage in operations reached 89% in 2022, progressing towards a 100% target[20] Outlook and Capital Management - The outlook for 2023 anticipates an operating profit of approximately EUR 142 billion, plus or minus EUR 1 billion[23] - The company maintains a disciplined capital management approach, with an average payout ratio of 79%[22]

Financial Data and Key Metrics Changes - The company reported an operating profit of €10.2 billion for the first nine months of 2022, a 3% increase compared to the previous year [5] - For Q3 2022, the operating profit was €3.5 billion, which is 7% higher than the same period last year [10] - The net income for Q3 was €2.5 billion, reflecting strong operating performance combined with realized gains [12] - The solvency ratio stood at a comfortable 199% before dividend deductions, and 197% after [13] Business Line Data and Key Metrics Changes - The Property Casualty segment achieved an operating profit of €1.7 billion in Q3, a 32% increase year-over-year, with a stable combined ratio [11] - The Life segment saw an improvement in the new business margin, which reached 4%, although production was down 30% due to a large corporate contract last year [24] - The Asset Management segment reported an operating profit of €800 million for Q3, down from the previous year, but consistent with the outlook [34] Market Data and Key Metrics Changes - The Property Casualty segment experienced 9% internal growth, primarily driven by price increases in response to inflation [17] - The company noted that almost all markets showed good growth rates, with specific challenges in Brazil and the UK [21] Company Strategy and Development Direction - The company revised its 2022 expectations to the upper half of its target range, indicating strong underlying performance [9] - There is a focus on capital deployment, including a €1 billion buyback and small acquisitions in Asia and Greece [37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the Life segment despite market volatility, expecting positive impacts from assumption reviews [46] - The company is actively managing pricing in response to inflation, with expectations for further rate increases in 2023 [54] Other Important Information - The company is experiencing outflows in the Asset Management segment, with €20 billion in outflows for the quarter, but anticipates recovery as the interest rate environment stabilizes [31][32] - A significant amount of realized gains was noted from the Voya transaction, contributing positively to net income [36] Q&A Session All Questions and Answers Question: Buyback discussions with BaFin and future plans - Management confirmed constructive discussions with BaFin regarding the buyback plan, with no changes expected [42] Question: Property Casualty profits and combined ratio target for 2024 - Management indicated that the combined ratio target for 2024 will depend on market reactions, but expects a strong operating profit regardless [43][44] Question: U.S. life business outlook amidst market volatility - Management reassured that the volatility in the U.S. life business is normal and does not indicate underlying problems, with positive news expected from assumption reviews [45] Question: De-risking strategy and pricing actions in non-life - Management explained that de-risking is motivated by both improved fixed income returns and a desire to reduce Solvency II sensitivity, with ongoing pricing actions to address inflation [50][55] Question: Update on asset management flows and performance fees - Management noted that outflows are expected to stabilize once market uncertainties are resolved, and anticipates an increase in performance fees in Q4 [70][101]

Financial Data and Key Metrics Changes - The company reported a revenue growth of 4% for the first half of 2022, primarily driven by strong performance in the Property-Casualty (P&C) segment [3][4] - Operating profit for the first half was EUR 6.7 billion, representing 50% of the annual outlook of EUR 13.4 billion [4] - Net income for the quarter was EUR 1.7 billion, impacted by below-the-line items, but adjusted net income would be closer to EUR 4 billion [7][10] Business Line Data and Key Metrics Changes - In the P&C segment, operating profit reached EUR 1.6 billion, exceeding expectations, with a combined ratio of 93.6% for Q2 [9][18] - The Life segment achieved an operating profit of EUR 1.1 billion, despite a challenging market environment, with a new business margin over 4% [25][23] - Asset management reported an operating profit of EUR 800 million, in line with expectations, but faced outflows of EUR 43 billion, primarily from PIMCO [6][29] Market Data and Key Metrics Changes - The company experienced a solvency ratio of 200%, indicating strong capitalization and resilience to interest rate changes [11] - The asset management segment saw a reduction of EUR 160 billion in assets under management due to market conditions, but the impact was moderated by currency appreciation [30] Company Strategy and Development Direction - The company is focused on maintaining a strong combined ratio and is actively managing pricing strategies to counter inflationary pressures [15][96] - There is an emphasis on capital deployment to create shareholder value, with ongoing buybacks and strategic acquisitions [40][83] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the midpoint of the annual outlook, despite challenging market conditions [39] - The company is prepared for potential inflation impacts and is adjusting reserves accordingly, with a focus on maintaining profitability [60][81] Other Important Information - The company completed a EUR 1 billion share buyback recently, reflecting confidence in its financial position [40] - The impact of the Ukraine situation on underwriting results is estimated at EUR 150 million, with a conservative approach to reserves [116] Q&A Session Summary Question: AGI's pro forma cost-income ratio post-U.S. asset sale - Management expects the cost-income ratio to stabilize around 67% following the Voya transaction, with efforts to improve efficiency [45][46] Question: Pressure on underwriting income from investment income - Management indicated that while investment income is rising, it is not significantly impacting pricing strategies in the P&C business at this time [47][48] Question: Expectations for reserve releases amidst higher inflation - The runoff for the quarter was elevated at 4.3%, with expectations for a normalized rate around 2.5%, but potential for higher due to conservative reserves [50][51] Question: Current status of COVID provisions - Management noted that specific COVID provisions are nearing an end, but reserves for other lines of business remain healthy [53] Question: Competitive landscape in Germany - The German market is competitive but not excessively so, with a combined ratio of 91.3% indicating a stable environment [87][88]

Financial Performance - Total revenues reached EUR 44 billion, with internal growth of 3.8%[5,6] - Operating profit amounted to EUR 3.238 billion, a decrease of 2.9% compared to the previous year[7,8] - Shareholders' net income significantly decreased by 78.1% to EUR 561 million[9,13] Business Segment Highlights - Property-Casualty (P/C) insurance revenues grew internally by 6.6% to EUR 21.5 billion, but operating profit decreased by 9.0% to EUR 1.377 billion[6,8] - The combined ratio in P/C insurance worsened by 1.7%-p to 94.7%[14] - Life/Health (L/H) insurance revenues grew internally by 1.0% to EUR 20.7 billion, with operating profit remaining relatively stable at EUR 1.213 billion (up 0.1%)[6,8] - Asset Management (AM) revenues grew internally by 6.3% to EUR 2.1 billion, with operating profit increasing by 11.2% to EUR 831 million[6,8] Capitalization and Solvency - The Solvency II (SII) ratio decreased by 10%-p to 199%[23] - Shareholders' equity decreased by EUR 10.2 billion, primarily due to lower net unrealized gains/losses of EUR -11.8 billion[27] Asset Management Details - Total Assets Under Management (AuM) decreased by 5.0% to EUR 2.5 trillion[113] - Third-party AuM decreased by 4.5% to EUR 1.878 trillion[114] - PIMCO's third-party net flows were EUR -14 billion, while AllianzGI experienced net inflows of EUR +5 billion[124]