Allianz(US:ALIZY)2023-05-12 22:06Financial 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]