Allianz(ALIZY) - 2021 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a flat revenue, primarily due to the Property-Casualty and Life Health segments, while Asset Management showed positive development [5] - Operating profit reached €3.3 billion, exceeding the prior period and the full-year outlook of €12 billion [5][7] - Net income was €2.6 billion, benefiting from strong operating performance and no impairments during the quarter [7][47] - The solvency ratio improved by 3 percentage points, reaching 210%, with a pro forma adjustment indicating a 7 percentage point improvement [8][10] Business Line Data and Key Metrics Changes - The Property-Casualty segment experienced a growth rate of -1.6%, attributed to the COVID situation, with expectations for normal growth rates post-COVID [11][12] - The Life segment saw production increase by 8%, with a new business margin improvement of 10 basis points, particularly in Protection & Health [23][24] - The Asset Management segment achieved a record level of €2.4 trillion in assets under management, with strong inflows of €40 billion [35][37] Market Data and Key Metrics Changes - The market conditions were favorable, with interest rates rising, contributing to an 8 percentage point improvement in the solvency ratio [10] - The company noted stable rate momentum in Property-Casualty, with strong rate increases in the industrial business, particularly in Italy [14][15] Company Strategy and Development Direction - The company aims to maintain a cost-income ratio below 67% while considering investments in the business [55] - There is a focus on improving profitability in the Commercial Lines business and a cautious approach to growth in the Property-Casualty segment [12][106] - The company is exploring M&A opportunities while balancing buybacks, maintaining a disciplined approach to capital allocation [78][116] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong start to 2021, with expectations for continued positive performance despite the challenges posed by COVID [7][51] - The impact of COVID in Q1 was neutral, with expectations for no negative impact on 2021 targets moving forward [119][120] - Management indicated that the combined ratio of 93% in Property-Casualty is a target they are comfortable with, with potential for improvement [95] Other Important Information - The company reported no impairments during Q1, contributing to strong net income [47][33] - The investment margin for the Life segment exceeded €1 billion, with expectations for it to remain at the upper end of the projected range [32][34] Q&A Session Summary Question: Sustainability of AGI's cost-income ratio - Management expects a sustainable cost-income ratio of 61%, with a target of 67% achievable as they invest in the business [55][56] Question: PIMCO's internal asset margins - No changes have been made to the pricing structure for PIMCO's internal assets, with any increases attributed to the inclusion of Allianz Real Estate [60][61] Question: Outlook for Euler Hermes - The underlying combined ratio is better than reported, with expectations for stability in 2021 and 2022 [62][63] Question: Premium growth in P&C - Management clarified that the expected premium growth of 5% to 6% was a forward-looking statement, with actual expectations for flat revenue growth [93][94] Question: M&A strategy - The company continues to pursue a bolt-on M&A strategy, with no changes to its approach [116][117]