Allianz SE · XETR:ALV

Allianz — Q1 2016 Earnings Presentation

48 slides from Allianz's earnings presentation, May 11, 2016

1. Slide 1: 1Q 2016 Analyst conference call

   1Q 2016 Dieter Wemmer Chief Financial Officer Analyst conference call May 11, 2016

2. Slide 2: Highlights; Glossary

   1 1 Highlights Group financial results 1Q 2016 2 Glossary © Allianz SE 2016 2

3. Slide 3: Status quo and ambitions for 2018

   Group financial results 1Q 2016 Status quo and ambitions for 2018 1Q 16 2018 1Q 16 2018 Businesses with 32.5%1 5%1 EPS Growth 50%4 75% NPS above market 15.7%2 13% SII interest rate 12%-p <11%-p RoE Allianz Group sensitivity 93.3% 94% P/C CR PIMCO CIR 64.1% 60% L/H OEs with 52%2,3 100% IMIX 68%4 72%

4. Slide 4: Status quo and ambitions for 2018 - comments

   Group financial results 1Q 2016 Status quo and ambitions for 2018 Comments  Excellent EPS growth and RoE  New business margin improved Impacted by a favorable non-operating More favorable business mix – higher shares of result, driven by a high level of realized capital-efficient products / protec

5. Slide 5: Group: good start into the year

   Group financial results 1Q 2016 Group: good start into the year Total revenues Operating profit drivers (EUR mn) (EUR bn) -3.5% -6.4%1 +155 37.8 35.4 2,855 +27 2,756 -176 -92 -14 1Q 15 1Q 16 Shareholders’ net income (EUR mn) +20.5% Operating P/C L/H AM CO Conso. Operating profit profit 2,194 1,822 1

6. Slide 6: Group: good start into the year - comments

   Group financial results 1Q 2016 Group: good start into the year Comments  Revenue decrease  Asset Management – as expected Good internal growth in P/C, Operating profit down 16.5% primarily overcompensated by lower sales from caused by lower average 3rd party AuM. traditional products in L/H and d

7. Slide 7: Group: shareholders' equity up 6.7%

   Group financial results 1Q 2016 Group: shareholders’ equity up 6.7% Shareholders’ equity (EUR bn) Key sensitivities (EUR bn) +6.7% Equity -30% -2.8 67.4 markets 63.1 Unrealized 13.8 +50bps -3.5 10.9 gains/losses1 Interest Retained earnings2 24.7 rate 23.3 -50bps +3.2 Paid in capital 28.9 28.9 on gov

8. Slide 8: Group: shareholders' equity up 6.7% - comments

   Group financial results 1Q 2016 Group: shareholders’ equity up 6.7% Comments  Shareholders’ equity at record high  Solvency II interest rate sensitivity Net income (EUR 2.2bn) and higher net improved unrealized gains (EUR 2.8bn) by far Driven by management actions – e.g. asset overcompensate negat

9. Slide 9: Strong pre-tax operating capital generation

   Group financial results 1Q 2016 Group: strong pre-tax operating capital generation +0.4 72.7 +1.4 +2.0 -5.8 -1.7 +1.7 69.3 -0.3 -1.2 Own funds P/C AM L/H CO/Conso. (EUR bn) 31.12.15 Regulatory / Operating SII Market Dividends / Other 31.03.16 model changes earnings impact capital mgmt. SII capitaliz

10. Slide 10: Strong pre-tax operating capital generation - comments

    Group financial results 1Q 2016 Group: strong pre-tax operating capital generation Comments  Strong pre-tax operating capital  Regulatory / model changes generation Changed regulatory tax treatment of Adjusted for market effects, regulatory and German life sector reduces year-end model changes and

11. Slide 11: SII rules: long-term valuation rate well below UFR

    Group financial results 1Q 2016 SII rules: long-term valuation rate well below UFR LLP1 UFR1 4.5% 4.0% EUR 1Y forward rate 3.5% EUR valuation curve 3.0% EUR swap curve 2.5% (incl. anchoring and 2.0% VA adjustment) 1.5% 1.0% 0.5% 0.0% 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46

12. Slide 12: SII rules: long-term valuation rate - comments

    Group financial results 1Q 2016 SII rules: long-term valuation rate well below UFR Comments  Liabilities discounted using risk-free rates  UFR sensitivity manageable Under SII, liabilities are discounted using risk- Latest EIOPA proposals suggest a phased-in free rates, usually swap rates, adjuste

13. Slide 13: P/C: price and volume drive internal growth of 2.7%

    Group financial results 1Q 2016 P/C: price and volume drive internal growth of 2.7% (EUR mn) 1Q 2016 Revenues Total Internal Price Volume growth growth effect effect Δ p.y. Δ p.y. Total P/C segment 17,245 -0.5% +2.7% +1.0% +1.7% Large OEs Germany 4,331 +2.6% +2.6% France 1,477 -3.5% +1.0% Italy 1,12

14. Slide 14: P/C: price and volume drive internal growth - comments

    Group financial results 1Q 2016 P/C: price and volume drive internal growth of 2.7% Comments  Good growth continues  AGCS – impacted by special items Internal growth of +2.7% driven by price Strong growth driven by fronting business as (+1.0%) and volume (+1.7%). F/X -2.0% and well as by accountin

15. Slide 15: P/C: strong increase in underwriting result

    Group financial results 1Q 2016 P/C: strong increase in underwriting result Operating profit drivers (EUR mn) Combined ratio (in %) +12.0% NatCat impact2 (in %-p) +141 +113 1,439 -1.3%-p 1,285 94.6 93.3 -99 Loss ratio 66.4 64.8 1.9 0.2 Expense ratio 28.2 28.5 Operating Underwriting Investment1 Other

16. Slide 16: P/C: strong increase in underwriting result - comments

    Group financial results 1Q 2016 P/C: strong increase in underwriting result Comments  Operating profit – higher underwriting  AY LR – lower NatCat profit main growth driver AY LR improves -1.4%-p to 68.2% on back of OP +12.0% (EUR +155mn) on back of strong lower NatCat (-1.7%-p). Attritional LR wo

17. Slide 17: P/C: flagship OEs with excellent combined ratios

    Group financial results 1Q 2016 P/C: flagship OEs with excellent combined ratios (EUR mn) 1Q 2016 Operating Δ p.y. Combined Δ p.y. NatCat Δ p.y. profit ratio impact in CR Total P/C segment 1,439 +12.0% 93.3% -1.3%-p 0.2%-p -1.7%-p Large OEs Germany 352 +61.6% 89.0% -9.0%-p 0.0%-p -7.3%-p France 114

18. Slide 18: P/C: flagship OEs - comments

    Group financial results 1Q 2016 P/C: flagship OEs with excellent combined ratios Comments  Germany – CR outstanding  UK – excellent performance in commercial OP rises 62% as CR improves further. Lack of Best CR in commercial for many years NatCat main reason but attritional LR below partially offs

19. Slide 19: P/C: interest & similar income only slightly lower

    Group financial results 1Q 2016 P/C: interest & similar income only slightly lower Operating investment result1,2 Current yield (debt securities; in %) (EUR mn) -12.3% 1Q 15 0.70 806 707 1Q 16 0.66 Total average asset base2,3 113.1 110.6 Reinvestment yield6 (debt securities; in %) (EUR bn) Economic

20. Slide 20: P/C: interest & similar income - comments

    Group financial results 1Q 2016 P/C: interest & similar income only slightly lower Comments  Interest and similar income – slightly lower  Economic reinvestment yield Current income slightly lower driven by lower Alternative calculation methodology income on debt, partially offset by higher incorp

21. Slide 21: L/H: successful execution of new business strategy

    Group financial results 1Q 2016 L/H: successful execution of new business strategy PVNBP share by line1 PVNBP by OE Operating entity PVNBP in EUR mn (Δ p.y.) NBM (in %) Other OEs Germany Life 1,993 (-29.7%) 3,585 (-12.5%) Total L/H segment 1.5 2.5 Spain 340 (-27.0%) 2.8 2.6 Switzerland Protection &

22. Slide 22: L/H: new business strategy - comments

    Group financial results 1Q 2016 L/H: successful execution of new business strategy Comments PVNBP share by line PVNBP by OE  Capital-efficient products on the rise  GER Life – targeted new business growth Weight of guaranteed savings & annuities Guaranteed savings & annuities down by down by 11%-p

23. Slide 23: L/H: operating profit on track

    Group financial results 1Q 2016 L/H: operating profit on track (EUR mn) Operating profit by source1 Operating profit by line1 -16.0% -16.0% 1,104 1,104 -32 +77 927 216 927 23 -136 124 90 -55 -31 166 250 598 564 Operating Loadings Investment Expenses Technical Impact of Operating 1Q 15 1Q 16 profit &

24. Slide 24: L/H: operating profit on track - comments

    Group financial results 1Q 2016 L/H: operating profit on track Comments  OP at 26% of FY target range mid-point  Technical margin – one-off charges Operating profit on track despite loss Decrease driven by USA (EUR -42mn) mainly recognition in Korea (EUR -82mn). After due to a non-recurring reserv

25. Slide 25: L/H: VNB up 37%

    Group financial results 1Q 2016 L/H: VNB up 37% (EUR mn) 1Q 2016 VNB Δ p.y. NBM Δ p.y. Operating Δ p.y. profit Total L/H segment 367 +36.7% 2.5% +1.0%-p 927 -16.0% Large OEs Germany Life 110 +49.8% 3.1% +1.3%-p 340 -19.7% USA 105 +59.7% 3.5% +1.1%-p 150 -8.2% Italy 37 +121.2% 1.9% +1.4%-p 77 -7.1% F

26. Slide 26: L/H: VNB up 37% - comments

    Group financial results 1Q 2016 L/H: VNB up 37% Comments New business Operating profit  Third consecutive quarter with NBM ≥2.5%  Germany Life – still excellent level Management actions main reason for Investment margin 1Q 2015 at exceptionally improvement of 1.0%-p. Excluding French high level. D

27. Slide 27: L/H: investment margin strong at 21bps

    Group financial results 1Q 2016 L/H: investment margin strong at 21bps1 (yields are pro-rata) Reinvestment yield6 Based on Ø book value of assets2 1Q 15 1Q 16 (debt securities; in %) Current yield3 0.9% 0.9% Economic reinvestment yield Based on Ø aggregate policy reserves 2.4 2.2 Current yield3 1.1%

28. Slide 28: L/H: investment margin - comments

    Group financial results 1Q 2016 L/H: investment margin strong at 21bps Comments  Yield decline within expected range  PHP ratio slightly down Current yield based on aggregate policy Lower PHP (-2%-p) helped to improve reserves declines 4bps within expected investment margin. Profit sharing managed

29. Slide 29: AM: 3rd party net flows stabilized; F/X drives AuM

    Group financial results 1Q 2016 AM: 3rd party net flows stabilized; F/X drives AuM (EUR bn) -0.8% 1,763 1,750 -2.6% Allianz Group 487 507 assets 1,276 +0.1% +1.4% 1,242 -0.0% -0.8% -3.3% 3rd party AuM 1,276 1,242 31.12.15 31.03.16 31.12.15 Net flows Market & F/X Other 31.03.16 dividends impact Allia

30. Slide 30: AM: 3rd party net flows - comments

    Group financial results 1Q 2016 AM: 3rd party net flows stabilized; F/X drives AuM Comments  Segment – 3rd party AuM driven by F/X  PIMCO – net outflows further reduced Slight reduction of 3rd party AuM driven by 3rd party net inflows in various strategies like depreciation of the USD end of March

31. Slide 31: AM: lower average 3rd party AuM impact revenues

    Group financial results 1Q 2016 AM: lower average 3rd party AuM impact revenues (EUR mn) Revenues development1 Internal growth PIMCO Internal growth -11.8% -13.0% -13.7% -15.3% 1,141 1,573 985 26 Performance fees 59 1,388 28 Other net fee and commission income 52 (AuM driven fees) 39.5 38.2 1,115 95

32. Slide 32: AM: lower average 3rd party AuM - comments

    Group financial results 1Q 2016 AM: lower average 3rd party AuM impact revenues Comments  Segment – lower operating revenues  PIMCO – business mix impacts 3rd party Lower average 3rd party AuM (-9%) and AuM margin reduced 3rd party AuM margins lead to lower Shift in asset mix – e.g. a slightly low

33. Slide 33: AM: operating profit on track

    Group financial results 1Q 2016 AM: operating profit on track Internal growth Operating profit drivers (EUR mn) -17.8% CIR -16.5% 5551 AllianzGI 364 135 +20 +4 +7 4631 68.9% +84 AllianzGI 119 -143 70.7% -48 -8 -8 PIMCO 428 2,740 PIMCO 62.5% 353 64.1% Operating Revenues Expenses F/X Operating profit

34. Slide 34: AM: operating profit on track - comments

    Group financial results 1Q 2016 AM: operating profit on track Comments  Segment – OP on track  AllianzGI – quarterly OP again OP on track to achieve full year target. >EUR 100mn Operating expenses are reduced by 9% Operating profit continues to be on a very (thereof 2% stemming from lower expenses

35. Slide 35: CO: good operating result

    Group financial results 1Q 2016 CO: good operating result (EUR mn) Operating loss development and components +38 +3 +1 -13 -74 -101 -27.0% Operating Holding & Banking Alternative Consoli- Operating result Treasury Investments dation result 1Q 15 1Q 16 Δ 1Q 16/15 © Allianz SE 2016 1Q 16 -106 19 13 0

36. Slide 36: CO: good operating result - comments

    Group financial results 1Q 2016 CO: good operating result Comments  Holding & Treasury – lower loss  Banking – slightly down Improvement compared to 1Q 2015 mainly Mainly due to lower net fee and commission driven by better net fee and commission result in Italy, driven by lower performance result

37. Slide 37: Group: shareholders' net income up 20.5%

    Group financial results 1Q 2016 Group: shareholders’ net income up 20.5% (EUR mn) 1Q 15 1Q 16 Change Operating profit 2,855 2,756 -100 Non-operating items -61 278 +339 Realized gains/losses (net) 318 568 +249 Impairments (net) -20 -61 -42 Income from fin. assets and liabilities carried at fair value

38. Slide 38: Group: shareholders' net income - comments

    Group financial results 1Q 2016 Group: shareholders’ net income up 20.5% Comments  Non-operating items improved  Shareholders’ net income up Positive development driven by higher Increase of 20.5% driven by better realized gains/losses, including non-operating result and lower tax EUR 235mn gain f

39. Slide 39: Glossary

    2 1 Highlights 2 Glossary © Allianz SE 2016 39

40. Slide 40: Glossary (1)

    Glossary (1) AFS Available-for-sale: Securities which have been acquired neither for sale in the near term nor to be held to maturity. Available-for-sale investments are shown at fair value on the balance sheet. AGCS Allianz Global Corporate & Specialty AllianzGI Allianz Global Investors AM Asset Ma

41. Slide 41: Glossary (2)

    Glossary (2) CEE Central and Eastern Europe excluding Russia and Ukraine CIR Cost-income ratio: Operating expenses divided by operating revenues CO Corporate and Other – CO segment CR Combined ratio: Represents the total of acquisition and administrative expenses (net), excluding one-off effects fro

42. Slide 42: Glossary (3)

    Glossary (3) FIA Fixed index annuity: Annuity contract whereby the policyholder is credited based on movements in stated equity or bond market indices with protection of principal. FV Fair value: The price that would be received to sell an asset or paid to transfer a liability in an orderly transact

43. Slide 43: Glossary (4)

    Glossary (4) L/H Life and health insurance – L/H segment L/H lines of business Guaranteed savings & annuities: Guaranteed savings and annuities are life insurance obligations that always relate to the length of human life. Life obligations may be related to guarantees offering life and / or death co

44. Slide 44: Glossary (5)

    Glossary (5) LatAm Latin America: South America and Mexico LoB Line of business LR Loss ratio: Claims and insurance benefits incurred (net) divided by premiums earned (net). Loss ratio calendar year (c.y.) includes the results of the prior year reserve development in contrast to the loss ratio accid

45. Slide 45: Glossary (6)

    Glossary (6) OP Operating profit: Earnings from ordinary activities before income taxes and non-controlling interests in earnings, excluding, as applicable for each respective segment, all or some of the following items: Income from financial assets and liabilities carried at fair value (net), reali

46. Slide 46: Glossary (7)

    Glossary (7) RoE Return on equity Group: Represents net income attributable to shareholders divided by the average shareholders’ equity excluding unrealized gains/losses on bonds (net of shadow DAC) at the beginning and at the end of the period. Return on equity L/H OE: Represents net income divided

47. Slide 47: Glossary (8)

    Glossary (8) UFR Ultimate forward rate: The estimate of the ultimate forward rate is defined in line with the EIOPA methodology and guidelines. An extrapolation is needed past last available market data points. The UFR is determined for each currency using macro-economic methods, the most important

48. Slide 48: Disclaimer

    Disclaimer These assessments are, as always, subject to the disclaimer provided below. Forward-looking statements The statements contained herein may include prospects, statements of extent of credit defaults, (vii) interest rate levels, (viii) currency exchange future expectations and other forward

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