Allianz Se · XETR:ALV
Allianz — Non-Deal Roadshow (March 2005)
50 slides from Allianz's roadshow presentation, March 2005
Slide 1: Allianz Group +One Roadshow March 2005
Allianz Group +One Roadshow March 2005
Slide 2: Michael Diekmann, CEO
Michael Diekmann, CEO 3+one Roadshow March 2005
Slide 3: 2004 at a glance: a successful year
A. 3+one 2004 at a glance: a successful year Strong growth of operating profit Improved quality of result RoRACN-goal of 15% achieved1 Dividend increased by 16.7% Optimization and growth initiatives launched Further profit potential 1) 16.2% RoRACN of operating units before RAC diversification and c
Slide 4: 2004 at a glance: over-delivered on most financial targets
A. 3+one 2004 at a glance: over-delivered on most financial targets Segment Lever Target1 Achieved Score Combined ratio Group ~ 97% 92.9% P/C Combined ratio AGF < 100% 98.5% Operating profit 1,383m2 1,418m L/H Reach critical mass in VA3 2005 2004 Profit in EUR m [rc = restructuring costs] 0m before
Slide 5: Where do we stand today?
A. 3+one Where do we stand today? RoRACN Group1 Capitalize on strengths Focus on Clear targets profitability per segment Restore the basics 16.5% 12.6% 3.1% 2002 2003 2004 2005 2006 Initiatives 3+one Sustainability Customer focus 1) Normalized profit after tax / average risk-adjusted capital; after
Slide 6: "3+one" recap
A. 3+one “3+one” recap Protect and enhance capital base Substantially strengthen operating profitability Reduce complexity Increase sustainable competitiveness and shareholder value A4
Slide 7: Capital base enhanced
A. 3+one Capital base enhanced Including Achievements 2004 “All in one” Capital strengthened Risk capital surplus1 pro forma2 ! Successful launch of “All in one” (EUR bn) 18.7 transaction 15.8 - Improved debt structure - Sound capital base 11.8 Risks reduced ! Lower equity gearing ! Less equity clus
Slide 8: Operating profitability substantially strengthened
A. 3+one Operating profitability substantially strengthened Achievements 2004 ! Operating profit up 68.6% to Operating profit1 EUR 6.9bn (EUR m) ! Sustainable improvement: 6,856 - cost reductions - underwriting discipline - risk profile of bank portfolio 4,066 ! Target of 15% RoRACN reached2 -524 20
Slide 9: Complexity reduced
A. 3+one Complexity reduced Selected initiatives IRU Ongoing reduction of non-strategic loan portfolio Sale of sub-critical subsidiaries, e.g. AZ Canada, Divestments AZ President, ZA Verzekeringen, Cornhill Life Significant reduction of Dresdner Bank’s non-strategic “All in one” equity portfolio Sus
Slide 10: Return on capital improved
A. 3+one Return on capital improved 2004, in % of average risk-adjusted capital Revenue Strategic Growers Value Growers Outperformers growth -4%-p -19%-p 12%-p 37 36 24 18 4 0 2003 2004 2003 2004 2003 2004 0% 8.15% 15% Underperformers Optimizers RoRACN1 1%-p 5%-p 5%-p 252 262 8 7 12 Ø RoRACN -0.1% 3
Slide 11: IFSP: insurance sales via bank branches continue to grow
A. 3+one IFSP: insurance sales via bank branches continue to grow New business life plus non-life Annual business value (EUR m)1 Number of contracts (‘000) P/C L/H Riester contracts 238 2 182 173 6 113 +419% +668% 40 92 184.2 88 70 135.9 44 99.2 122 31 84 51.4 28 63 35.5 21 9 17 2000 2001 2002 2003
Slide 12: IFSP: tied agents sustainable channel for mutual fund distribution
A. 3+one IFSP: tied agents sustainable channel for mutual fund distribution In % of Allianz agents active in mutual fund business1 Net inflows from Allianz distribution (EUR m) Real estate Securities +16.7%-p +37% 712 85.1% 85.5% 702 121 68.8% 209 520 109 591 493 411 2002 2003 2004 2002 2003 2004 1)
Slide 13: Sustainability: further enhancement of "3+one"
A. 3+one Sustainability: further enhancement of “3+one” Deliver bottom-line impact across Group Target: Identify and Sustainable understand operational best practice excellence and Make superior operating best practice profitability common practice Teach and learn A 11
Slide 14: Customer focus: further enhancement of "3+one"
A. 3+one Customer focus: further enhancement of “3+one” Customer Customer focus focus initiative initiative (CFI) (CFI) Sustainable competitive advantage Protect customer base Target: Increase High customer loyalty Maximize life-time value customer market share Customers referring Obtain new custome
Slide 15: Going forward
A. 3+one Going forward Management focus Deliverables for 2005 ! Capital allocation / efficiency ! Revenues: ! Operational excellence growth in line with 2004 ! Customer focus ! P/C: ! Investment performance combined ratio < 95%1 ! Risk management ! L/H: operating profit > EUR 1.5bn Growth focus ! In
Slide 16: Group financial results 2004
Helmut Perlet - CFO Allianz AG Group financial results 2004 Roadshow March 2005
Slide 17: "3+one": goals 2004 achieved
B. Group financial results 2004 “3+one”: goals 2004 achieved Highlights 2004 Operating profit evolution ! Managed growth: dynamic expansion in L/H and AM, selective 6,856 growth in P/C, stabilized at Dresdner Bank ! Operational discipline: 4,066 reduction of expenses, improvement of underwriting res
Slide 18: Agenda: where do we stand
Agenda: where do we stand I. Substantially strengthen operating profitability ! Group ! P/C ! L/H ! Banking ! Asset Management ! Investment income II. Protect and enhance capital base B2
Slide 19: Revenue development: managed growth
B. Group financial results 2004 Revenue development: managed growth 4Q total revenues1 (EUR bn) 12M total revenues1 (EUR bn) Total Internal Total Internal growth growth2 growth growth2 22.8 24.3 (%) (%) 93.8 96.9 (%) (%) 2.5 AM 12.4 22.7 2.2 0.7 AM 18.2 33.7 6.2 Banking -4.5 0.3 0.6 1.5 6.5 Banking
Slide 20: Expenses: all segments improve
B. Group financial results 2004 Expenses1: all segments improve (EUR m) P/C Banking L/H AM2 Evolution of expenses -15.2% -18.9% 3,751 15,272 3,420 1,526 13,318 526 3,181 304 12,389 1,207 307 1,140 7,224 1,739 1,488 1,397 6,052 5,459 469 1,911 536 442 1,719 1,636 950 1,159 1,035 4,611 4,340 4,154 4Q
Slide 21: Operating profit: all segments improve
B. Group financial results 2004 Operating profit1: all segments improve (EUR m) 4Q 2004 ∆4Q 04/03 12M 2004 ∆12M 04/03 Comments 12M 04 P/C Combined ratio down 1,081 528 3,979 1,542 4.1%-p to 92.9% 12% improvement as L/H 370 -13 1,418 153 operating CIR2 decreases 0.3% to 95.5% Cost & risk profile Bank
Slide 22: Better quality of result
B. Group financial results 2004 Better quality of result (EUR m) Evolution of income b/ taxes, minorities and goodwill amortization 2,790 Taxes 884 6,347 increased by EUR 1,581m 1,351 Taxes Banking 1,727 restructuring 4,274 EUR 600m Minorities Taxes 1,257 146 -2,952 Minorities Goodwill 825 1,164 Goo
Slide 23: We achieved our goals...
B. Group financial results 2004 We achieved our goals... RoRACN (operating units)1 RoRACN (Group)2 IFRS RoE b/GW +3.2%-p +3.9%-p -1.8%-p 16.2% 16.5% 13.0% 12.6% 13.1% 11.3% XX% 2003 2004 2003 2004 2003 2004 ∅ Capital (EUR bn) 36.3 34.4 32.6 31.2 25.1 29.7 1) RoRACN of operating units is before effec
Slide 24: ...but for numerous companies, 15% RoRACN still remains a goal to achieve
B. Group financial results 2004 ...but for numerous companies, 15% RoRACN still remains a goal to achieve1 RAC and RoRACN2 RoRACN 80% 2004 ! Clear progress 70% 2003 against 2003 60% 15.0% ! 74% of RAC earn 50% 8.15% CoC1 48% cost of capital 40% 30% ! 48% of RAC exceed 74% 15% RoRACN target 20% 15.0
Slide 25: Agenda: where do we stand
Agenda: where do we stand I. Substantially strengthen operating profitability ! Group ! P/C ! L/H ! Banking ! Asset Management ! Investment income II. Protect and enhance capital base B 11
Slide 26: P/C overview: focus on underwriting profitability pays off
B. Group financial results 2004 P/C overview: focus on underwriting profitability pays off (EUR m) Drivers Operating profit ! Strong combined ratio of 92.9% 95.5% 63.3% (12M 03: 97.0%) reflects: 3,979 - selective growth in profitable 1,081 markets or segments 2,437 - strict underwriting guidelines 5
Slide 27: P/C: ...leads to strongly improved combined ratio
B. Group financial results 2004 P/C: ...leads to strongly improved combined ratio (in %) Combined ratio 12M 03 12M 04 Combined ratio SGD (German P/C Group) 93.0 88.2 Claims ratio Expense ratio Adjustment4 Allianz AG1 100.2 87.1 -12.8%-p AGF2 102.8 98.5 105.7 RAS Group Italy 97.0 95.7 4.0 97.0 95.8 9
Slide 28: Agenda: where do we stand
Agenda: where do we stand I. Substantially strengthen operating profitability ! Group ! P/C ! L/H ! Banking ! Asset Management ! Investment income II. Protect and enhance capital base B 17
Slide 29: L/H overview: ongoing profitable growth
B. Group financial results 2004 L/H overview: ongoing profitable growth (EUR m) Drivers Operating profit ! Operating CIR1 improved by -3.4% 12.1% 0.3%-p to 95.5%, driven 1,418 383 370 1,265 especially by: - increased asset base - pricing of new business 4Q 2003 4Q 2004 12M 2003 12M 2004 - efficiency
Slide 30: Embedded value after minorities
B. Group financial results 2004 Embedded value after minorities (EUR m) Per region and by components 2004 PVFP - CRC - O&G RAC + XS 12, 389 PVFP: 7,177 5,043 CRC: 1,600 O&G: 534 RAC: 5,982 3,722 XS: 1,364 2,726 7,346 2,657 2,457 1,005 1,612 1,341 952 331 684 568 1,265 1,721 1,705 955 928 772 -624 Va
Slide 31: Value of new business by region
B. Group financial results 2004 Value of new business by region (EUR m) Value of new business at issue before and after cost of risk-adjusted capital (a/ min.) 2003 Old model 2004 EEV ! Germany: Margin increased reflecting NB NB margin NB NB margin Spread1 management’s long-term profit Before CRC Va
Slide 32: Agenda: where do we stand
Agenda: where do we stand I. Substantially strengthen operating profitability ! Group ! P/C ! L/H ! Banking ! Asset management ! Investment income II. Protect and enhance capital base B 21
Slide 33: Dresdner Bank overview: back on track
B. Group financial results 2004 Dresdner Bank1 overview: back on track (EUR m) Drivers Operating profit (loss) 599 ! Operating profit improved by EUR 1.1bn to EUR 0.6bn 57 ! Net income after restructuring costs EUR 142m; target over-achieved -259 -482 ! Net loss in 4Q 04 due to accelerated 4Q 2003 4
Slide 34: Dresdner Bank – IRU: wind down will be accomplished by agreed and initiated transactions
B. Group financial results 2004 Dresdner Bank – IRU: wind down will be accomplished by agreed and initiated transactions (EUR m) Exposure Down from 264 624 EUR 35.5bn 648 since 2003 9,690 3,671 1,629 2,011 670 173 Actual Pending Pending Repayments, Retransfers Large Large Transaction Other 31/12/04
Slide 35: Agenda: where do we stand
Agenda: where do we stand I. Substantially strengthen operating profitability ! Group ! P/C ! L/H ! Banking ! Asset Management ! Investment income II. Protect and enhance capital base B 29
Slide 36: Asset Management overview: profitable growth continues
B. Group financial results 2004 Asset Management overview: profitable growth continues (EUR m) Drivers Operating profit ! Profitability improved for 3rd 35.6% 16.8% consecutive year; 4Q first quarter 856 733 with positive net income ! Strong net inflows due to superior 278 205 performance in fixed i
Slide 37: Asset Management: acquisition-related expenses clearly decrease from 2005 onwards
B. Group financial results 2004 Asset Management: acquisition-related expenses clearly decrease from 2005 onwards Acquisition related expenses (before taxes, EUR m) Comment -655 1,015 -570 ! Due to IFRS 3, goodwill amortization has been 212 new abandoned after 2004 803 385 B-units 173 173 ! Due to I
Slide 38: Agenda: where do we stand
Agenda: where do we stand I. Substantially strengthen operating profitability ! Group ! P/C ! L/H ! Banking ! Asset Management ! Investment income II. Protect and enhance capital base B 37
Slide 39: Capital base: further strengthened
B. Group financial results 2004 Capital base: further strengthened IFRS equity (EUR bn) Group solvency (in %) Risk capital surplus1 (EUR bn) +7.8% +17.6%-p +33.9% 223.9 206.3 30.8 28.6 100% 15.8 11.8 2003 2004 2003 2004 2003 2004 Capital significantly Solvency margin reflects Comfortable risk buffer
Slide 40: Summary: we delivered what we promised
B. Group financial results 2004 Summary: we delivered what we promised “All targets 2004 achieved” ! Operating profitability substantially strengthened across all segments: - P/C: combined ratio of 92.9% - L/H: operating profit of EUR 1.4bn - Dresdner Bank: bottom-line profit - AM: CIR down to 62.9%
Slide 41: Accounting changes 2005
B. Group financial results 2004 Accounting changes 2005 Topic Explanation IFRS2 Cash-settled plans to be adjusted from intrinsic valuation to fair valuation; Share-based PIMCO B-Units to be reclassified from equity-settled plan to cash-settled plan compensation (put option included). Effects1: equit
Slide 42: Targets 2005
B. Group financial results 2004 Targets 2005 Focus on profitable and sustainable growth: Group-wide revenue increase in line with 2004 P/C L/H Banking Asset Mgmt. Strong combined Operating profit Earn cost of 10% increase in ratio below 95% of at least capital operating profit1 EUR 1.5bn Caveats, e.
Slide 43: Capital efficiency
Paul Achleitner, Board member Allianz AG Capital efficiency Roadshow March 2005
Slide 44: "All in one"
C. Capital efficiency Capital efficiency targets 2004/2005 (2) Examples “All in one” Assets Equity and Liabilities T-shares BITES 1 Reduce equity exposure 5 Strengthen capital base Subbond Senior bonds MAN 2 Reduce cluster risks 6 De-leverage Group reduced AZ 3 Free up Dresdner from 7 Use attractive
Slide 45: Equity exposure reduced
C. Capital efficiency 1 Equity exposure reduced (EUR bn) Reconciliation of net equity exposure Equity gearing excluding goodwill … Banking Market values as at 31/12/04 32.5 L/H 30.2 25.0 GW P/C GW 21.9 11.7 1.4 12.4 1.1 20.8 52.3 17.8 6.8 -1.1 Net equity NAV1 Net equity NAV1 28.4 exposure exposure 2
Slide 46: Cluster risks reduced
C. Capital efficiency 2 Cluster risks reduced Reduction of stakes1 ≥ 5% Current ten largest stakes ≥ 5% As percentage of gross equity exposure2 Stakes Market value Quota (%) Munich Re 2,028 9.8 At the start Schering 1,259 11.8 of 2000 34% Linde 629 11.5 Beiersdorf 530 7.3 Worms & Cie 367 14.8 Heidel
Slide 47: Sub-critical and non-performing activities divested
C. Capital efficiency 4 Sub-critical and non-performing activities divested IRU wind down (RWA EUR bn) Divestments (as at 03/2005) ! 22 divestments in 2004/2005: 19.9 - 2 unprofitable -79% -98% - 14 non-strategic (e.g. AZ Canada, Cornhill Life) - 6 sub-critical (e.g. ZA Verzekeringen Belgium) ! Deal
Slide 48: Capital base strengthened and Group de-leveraged
C. Capital efficiency 5 6 Capital base strengthened and Group de-leveraged (EUR bn) Capital base Outstanding senior bonds Subordinated bonds1 Straight bonds Shareholders’ equity 39.6 Exchangeable bonds 36.3 Commercial paper 32.6 7.3 14.6 5.5 4.0 25.6 11.7 32.3 6.4 10.5 3.9 30.8 5.7 28.6 7.8 5.7 21.7
Slide 49: Shareholder structure optimized
C. Capital efficiency 8 Shareholder structure optimized Free float of Allianz shares in % 1% Allianz free float in indices equals trading Current Expected volume of Allianz Deutsche HVB Dresdner T-shares Munich free float Bank Re 1.5 days MSCI 80.0% 90.0% 05/05 12 9 9 25 25 20 20 5 5 FTSE 100% 100%
Slide 50: Disclaimer
G. Appendix Disclaimer These assessments are, as always, subject to the disclaimer provided below. Cautionary Note Regarding Forward-Looking Statements Certain of the statements contained herein may be statements of future expectations and other forward-looking statements that are based on managemen