Allianz SE · XETR:ALV
Allianz — Q2 2019 Earnings Presentation
47 slides from Allianz's earnings presentation, Aug 2, 2019
Slide 1: 2Q 2019 Analyst conference call
2Q 2019 Giulio Terzariol Chief Financial Officer Analyst conference call August 2, 2019 © Allianz SE 2019
Slide 2: Content
CONTENT GROUP FINANCIAL RESULTS 1 2Q 2019 GLOSSARY 2 DISCLAIMER © Allianz SE 2019 2
Slide 3: Group: 6M with strong profitable growth
Group financial results 2Q 2019 Group: 6M with strong profitable growth Group Property-Casualty Life/Health Asset Management Total revenues 6M 19 in EUR bn (internal growth vs. prior year in %) 73.5 (+5.9%) 32.9 (+4.5%) 37.4 (+8.0%) 3.3 (-3.2%) Operating profit 6M 19 in EUR mn (vs. prior year in %)
Slide 4: Group: 6M with strong profitable growth - comments
Group financial results 2Q 2019 Group: 6M with strong profitable growth Comments • Internal growth strong at 5.9% • RoE (annualized) improves to 14.7% Strong internal growth in L/H +8.0% and P/C +4.5%. • P/C – fully on track -3.2% internal growth in AM primarily due to lower Improved CR due to bette
Slide 5: Group: 2Q operating profit strong at EUR 3.2bn
Group financial results 2Q 2019 Group: 2Q operating profit strong at EUR 3.2bn Total revenues (EUR bn) Operating profit drivers (EUR mn) +6.1% +5.4% +4.1% Internal growth +27 +65 3,159 31.3 33.2 2,997 +155 -13 -72 2Q 18 2Q 19 Shareholders’ net income (EUR mn) +13.1% 2,140 Operating P/C L/H AM CO Con
Slide 6: Group: 2Q operating profit strong - comments
Group financial results 2Q 2019 Group: 2Q operating profit strong at EUR 3.2bn Comments • Internal growth good at 4.1% • P/C – a good performance Good internal growth in L/H +4.5% and P/C +4.3%. Lower investment and ‘other’ results lead to slight OP -1.7% internal growth in AM primarily due to less
Slide 7: Group: SII ratio on good level
Group financial results 2Q 2019 Group: SII ratio on good level Shareholders’ equity (EUR bn) Key sensitivities (EUR bn) +1.8% Equity markets -30% -4.5 67.2 68.4 Unrealized 61.2 gains/losses1 6.9 11.9 15.9 +50bps -4.6 Interest rate Retained earnings2 25.4 26.4 23.5 -50bps +4.3 Paid in capital 28.9 28
Slide 8: Group: SII ratio on good level - comments
Group financial results 2Q 2019 Group: SII ratio on good level Comments • Shareholders’ equity – EUR 1.2bn increase in 2Q • SII ratio – on good level In 2Q 2019, shareholders’ equity increased by In 2Q 2019, the SII ratio declined versus 1Q 2019. EUR +1.2bn, despite EUR 3.8bn dividend payment The ma
Slide 9: Group: good organic capital generation
Group financial results 2Q 2019 Group: good organic capital generation Own funds +3.4 +0.2 79.9 (EUR bn) 78.6 76.8 -0.0 -1.6 -0.7 +1.6 +1.2 +0.7 -0.1 P/C AM L/H CO/Conso. 31.12.18 31.03.19 Regulatory/ Operating SII Market Capital mgmt./ Tax/ 30.06.19 model changes earnings impact management other ac
Slide 10: Group: good organic capital generation - comments
Group financial results 2Q 2019 Group: good organic capital generation Comments • Good capital generation partially reinvested in • Business evolution strong growth Very good P/C NPE growth is the main driver. SII capital generation – net of tax and dividend – L/H new business growth is largely offs
Slide 11: P/C: strong price- and volume-driven growth
Group financial results 2Q 2019 P/C: strong price- and volume-driven growth EUR mn Revenues YTD change on renewals 2Q 19 Total growth Internal growth 6M 19 Momentum ∆ p.y. ∆ p.y. Total P/C segment 13,426 +7.3% +4.3% +2.1% n.a. Selected OEs Germany1 1,968 +2.5% +3.2% +2.3% stable Italy1 1,019 -11.0%
Slide 12: P/C: strong price- and volume-driven growth - comments
Group financial results 2Q 2019 P/C: strong price- and volume-driven growth Comments • Strong growth continues in 2Q 2019 • UK – price-effect partially offset by lower volume Strong internal growth of +4.3%, driven by price and Rate strength positive across all LoBs. Reduced volumes volume. Growth d
Slide 13: P/C: stable underwriting, lower investment result
Group financial results 2Q 2019 P/C: stable underwriting, lower investment result Operating profit drivers (EUR mn) Combined ratio (in %) -5.0% +0.2%-p 1,455 +1 94.1 94.3 1,383 -52 -21 Loss ratio 66.3 67.0 NatCat impact2 1.3 1.9 (in %-p) Expense ratio 27.8 27.3 2Q 18 2Q 19 Operating Underwriting Inv
Slide 14: P/C: stable underwriting, lower investment result - comments
Group financial results 2Q 2019 P/C: stable underwriting, lower investment result Comments • Operating profit – on track • Expense ratio – continued progress Lower investment and ‘other’ results lead to OP decline ER improves -0.5%-p yoy broadly equally split while the underwriting result is stable.
Slide 15: P/C: stable combined ratio
Group financial results 2Q 2019 P/C: stable combined ratio EUR mn Operating profit Combined ratio NatCat impact on CR 2Q 19 ∆ p.y. 2Q 19 ∆ p.y. 2Q 19 ∆ p.y. Total P/C segment 1,383 -5.0% 94.3% +0.2%-p 1.9%-p +0.6%-p Selected OEs Germany1 212 -16.8% 95.6% +1.3%-p 7.7%-p +4.6%-p Italy1 201 -17.6% 83.9
Slide 16: P/C: stable combined ratio - comments
Group financial results 2Q 2019 P/C: stable combined ratio Comments • Germany – impacted by NatCat • UK – AY LR improvement offset by lower run-off Higher NatCat losses main driver of CR increase. Operating profit also affected by business transfers Hail storms Jörn / Klaus biggest event with a comb
Slide 17: P/C: resilient current yield
Group financial results 2Q 2019 P/C: resilient current yield Operating investment result1 Current yield Economic reinvestment yield (EUR mn) (debt securities; in %) (debt securities; in %) -6.6% 0.67 0.67 2.2 1.7 795 743 2Q 18 2Q 19 2Q 18 2Q 19 2Q 18 2Q 19 Total average asset base4 Duration5 (EUR bn
Slide 18: P/C: resilient current yield - comments
Group financial results 2Q 2019 P/C: resilient current yield Comments • Interest & similar income • Current yield increases vs. 1Q 2019 Net interest result declines due to lower income The current yield on our debt portfolio increases 4bps from equities. Last year’s current income on equities versus
Slide 19: L/H: 8.5% new business growth with NBM 3.6%
Group financial results 2Q 2019 L/H: 8.5% new business growth with NBM 3.6% PVNBP share by line PVNBP by OE (EUR mn) Total L/H segment 3.5 3.6 Other OEs Germany Life 1,057 (-1.7%) 5,869 (+26.8%) Protection & health 13% USA 6.4 13% 6.3 2,977 (+16.0%) Unit-linked 18% 2.5 Asia-Pacific 2.3 24% w/o guara
Slide 20: L/H: new business growth - comments
Group financial results 2Q 2019 L/H: 8.5% new business growth with NBM 3.6% Comments PVNBP by line PVNBP by OE • New business driven by Germany Life and USA • Germany Life – capital-efficient products +42% New business with capital-efficient products is up by In addition higher sales in protection &
Slide 21: L/H: operating profit rises to EUR 1.2bn
Group financial results 2Q 2019 L/H: operating profit rises to EUR 1.2bn (EUR mn) Operating profit by source1 Operating profit by line +14.5% +14.5% +222 1,231 1,231 +121 1,075 1,075 269 -78 228 -91 -18 106 103 316 206 538 539 Operating Loadings Investment Expenses Technical Impact of Operating 2Q 1
Slide 22: L/H: operating profit rises - comments
Group financial results 2Q 2019 L/H: operating profit rises to EUR 1.2bn Comments • OP at 29% of FY target range midpoint Operating profit by line Favorable change in DAC and volume growth • Protection & health more than offset lower investment margin. Better result from loadings and volume growth.
Slide 23: L/H: continued double-digit VNB growth
Group financial results 2Q 2019 L/H: continued double-digit VNB growth EUR mn Value of new business New business margin Operating profit 2Q 19 ∆ p.y. 2Q 19 ∆ p.y. 2Q 19 ∆ p.y. Total L/H segment 544 +10.7% 3.6% +0.1%-p 1,231 +14.5% Germany Life 232 +23.9% 4.0% -0.1%-p 267 +3.9% USA 95 +3.2% 3.2% -0.4
Slide 24: L/H: continued double-digit VNB growth - comments
Group financial results 2Q 2019 L/H: continued double-digit VNB growth Comments New business Operating profit • NBM well above target level of 3.0% • Germany Life – good level Better business mix (+0.2%-p) offsets impact from Stable investment margin and higher loadings & fees. change in economic as
Slide 25: L/H: gross investment margin stable, profit sharing up
Group financial results 2Q 2019 L/H: gross investment margin stable, profit sharing up Investment margin Economic reinvestment yield (debt securities; in %) (Yields are pro-rata) 2Q 18 2Q 19 2.2 1.9 Based on Ø book value of assets1 (EUR bn) 529 577 Current yield 0.88% 0.83% Based on Ø aggregate poli
Slide 26: L/H: investment margin - comments
Group financial results 2Q 2019 L/H: gross investment margin stable, profit sharing up Comments • Investment margin down by EUR 78mn • PHP up 2.5%-p to 82.2% Lower investment margin (∆ -3bps to 19bps) partially Main driver is higher PHP in the U.S. business and compensated by higher reserve base (+6
Slide 27: AM: positive 3rd party net flows of EUR 20bn
Group financial results 2Q 2019 AM: positive 3rd party net flows of EUR 20bn (EUR bn) Total assets under management 3rd party assets under management development +2.9% +2.8% 2,163 2,101 1,961 +37.8 1,591 571 1,548 +23.0 Allianz Group 553 +3.2% 526 -14.5 assets -2.7 +20.3 340 +0.9% 343 AllianzGI 319
Slide 28: AM: positive 3rd party net flows - comments
Group financial results 2Q 2019 AM: positive 3rd party net flows of EUR 20bn Comments • Total AuM: +3% • 3rd party net flows PIMCO: EUR +23bn Total AuM further increased to EUR 2.2tn due to 3rd party net inflows from investment strategies like rising 3rd party and Allianz Group assets. income, globa
Slide 29: AM: healthy growth of AuM driven revenues
Group financial results 2Q 2019 AM: healthy growth of AuM driven revenues (EUR mn) Revenues development PIMCO AllianzGI +2.8% +6.2% -4.4% Internal growth -1.7% -0.0% -5.0% 1,744 1,252 1,696 517 Performance fees 72 1,179 19 494 115 AuM driven & 28 other revenues 1 86 53 1,582 1,672 1,151 1,233 431 44
Slide 30: AM: healthy growth of revenues - comments
Group financial results 2Q 2019 AM: healthy growth of AuM driven revenues Comments • Segment revenues – F/X and more AuM driven fees • PIMCO margin – mix effect and Gurtin Revenues increase by 3% supported by 8% higher Margin of 38.5bps significantly above 1Q 2019 average 3rd party AuM and positive
Slide 31: AM: strong operating profit
Group financial results 2Q 2019 AM: strong operating profit (EUR mn) Operating profit drivers PIMCO +4.1% +5.4% -0.5% Internal growth 504 532 6521 +13 +29 +30 6781 -45 57.2 57.5 CIR (in %) 61.6 61.1 CIR (in %) 2Q 18 2Q 19 Operating AuM driven & Performance Expenses F/X Operating AllianzGI profit oth
Slide 32: AM: strong operating profit - comments
Group financial results 2Q 2019 AM: strong operating profit Comments • Segment – OP up 4% • AllianzGI – OP stable Higher AuM driven revenues and favorable F/X Lower expenses compensate for lower revenues. contribute to OP increase compared with a very good CIR of 68.7% is below 2Q 2018 level (70.3%)
Slide 33: CO: performance above expectations
Group financial results 2Q 2019 CO: performance above expectations (EUR mn) Operating loss development and components +10 +50 +5 0 -131 -196 -33.0% Operating Holding & Banking Alternative Consoli- Operating result Treasury Investments dation result 2Q 18 2Q 19 ∆ 2Q 19/18 © Allianz SE 2019 2Q 19 -180
Slide 34: CO: performance above expectations - comments
Group financial results 2Q 2019 CO: performance above expectations Comments • Operating loss at 15% of FY outlook midpoint Main reason for improvement is a better result from Allianz Technology and higher investment income. 6M 2019 operating loss of EUR -0.3bn at 33% of FY outlook midpoint. © Allian
Slide 35: Group: shareholders' net income grows double-digit
Group financial results 2Q 2019 Group: shareholders’ net income grows double-digit EUR mn 2Q 18 2Q 19 Change Operating profit 2,997 3,159 +162 Non-operating items -313 -226 +87 Realized gains/losses (net) 377 203 -174 Impairments (net) -103 -80 +23 Income from financial assets and liabilities carrie
Slide 36: Group: net income - comments
Group financial results 2Q 2019 Group: shareholders’ net income grows double-digit Comments • Operating profit drives net income growth • Tax rate at good level Operating profit is up by EUR +162mn. Tax rate supported by release of tax liabilities and In addition supported by better non-operating re
Slide 37: To sum it up
Group financial results 2Q 2019 To sum it up Strong Improved Double-digit Positive Confirmed results expense VNB growth net flows ratio Group Property- Life/Health Asset OP outlook Casualty Management 2019 © Allianz SE 2019 37
Slide 38: Glossary & Disclaimer
GLOSSARY & DISCLAIMER © Allianz SE 2019 38
Slide 39: Glossary (1)
Glossary Glossary (1) AFS Available for sale: Available-for-sale investments are non-derivative financial assets which have been acquired neither for sale in the near term nor to be held to maturity. They are shown at fair value on the balance sheet. AGCS Allianz Global Corporate & Specialty Allianz
Slide 40: Glossary (2)
Glossary Glossary (2) Bps Basis points: 1 Basis point = 0.01%. CEE Central and Eastern Europe CIR Cost-income ratio: Operating expenses divided by operating revenues CO (The Allianz business segment) Corporate and Other CR Combined ratio: Represents the total of acquisition and administrative expens
Slide 41: Glossary (3)
Glossary Glossary (3) FIA Fixed index annuity: Annuity contract under which the policyholder can elect to be credited based on movements in equity or i n bond market indices, with the principal remaining protected. FV Fair value: The price that would be received to sell an asset or paid to transfer
Slide 42: Glossary (4)
Glossary Glossary (4) L/H (The Allianz business segment) Life and Health insurance L/H lines of business Guaranteed savings & annuities: Life insurance products linked to life expectancy, offering life and / or death benefits in the form of single or multiple payments to beneficiaries and possibly i
Slide 43: Glossary (5)
Glossary Glossary (5) LoB Line of business LR Loss ratio: Represents claims and insurance benefits incurred (net), divided by premiums earned (net). The calendar year (CY) loss ratio includes the results of the prior year’s reserve development in addition to the accident year (AY) loss ratio. MCEV M
Slide 44: Glossary (6)
Glossary Glossary (6) Operating SII earnings Operating SII earnings represent the change in own funds, before tax and dividend accrual, that is attributable to the Allian z Group’s ongoing core operations. As such, operating SII earnings comprise: expected return from existing business, new business
Slide 45: Glossary (7)
Glossary Glossary (7) Reinsurance Insurance companies transfer parts of the insurance risk they have assumed to reinsurance companies. Retained earnings In addition to the reserve legally required in the group parent company’s financial statements, this item mainly comprises th e undistributed profi
Slide 46: Glossary (8)
Glossary Glossary (8) Statutory premiums Gross premiums written from the sales of life and health insurance policies, as well as gross receipts from sales of unit -linked and other investment-related products, in accordance with the statutory accounting principles applicable in the insurer’s home ju
Slide 47: Disclaimer
Disclaimer Disclaimer This document includes forward-looking statements, such as prospects or (viii) currency exchange rates, most notably the EUR/USD exchange rate, (ix) expectations, that are based on management's current views and changes in laws and regulations, including tax regulations, (x) th