Allianz SE · XETR:ALV
Allianz — Q3 2005 Earnings Presentation
49 slides from Allianz's earnings presentation, Nov 11, 2005
Slide 1: Group financial results for the third quarter 2005
Group financial results for the third quarter 2005 Helmut Perlet - CFO Allianz AG Analysts’ Conference Call, November 11, 2005
Slide 2: Group overview: continued profitable growth (1/2)
Group results 3Q 2005 Group overview: continued profitable growth (1/2) 1111_AP3Q2005_FINAL Total revenues (EUR bn) Profitable growth, driven by Internal CAGR: 3.3% +4.3% growth: +5.2% 72.6 75.7 …revenues 71.1 6M + 5% 3Q 21.6 23.1 23.8 9M 03 9M 04 9M 05 Operating profit (EUR m) CAGR: 38.4% +16.2% …
Slide 3: Group overview: continued profitable growth (2/2)
Group results 3Q 2005 Group overview: continued profitable growth (2/2) 1111_AP3Q2005_FINAL Net income b/f goodwill amortization1 (EUR m) CAGR: 43.6% +25.4% …strong net income 3,508 2,797 + 25% 1,701 6M 3Q 945 745 794 9M 03 9M 04 9M 05 Shareholders’ equity2 (EUR bn) … which contributes to CAGR: 19.2
Slide 4: Agenda
Agenda 1111_AP3Q2005_FINAL Group P/C L/H Banking Asset Management Capital base and investments Additional information © Allianz AG 2005 3
Slide 5: Life and Asset Management drive growth
Group results 3Q 2005 Life and Asset Management drive growth (EUR bn) 1111_AP3Q2005_FINAL Total revenues1 (in %) Total growth Internal growth2 Total 9M 04 +2.3 +5.1 23.1 23.8 72.6 75.7 Total 9M 05 +4.3 +5.2 2.1 1.8 4.4 4.8 AM +15.8 +16.8 Banking -7.1 -6.7 Int. growth 34.9 +2.8% 31.9 L/H +9.4 +9.7 0.
Slide 6: Operational discipline continues
Group results 3Q 2005 Operational discipline continues 1111_AP3Q2005_FINAL “Cost control” (in %) “Careful risk selection” P/C Expense ratio 3Q 04 24.5 Net release of LLP 3Q 05 24.1 72.9% L/H Expense ratio1 66.4% 3Q 04 10.1 54 3Q 05 8.5 Dresdner Bank Operating CIR 3Q 04 87.7 -130 3Q 05 93.1 3Q 04 3Q
Slide 7: Strong 3Q operating profit despite significant Nat Cat impact
Group results 3Q 2005 Strong 3Q operating profit1 despite significant Nat Cat impact (EUR m) 1111_AP3Q2005_FINAL 3Q 05 ∆ 3Q 05/04 9M 05 ∆ 9M 05/04 P/C 696 -442 3,090 +192 L/H 478 +100 1,283 +235 Banking 250 +114 759 +192 AM 299 +82 785 +207 Group 1,723 5,917 © Allianz AG 2005 -146 +826 1) Operating
Slide 8: Net income: operating profit drives result
Group results 3Q 2005 Net income: operating profit drives result (EUR m) 1111_AP3Q2005_FINAL 3Q 05 ∆ 3Q 05/04 9M 05 ∆ 9M 05/04 Operating profit 1,723 -146 5,917 +826 Trading income -108 -107 -269 -233 Net capital gains 504 +10 1,868 -579 Net Impairments -25 +344 -216 +791 EUR 794m net Other -436 +71
Slide 9: Results of new impairment policy
Group results 3Q 2005 Results of new impairment policy 1111_AP3Q2005_FINAL ! Implementation of very prudent impairment policy Impacts 2005 (EUR m) 1Q 05 2Q 05 Sum ! Retrospective introduction of IAS 39 (revised) impairment Change in net income rules for available-for-sale Change in impairments -9 -2
Slide 10: Agenda
Agenda 1111_AP3Q2005_FINAL Group P/C L/H Banking Asset Management Capital base and investments Additional information © Allianz AG 2005 9
Slide 11: P/C overview: robust underwriting profitability
Group results 3Q 2005 P/C overview: robust underwriting profitability (EUR m) 1111_AP3Q2005_FINAL Drivers 3Q 05 Operating profit ! Operating profit impacted by -38.8% +6.6% Nat Cat, combined ratio in 3Q at 97.0% 3,090 ! Non-operating result improved 2,898 due to lower impairments 1,138 696 (+EUR 218
Slide 12: P/C: managed growth
Group results 3Q 2005 P/C: managed growth 1111_AP3Q2005_FINAL GPW drivers 3Q 05 Gross premiums written (EUR bn) ! Allianz continues to react flexibly Internal to growth opportunities in some growth rate1 +2.6% +1.9% markets but is ready to forgo Total premiums if prices are not risk- growth rate +0.
Slide 13: P/C: 3Q impact of Nat Cat is EUR 753m
Group results 3Q 2005 P/C: 3Q impact of Nat Cat is EUR 753m 1111_AP3Q2005_FINAL Net losses b/ taxes and minorities, 3Q 05 (EUR m) ! Impact on 3Q 05 combined 75 753 ratio: 7.5%-p 58 101 ! Preliminary estimate for net 519 impact of hurricane Wilma in 4Q (as of October 05): EUR 124m Hurricane Hurricane
Slide 14: P/C: combined ratio well below target
Group results 3Q 2005 P/C: combined ratio well below target (in %) 1111_AP3Q2005_FINAL Combined ratio 9M 04 9M 05 Combined ratio SGD (German P/C Group) 87.0 86.5 Allianz AG1 85.4 91.5 AGF2 99.1 98.2 90.9 92.3 92.1 89.8 97.0 12MR 92.8% RAS Group Italy 95.5 96.4 Lloyd Adriatico 79.7 79.2 66.4 66.3 66.
Slide 15: P/C: investment income almost flat
Group results 3Q 2005 P/C: investment income almost flat (EUR m) 1111_AP3Q2005_FINAL Inv. result drivers 4,6231 ! Current yield2: 1,169 43 - F/I: 3.1% 3,435 (unchanged) 2,982 -127 -261 -371 - Equity: 2.9% (+0.4%-p) ! Harvesting rate2,3 4.2% on equity portfolio value Current Realized Fair value Write
Slide 16: Agenda
Agenda 1111_AP3Q2005_FINAL Group P/C L/H Banking Asset Management Capital base and investments Additional information © Allianz AG 2005 15
Slide 17: L/H overview: strong profit growth
Group results 3Q 2005 L/H overview: strong profit growth (EUR m) 1111_AP3Q2005_FINAL Drivers 3Q 05 Operating profit ! Margin increase due to … +26.5% +22.4% - Statutory expense ratio down 1.6%-p (partially prior year effects) 1,283 - Current investment and trading 1,048 378 478 income increase 9% -
Slide 18: L/H: double-digit growth in core European markets
Group results 3Q 2005 L/H: double-digit growth in core European markets 1111_AP3Q2005_FINAL Stat. premium drivers 3Q 051 Statutory premiums (EUR bn) ! Continued growth in important Internal European markets growth rate +1.5% +9.7% - Life Germany +12.9%, in 3Q still Total benefiting from 4Q 04 „last
Slide 19: L/H: higher realized gains
Group results 3Q 2005 L/H: higher realized gains (EUR m) 1111_AP3Q2005_FINAL Before policyholder participation Inv. result drivers 2,422 320 1 ! Current yield2: 10,739 11,060 -215 -188 - F/I: 3.5% 8,620 -220 (-0.2%-p) - Equity: 2.4% (-0.2%-p) ! Harvesting rate2,3 7.4% on equity portfolio value Curre
Slide 20: Agenda
Agenda 1111_AP3Q2005_FINAL Group P/C L/H Banking Asset Management Capital base and investments Additional information © Allianz AG 2005 19
Slide 21: Dresdner Bank: on track for earning cost of capital
Group results 3Q 2005 Dresdner Bank1: on track for earning cost of capital (EUR m) 1111_AP3Q2005_FINAL Drivers 3Q 05 Operating profit ! Operating Profit up 81.9% +81.9% +32.6% - Revenues stable 711 - Cost-income ratio up 536 - Net releases of LLP mainly due to IRU 231 127 ! No significant impact fro
Slide 22: Dresdner Bank: 3Q operating revenues stable
Group results 3Q 2005 Dresdner Bank1: 3Q operating revenues stable (EUR m) 1111_AP3Q2005_FINAL Oper. revenue drivers 3Q 05 Operating revenues ! Operating divisions +14% Internal growth rate2 +0.3% -7.2% ! Net interest income impacted by Total IRU close-down growth rate -0.0% -7.6% ! Improvement in c
Slide 23: Dresdner Bank: cost remain under control
Group results 3Q 2005 Dresdner Bank1: cost remain under control (EUR m) 1111_AP3Q2005_FINAL Operating expense drivers 3Q 05 Administrative expenses ! Higher personnel expenses +6.2% -4.6% driven by performance related compensation 3,969 ! All other personnel expenses % 3,786 down 2.9% despite tariff
Slide 24: Dresdner Bank: Net LLP releases mainly due to IRU
Group results 3Q 2005 Dresdner Bank1: Net LLP releases mainly due to IRU (EUR m) 1111_AP3Q2005_FINAL Net loan loss provision Risk elements -62.6% 8,956 Potential Net release problem 1,251 of LLP loans 271 54 -130 Non- 3,349 performing 7,705 815 loans -84 2,534 3Q 04 3Q 05 9M 04 9M 05 9M 04 9M 05 © A
Slide 25: Agenda
Agenda 1111_AP3Q2005_FINAL Group P/C L/H Banking Asset Management Capital base and investments Additional information © Allianz AG 2005 24
Slide 26: Asset Management overview: strong revenue and profit growth continue
Group results 3Q 2005 Asset Management overview: strong revenue and profit growth continue (EUR m) 1111_AP3Q2005_FINAL Drivers 3Q Operating profit ! Continued high net inflows +37.8% +35.8% (EUR +16bn) ! Net revenues +23.5%1, based 785 on strongly increased AuM-level 578 299 217 9M 05 3Q 04 3Q 05 9M
Slide 27: Asset Management: EUR billion net inflows
Group results 3Q 2005 Asset Management: EUR 48 billion net inflows 1111_AP3Q2005_FINAL Third-party AuM (EUR bn) Client and asset mix Third-party AuM (as of 30/09/2005 = EUR 711bn) Third-party AuM 585 (as of 31/12/2004) +48 Retail Institutional Σ Net inflows (De) Consolidation1 -5 Equity 11% 10% 21%
Slide 28: Asset Management: very strong CIR as revenue growth continues
Group results 3Q 2005 Asset Management: very strong CIR as revenue growth and cost discipline continue (EUR m) 1111_AP3Q2005_FINAL Drivers Cost-income ratio (in %) Operating revenues Internal growth rate +23.5% +17.0% Total growth rate +25.5% +16.2% -3.7%-p 1,933 1,664 12MR 67.5 58.8% 564 708 61.5 6
Slide 29: Asset Management: development of acquisition related expenses
Group results 3Q 2005 Asset Management: development of acquisition related expenses 1111_AP3Q2005_FINAL Acquisition related expenses (EUR m) 9M 04 9M 05 3Q 04 3Q 05 Total 557 556 174 213 Retention payments 98 12 31 - (PIMCO and Nicolas Applegate) ETA amortization 95 25 32 - Goodwill amortization 285
Slide 30: Agenda
Agenda 1111_AP3Q2005_FINAL Group P/C L/H Banking Asset Management Capital base and investments Additional information © Allianz AG 2005 29
Slide 31: Asset allocation: 10% asset growth
Group results 3Q 2005 Asset allocation1: 10% asset growth (EUR bn, in %) 1111_AP3Q2005_FINAL Group asset allocation (in %) Asset allocation P/C Total (EUR bn) 350 +10% 386 Real estate Other 2 0.4 4.8 (4.7%) 1.5 (1.5%) 14 3.7 Other2 15 4.2 59 15.33 Equity Real estate 15 4.2 20.6 (20.0%) Equity 50 14.
Slide 32: Since 01.01.2005 shareholders' equity increased by 33%
Group results 3Q 2005 Since 01.01.2005 shareholders’ equity1 increased by 33% (EUR m) 1111_AP3Q2005_FINAL Change in unrealized +32.7% gains/losses (EUR 2.2bn) 39,8181 Revenue reserves up 5.5bn +30.4% 9,525 - Net income (EUR 3.5bn) 29,995 - Sale of treasury shares in Unrealized gains / 1Q (EUR 1.6bn)
Slide 33: Summary
Group results 3Q 2005 Summary 1111_AP3Q2005_FINAL ! Allianz net income increases by 25% to EUR 3.5bn, driver: operating profit, capital gains flat ! P/C combined ratio despite Nat Cat at 93.0% ! Strong and profitable growth in Life and Asset Management ! Dresdner Bank stabilizes revenues and benefit
Slide 34: On track to outperform targets
Group results 3Q 2005 On track to outperform targets 1111_AP3Q2005_FINAL """ Focus on profitable growth: Group-wide revenue increase in line with 2004 P/C L/H Banking Asset Managemt. Strong combined Operating profit Earn cost of 10% increase in ratio below 95% of at least capital operating profit1 E
Slide 35: Agenda
Agenda 1111_AP3Q2005_FINAL Group P/C L/H Banking Asset Management Capital base and investments Additional information © Allianz AG 2005 34
Slide 36: Result by segments overview
Group results 3Q 2005 Group: result by segments overview (EUR m) 1111_AP3Q2005_FINAL P/C L/H1 Banking AM Consolidation Total 9M 04 9M 05 9M 04 9M 05 9M 04 9M 05 9M 04 9M 05 9M 04 9M 05 9M 04 9M 05 Total revenues (EUR bn) 34.6 34.4 31.9 34.9 5.0 4.6 1.7 1.9 -0.6 -0.2 72.6 75.7 Operating profit2 2,898
Slide 37: Breakdown of profit consolidations
Group results 3Q 2005 Breakdown of profit consolidations (EUR m) 1111_AP3Q2005_FINAL Profit before taxes, minorities and goodwill amortization (9M 05) 343 27 1,667 387 Banking 1,297 198 L/H 1,082 P/C Intra-group Gain from Other income/ Total dividends sale of expenses from consolidations MunichRe in
Slide 38: Key figures per quarter
Group results 3Q 2005 Group: key figures per quarter (EUR m) 1111_AP3Q2005_FINAL 2003 2004 2005 Delta 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 3Q 05/04 1 Total revenues (EUR bn) 21.6 22.8 27.3 22.2 23.1 24.3 28.3 23.7 23.8 0.7 Operating profit 939 892 1,224 1,998 1,869 1,749 1,820 2,374 1,723 -146 (Non-op.) Tradi
Slide 39: P/C: key figures and ratios per quarter
Group results 3Q 2005 P/C: key figures and ratios per quarter (EUR m) 1111_AP3Q2005_FINAL 2003 2004 2005 Delta 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 3Q 05/04 Total revenues (EUR bn) 10.1 9.2 14.4 9.8 10.4 9.1 14.2 9.8 10.5 0.1 Operating profit1 640 552 497 1,263 1,138 1,081 1,004 1,390 696 -442 (Non-op.) Tradi
Slide 40: L/H: key figures and ratios per quarter
Group results 3Q 2005 L/H: key figures and ratios per quarter (EUR m) 1111_AP3Q2005_FINAL 2003 2004 2005 Delta 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 3Q 05/04 Total revenues (EUR bn) 9.5 11.7 10.8 10.3 10.8 13.2 11.8 12.0 11.1 0.3 Operating profit 135 383 371 299 378 370 357 448 478 100 (Non-op.)Trading income
Slide 41: Dresdner Bank: key figures and ratios per quarter
Group results 3Q 2005 Dresdner Bank1: key figures and ratios per quarter (EUR m) 1111_AP3Q2005_FINAL 2003 2004 2005 Delta 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 3Q 05/04 Net interest income 489 726 515 583 655 514 533 538 517 -138 Net fee and commission inc 579 564 708 581 569 602 647 663 599 30 Net trading inc
Slide 42: Asset Management: key figures and ratios per quarter
Group results 3Q 2005 Asset Management: key figures and ratios per quarter (EUR m) 1111_AP3Q2005_FINAL 2003 2004 2005 Delta 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Operating revenues 633 576 544 556 564 644 591 634 708 144 Operating expenses -424 -369 -364 -375 -347 -365 -360 -379 -409 -62 Operating profit 209 2
Slide 43: Asset allocation: breakdown per segment
Group results 3Q 2005 Group asset allocation1: breakdown per segment (EUR bn) 1111_AP3Q2005_FINAL Total in % P/C in % L/H in % Bank. in % AM in % Equity 59.2 15.3 20.6 20.0 33.2 12.6 5.3 27.5 0.1 14.3 Fixed income 310.7 80.6 76.2 73.8 221.2 84.3 12.7 65.8 0.6 85.7 Real estate 14.3 3.7 4.8 4.7 8.2 3.
Slide 44: Investment result: breakdown per segment
Group results 3Q 2005 Investment result1: breakdown per segment (EUR m) 1111_AP3Q2005_FINAL Total P/C L/H Banking AM 9M 04 9M 05 9M 04 9M 05 9M 04 9M 05 9M 04 9M 05 9M 04 9M 05 Current income 11,637 12,301 2,787 2,982 8,174 8,620 670 688 6 11 Realized gains/losses 3,848 3,895 1,856 1,169 1,601 2,422
Slide 45: Revaluation reserve of EUR 33.3 bn
Group results 3Q 2005 Revaluation reserve of EUR 33.3 bn (EUR bn) 1111_AP3Q2005_FINAL Off balance sheet Revaluation reserve On balance sheet Shareholders’ Policyholders’ share share 1.5 (31.1%) 1.9 (40.7%) 33.3 Real estate 4.7 Affiliated/associated enterprises, JV 0.04 14.9 Minorities 0.3 (7.0%) 1.7
Slide 46: Reconciliation of P/C and L/H ratios
Group results 3Q 2005 Reconciliation of P/C and L/H ratios (EUR m) 1111_AP3Q2005_FINAL P/C L/H Loss ratio Expense ratio Expense ratio (statutory) 1 1 8. Insurance benefits (net) 12. Acquisition costs & admini- 12.1 Acquisition costs & admini- (EUR m) 20,575 19,884 strative expenses strative expenses
Slide 47: Segment overview after separating holding activities
Group results 3Q 2005 Segment overview after separating holding activities (EUR m) 1111_AP3Q2005_FINAL 9M 05 P/C L/H Banking Asset Consoli- Group Insurance Holding dation 1 activities Operating profit 4,022 -994 1,345 759 785 0 5,917 Trading income 10 -279 0 0 0 0 -269 Net capital gains 1,006 113 51
Slide 48: New impairment policy may lead to accelerated impairment
Group results 3Q 2005 New impairment policy may lead to accelerated im- pairment and higher accumulated impairment losses 1111_AP3Q2005_FINAL Stand-alone compa- Old policy New policy rison of changes 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Price Price Impairment Impairment “AND” rule vs. AC11 loss AC1 loss 80% AC A
Slide 49: Disclaimer
Group results 3Q 2005 Disclaimer 1111_AP3Q2005_FINAL 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 statemen