Allianz SE · XETR:ALV
Allianz — H1 2004 Earnings Presentation
52 slides from Allianz's earnings presentation, Aug 16, 2004
Slide 1: Group financial results for the first half-year 2004
Helmut Perlet - CFO Allianz AG Group financial results for the first half-year 2004 Analysts’ conference call August 16, 2004
Slide 2: "3+One" drives results
Group financial results 6M 2004 “3+One” drives results ! Successful implementation continues Promise from 12M 2003 analyst meeting: Positive trend continues into 2004 3,135 2,178 974 6M 2002 6M 2003 6M 2004 Operating profit1 (EUR m) 1) Operating profit is a non-GAAP measure which we believe highligh
Slide 3: The first half-year 2004: we are on track
Group financial results 6M 2004 The first half-year 2004: we are on track ! 6M 2004 § Operating profitability: all segments improve – Operating profit increases by EUR 1.0bn to EUR 3.1bn – P/C: combined ratio clearly improves by 2.7%-p to 94.3% – L/H: moderate internal growth of 3.1% – Banking: reve
Slide 4: Agenda: where do we stand
Group financial results 6M 2004 Agenda: where do we stand Substantially strengthen operating profitability § Group § P/C § L/H § Banking § Asset Management § Investments Protect and enhance capital base 3
Slide 5: Key financials: positive trend confirmed
Group financial results 6M 2004 Key financials1: positive trend confirmed ! Total revenues Expenses2 Operating profit Net income (EUR bn) (EUR m) (EUR m) (EUR m) 0.0% -10.4% 43.9% 783% 49.5 6,647 3,135 49.5 5,957 2,178 1,289 146 Internal growth: 2.4% 6M 2003 6M 2004 6M 2003 6M 2004 6M 2003 6M 2004 6
Slide 6: Revenue development: moderate growth
Group financial results 6M 2004 Revenue development: moderate growth P/C Banking L/H AM 2Q total revenues1 (EUR bn) 6M total revenues1 (EUR bn) Total Internal Total Internal growth growth3 growth growth3 22.02 22.22 (%) (%) 49.5 49.5 (%) (%) 1.1 1.2 AM 11.5 20.4 0.6 0.6 AM 0.3 5.0 3.6 3.3 Banking -8
Slide 7: Expenses: all segments improve
Group financial results 6M 2004 Expenses1: all segments improve P/C Banking L/H AM Evolution of expenses (EUR m) -11.3% -10.4% 6,647 601 5,957 3,246 560 259 2,880 238 3,023 1,445 2,749 1,370 851 420 769 384 1,122 2,172 1,879 888 2Q 2003 2Q 2004 6M 2003 6M 2004 1) Administrative expenses and investme
Slide 8: Operating profit: all segments improve
Group financial results 6M 2004 Operating profit1: all segments improve EUR m 2Q 2004 ∆2Q 04/03 6M 2004 ∆6M 04/03 Comments P/C 1,283 +331 1,742 +426 Combined ratio 94.3% L/H Improvement understated 245 -56 601 +36 due to DAC “true-up” Revenues stabilize, costs Banking 252 +344 431 +454 are reduced,
Slide 9: Better quality of result
Group financial results 6M 2004 Better quality of result Evolution of income before tax (EUR m) Evolution of net income (EUR m) 419 3,276 1,853 1,423 -291 957 1,289 957 -1,376 477 146 Profit Operat. Net capital gains/ Other Profit Net Operat. Non-operat. Minorities Taxes Net b/ tax, profit Net impai
Slide 10: Agenda: where do we stand
Group financial results 6M 2004 Agenda: where do we stand Substantially strengthen operating profitability § Group § P/C § L/H § Banking § Asset Management § Investments Protect and enhance capital base 9
Slide 11: P/C: considerable improvement
Group financial results 6M 2004 P/C: considerable improvement Drivers 6M 2004 Operating profit (EUR m) 34.8% 32.4% § Focus on profitability: controlled 1,742 1,283 1,316 growth pays off in higher margin; 952 combined ratio down 2.7%-p to 94.3% § Net income more than doubles 2Q 2003 2Q 2004 6M 2003 6
Slide 12: P/C: selective underwriting
Group financial results 6M 2004 P/C: selective underwriting … GPW drivers 6M 2004 Gross premiums written (EUR bn) Focus on profitability has varying implications in different markets: § Strong growth through both, price 3.7% 0.6% and number of contracts (e.g. Spain +6.7%, Australia +5.4%) 24.2 24.1
Slide 13: P/C: improves combined ratios considerably
Group financial results 6M 2004 P/C: ... improves combined ratios considerably Combined ratio 6M 03 6M 04 Combined ratio (in %) Claims ratio Expense ratio Adjustments3 SGD (German P/C Group) 90.7 86.0 Allianz AG1 94.7 88.4 -14.5%-p RAS Group Italy 98.1 94.9 108.8 105.7 4.4 4.0 Lloyd Adriatico 89.5 8
Slide 14: AGF continues successful turnaround
Group financial results 6M 2004 AGF continues successful turnaround Measures taken Evolution of combined ratio (in %) Claims ratio Expense ratio § Selective tariff increases in inforce: - Motor (∅): 12M 03: 9%; 6M 04: 3% - Commercial lines: 12M 03: 14 - 20%; 1Q/ 2003: 105.4 112.3 6M 04: 9 - 14% 102.
Slide 15: P/C: current investment yield stable
Group financial results 6M 2004 P/C1: current investment yield stable Investment result drivers 6M 04 Investment yield2 (in % of Ø investments) Other income § Current yield: Current income – F/I: run rate 2.2% (-0.1%-p) – Equity: 2.1%4 (+0.7%-p) § Harvesting rate5: -0.1%-p – down 0.1%-p, reduced wri
Slide 16: P/C: margin increase is main driver of improvement
Group financial results 6M 2004 P/C: margin increase is main driver of improvement Operating profit (EUR m) 520 18 14 1,742 -126 1,316 +426 902 6M 2002 6M 2003 Claims/ Growth Current Other 6M 2004 expenses investment Income 15
Slide 17: Agenda: where do we stand
Group financial results 6M 2004 Agenda: where do we stand Substantially strengthen operating profitability § Group § P/C § L/H § Banking § Asset Management § Investments Protect and enhance capital base 16
Slide 18: L/H: net income increases by 65.5%
Group financial results 6M 2004 L/H: net income increases by 65.5% Drivers 6M 2004 Operating profit (EUR m) -18.6% 6.4% § “True-up”-effects on operating 565 601 profit: positive impact1 of EUR 70m in 2Q 2003, negative 301 impact1 of EUR 40m in 2Q 2004 245 § Profit b/ tax, minorities and goodwill amo
Slide 19: L/H: premium growth less than expected
Group financial results 6M 2004 L/H: premium growth less than expected Premium drivers 6M 20041 Statutory premiums (EUR bn) § Significant internal growth of Premiums from investment-oriented products Ø 11.1% in most core markets IFRS premiums (e.g. Germany +4.0%, France +10.1%, Spain +23.8%) -1.4% 0
Slide 20: L/H: investment yield back to normal level
Group financial results 6M 2004 L/H1: investment yield back to “normal level” Investment result drivers Investment yield2 (in % of Ø investments) § Current yield stable and well Other income Current income above guarantees in most countries – F/I run rate 2.5% (-0.1%-p) – equity run rate 2.1% (+0.1%
Slide 21: Agenda: where do we stand
Group financial results 6M 2004 Agenda: where do we stand Substantially strengthen operating profitability § Group § P/C § L/H § Banking § Asset management § Investments Protect and enhance capital base 20
Slide 22: Dresdner Bank: turnaround on track
Group financial results 6M 2004 Dresdner Bank1: turnaround on track Drivers Operating profit (EUR m) § Positive net income and operating profit for second consecutive quarter 409 § Highest quarterly operating profit 234 since acquisition by Allianz § Revenues stabilize, costs reduced, -109 risk prof
Slide 23: Dresdner Bank: revenues stabilized
Group financial results 6M 2004 Dresdner Bank1: revenues stabilized… Operating revenue drivers Operating revenues (EUR m) § 2Q: revenues slightly improve Net interest income Net fee & commission income across all income categories Net trading income § 6M: decrease in net interest income -6.0% lower
Slide 24: Dresdner Bank: backed by analysis on a comparable basis
Group financial results 6M 2004 Dresdner Bank1: …backed by analysis on a comparable basis Operating revenues (EUR m) 3,514 Pro forma calculation -14 2.7% -66 3,302 -50 3,216 -169 6M 2003 FX ∆ IAS39 ∆ IRU2 ∆ RWA3 6M 2003 6M 2004 (stated) Revenue impact (comparable (stated) basis) 1) Dresdner Bank con
Slide 25: Dresdner Bank: costs further reduced
Group financial results 6M 2004 Dresdner Bank1: costs further reduced Operating expense drivers Operating expenses (EUR m) § Already 70% (~3,300 of 4,700) of Personnel expenses New Dresdner FTE-reduction rea- Non-personnel expenses lized (~2,100) or contracted (~1,200) -6.5% 2,860 2,676 Evolution of
Slide 26: Dresdner Bank: lower provisions reflect improved risk profile
Group financial results 6M 2004 Dresdner Bank1: lower provisions reflect improved risk profile Net loan-loss provision drivers Net loan-loss provisions (LLP) (EUR m) § Total risk elements reduced by 24.1% to EUR 9.4bn2 -68.9% § Coverage ratio improves despite -76.4% 699 lower net LLP § Full-year pro
Slide 27: Dresdner Bank: strong improvement in PBC
Group financial results 6M 2004 Dresdner Bank1: strong improvement in PBC (EUR m) Operating profit drivers 2Q 2004 ∆2Q 04/03 6M 2004 ∆6M 04/03 § PBC: revenues 3.3% above 6M 03 127 +80 295 +189 § CB: CIR further improves by 120 212 4.9%-p to 45.7% +15 +49 § DrKW: risk capital managed 78 -70 162 -105
Slide 28: Agenda: where do we stand
Group financial results 6M 2004 Agenda: where do we stand Substantially strengthen operating profitability § Group § P/C § L/H § Banking § Asset Management § Investments Protect and enhance capital base 27
Slide 29: Asset Management: ongoing profitable growth
Group financial results 6M 2004 Asset Management: ongoing profitable growth Drivers 6M 2004 Operating profit (EUR m) -1.2% 12.7% § Double-digit profit increase despite strong Euro 361 320 § Growth (F/X adjusted): 183 181 – Operating profit: 22.2% – AuM1: 3.4% 2Q 2003 2Q 2004 6M 2003 6M 2004 § Provis
Slide 30: Asset Management: 6% AuM growth
Group financial results 6M 2004 Asset Management: 6% AuM growth Third-party AuM (EUR bn) Asset allocation Third-party AuM (as of 30/06/04 = EUR 599bn) Third-party AuM 565 (as of 31/12/03) Retail Institutional Σ Net inflow 13 Equity 12% 13% 25% Fixed F/X effects 15 27% 47% 74% income Market effects 6
Slide 31: Asset Management: sustainable efficiency gains
Group financial results 6M 2004 Asset Management: sustainable efficiency gains Drivers 6M 2004 Cost-income Operating profit ratio (%) Operating revenues -17.5%-p 2.2% 6.5% 1 1,100 84.7 1,032 78.5 544 556 67.2 67.2 2Q 03 2Q 04 6M 03 6M 04 Operating expenses 4.2% 3.9% 712 739 361 375 2Q 03 2Q 04 6M 03
Slide 32: Agenda: where do we stand
Group financial results 6M 2004 Agenda: where do we stand Substantially strengthen operating profitability § Group § P/C § L/H § Banking § Asset management § Investments Protect and enhance capital base 31
Slide 33: Asset allocation: breakdown
Group financial results 6M 2004 Asset allocation1: breakdown Group asset allocation (EUR bn) Asset allocation P/C (EUR bn, in %, 6M 04) Other Total 342.5 (%) 347.7 (%) 10.4 (11.5) Real estate Other 13.2 3.9 16.1 4.6 4.7 (5.2) Real estate 15.2 4.4 14.2 4.1 Equity F/I Equity 56.4 16.5 50.7 14.6 17.0 (
Slide 34: Increase in investment result: breakdown
Group financial results 6M 2004 Increase in investment result1: breakdown (EUR m) Allianz Group (6M 2004) P/C (6M 2004) 1,057 2,622 589 149 1,155 65 -394 952 10,513 Net Current Realized Write- Expen- Trading Net 1,834 185 invest. inc. gains/ ups/ ses invest. inc. losses downs inc. 6M 03 6M 04 894 20
Slide 35: Agenda: where do we stand
Group financial results 6M 2004 Agenda: where do we stand Substantially strengthen operating profitability § Group § P/C § L/H § Banking § Asset Management § Investments Protect and enhance capital base 34
Slide 36: Increased profitability further strengthens shareholders' equity
Group financial results 6M 2004 Increased profitability further strengthens shareholders’ equity EUR m 1,289 2 29,280 313 28,592 -551 -365 4.2 Unrealized Unrealized gains/losses (EUR bn) gains/losses (EUR bn) 3.9 Equity Currency Change in Net Dividend Other Equity 31/12/2003 translation unrealized i
Slide 37: Allianz remains on track
Group financial results 6M 2004 Allianz remains on track ! Outlook 2004 § “3+One” program: our key to success; operating profit targets unchanged § Development of investment result will level out in 2nd half 2004 (lower realized gains and dividends) § Caveats remain, e.g. – Further Nat Cat developme
Slide 38: Summary: "3+One" pays off
Group financial results 6M 2004 Summary: “3+One” pays off Summary ! § P/C combined ratio significantly improved to 94.3% § L/H net income considerably increased to EUR 386m § Dresdner Bank revenues stabilized, bottom-line profit of EUR 231m § AM produces profitable growth § Capitalization within AA-
Slide 39: Additional information
Allianz Group Additional information
Slide 40: Group: result by segments overview
Group financial results 6M 2004 Group: result by segments overview (EUR m) Asset Con- Total P/C L/H1 Banking Mgmt. solidation 6M 6M 6M 6M 6M 6M 6M 6M 6M 6M 6M 6M 03 04 03 04 03 04 03 04 03 04 03 04 Total revenues 24.1 24.2 21.1 21.1 3.7 3.4 1.0 1.1 -0.4 -0.3 49.5 49.5 Operating profit2 1,316 1,742 5
Slide 41: Breakdown of profit consolidations
Group financial results 6M 2004 Breakdown of profit consolidations Profit b/ goodwill amortization, taxes, minorities (EUR m) 107 1 1,234 1,122 4 Intra-group Gains from Other income/ Other Total dividends intra-Group expenses from consolidations transactions investments of shares 40
Slide 42: Group: key figures per quarter
Group financial results 6M 2004 Group: key figures per quarter (EUR m) 1Q 03 2Q 03 3Q 03 4Q 03 1Q 04 2Q 04 ∆2Q 04/03 Total revenues1 (EUR bn) 27.5 21.9 21.6 22.8 27.2 22.2 0.3 Operating profit 834 1,344 939 871 1,174 1,961 617 Net capital gains 912 -173 262 3,756 768 513 686 Net impairments -1,135 -
Slide 43: P/C: key figures and ratios per quarter
Group financial results 6M 2004 P/C: key figures and ratios per quarter (EUR m) 1Q 03 2Q 03 3Q 03 4Q 03 1Q 04 2Q 04 ∆2Q 04/03 Total revenues (EUR bn) 14.6 9.5 10.1 9.2 14.4 9.8 0.3 Operating profit1 364 952 627 558 459 1,283 331 Net capital gains 727 -212 400 4,056 628 297 509 Net impairments -713 -
Slide 44: L/H: key figures and ratios per quarter
Group financial results 6M 2004 L/H: key figures and ratios per quarter (EUR m) 1Q 03 2Q 03 3Q 03 4Q 03 1Q 04 2Q 04 ∆2Q 04/03 Total revenues (EUR bn) 10.7 10.4 9.5 11.7 10.8 10.3 -0.1 Operating profit 264 301 150 396 356 245 -56 Net capital gains 98 -6 -5 52 151 38 44 Net impairments -184 29 32 41 2
Slide 45: Dresdner Bank: key figures and ratios per quarter
Group financial results 6M 2004 Dresdner Bank1: key figures and ratios per quarter (EUR m) 1Q 03 2Q 03 3Q 03 4Q 03 1Q 04 2Q 04 ∆2Q 04/03 Net interest income2 611 581 491 729 517 584 3 Net fee & commission income 671 573 579 564 708 582 8 Net trading income 611 466 320 97 440 472 6 Operating revenues
Slide 46: Dresdner Bank: key figures by divisions
Group financial results 6M 2004 Dresdner Bank1: key figures by divisions (EUR m) 6M 2004 PBC CB DrKW Corp. DreBa ex IRU Total Other2 IRU 295 212 162 441 409 Operating profit - 32 - 2274 Net interest income 734 346 136 -330 886 215 1,101 Net fee & commission income 853 144 268 6 1,270 19 1,289 Net tr
Slide 47: Asset Management: key figures and ratios per quarter
Group financial results 6M 2004 Asset Management: key figures and ratios per quarter (EUR m) 1Q 03 2Q 03 3Q 03 4Q 03 1Q 04 2Q 04 ∆2Q 04/03 Operating revenues 488 544 632 574 544 556 12 Operating expenses -351 -361 -424 -369 -364 -375 -14 Operating profit 137 183 208 205 180 181 -2 Goodwill amortizat
Slide 48: Group asset allocation: breakdown per segment
Group financial results 6M 2004 Group asset allocation1: breakdown per segment (EUR bn) Total in % P/C in % L/H in % Bank in % AM in % Equity 50.7 14.6 17.0 18.8 25.8 11.2 7.9 31.3 0.1 9.3 Fixed income 266.7 76.7 58.1 64.5 192.5 83.1 15.5 61.6 0.5 90.2 Real estate 14.2 4.1 4.7 5.2 7.7 3.3 1.8 7.1 0.
Slide 49: Investment result: breakdown per segment
Group financial results 6M 2004 Investment result1: breakdown per segment (EUR m) Total P/C L/H Bank AM 6M 03 6M 04 6M 03 6M 04 6M 03 6M 04 6M 03 6M 04 6M 03 6M 04 Current income 7,874 8,083 1,884 1,949 5,477 5,561 505 569 7 4 Realized gains/losses 1,334 2,228 1,706 1,313 -511 756 134 154 5 5 Write-
Slide 50: Revaluation reserve: breakdown
Group financial results 6M 2004 Revaluation reserve: breakdown (EUR bn) Off balance sheet Revaluation reserve On balance sheet Shareholders’ share Policyholders’ share 1.6 (35.3%) 2.1 (46.4%) 17.0 Real 4.0 estate At equity 0.6 Minorities 7.1 0.3 (6.7%) Available 0.7 12.5 for sale 1.0 Deferred taxes
Slide 51: Asset allocation and equity gearing
Group financial results 6M 2004 Asset allocation and equity gearing Development asset allocation (in %) Equities Real estate Fixed income Other Equity gearing 6M 2004 (EUR bn) 2.7 3.3 3.9 4.6 § Shareholder exposure: 22.3 4.2 6 4.5 4 4.1 5 4.1 4 § NAV ex goodwill: 18.6 § Goodwill: 12.3 " Gearing: 1.2
Slide 52: Disclaimer
Group financial results 6M 2004 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 ar