Allianz SE · XETR:ALV
Allianz — Q1 2004 Earnings Presentation
52 slides from Allianz's earnings presentation, May 14, 2004
Slide 1: Group financial results for the first quarter 2004
Helmut Perlet - CFO Allianz AG Group financial results for the first quarter 2004 Analysts’ conference call May 14, 2004 NOT FOR DISTRIBUTION IN THE USA
Slide 2: Our program for 2004: build on and expand the progress made
Group financial results 3M 2004 Our program for 2004: build on and expand the progress made ! Drive “3+One”-program In early 2003, we implemented our strategic “3+one”-program. By year-end, we had achieved significant progress During the full-year analyst presentation, we promised that we will stead
Slide 3: The first quarter 2004: continued improvement of operating profitability
Group financial results 3M 2004 The first quarter 2004: continued improvement of operating profitability1 ! 3M 2004 § Positive trend in operating profitability has been sustained – Operating profit1 increases by EUR 0.3bn to EUR 1.2bn – All segments contribute to positive trend – Further efficiency
Slide 4: Agenda: where do we stand
Group financial results 3M 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: progress as planned
Group financial results 3M 2004 Key financials: progress as planned ! Total revenues1 Expenses2 Operating profit Net income (EUR bn) (EUR m) (EUR m) (EUR m) -1.1% -9.5% +41% +1,221 3,401 27.5 27.2 3,077 1,174 834 675 Internal growth: 2.4% -546 3M 2003 3M 2004 3M 2003 3M 2004 3M 2003 3M 2004 3M 2003
Slide 6: Revenue development
Group financial results 3M 2004 Revenue development Total revenues1 (EUR bn) Total growth Internal growth2 27.53 27.2 AM 0.5 0.5 AM 11.5% 29.1% Banking 2.0 1.6 Banking -16.3% -12.4% 10.7 10.8 L/H L/H 1.5% 6.3% P/C -1.4% 0.6% Total 14.4 14.2 insurance -0.2% 3.1% P/C growth 3M 2003 3M 2004 Total -1.1%
Slide 7: Expenses: all segments improve
Group financial results 3M 2004 Expenses1: all segments improve Main expense drivers Evolution of expenses (EUR m) § Personnel expenses reduced -9.5% by EUR 90m § Non-personnel expenses reduced 3,401 Asset by EUR 234m 342 3,077 Management2 -5.8% 322 Banking 1,578 -12.6% 1,379 L/H 431 -10.7% 385 P/C
Slide 8: Operating profit: all segments improve
Group financial results 3M 2004 Operating profit1: all segments improve EUR m Op. profit 3M 2004 Changes vs. 3M 2003 Comments 67 § Combined ratio improved to 461 P/C 95.8% § Continued strong internal growth 356 92 (+6.3%), absolute expenses L/H decline § Significant progress despite Banking 179 110
Slide 9: Agenda: where do we stand
Group financial results 3M 2004 Agenda: where do we stand Substantially strengthen operating profitability § Group § P/C § L/H § Banking § Asset Management § Investments Protect and enhance capital base 8
Slide 10: P/C: combined ratio better than target
Group financial results 3M 2004 P/C: combined ratio better than target Operating profit (EUR m) § Moderate internal growth (0.6%). For +17% increasing operating margin, we accept 461 forgoing some growth opportunities 394 § Combined ratio further lowered by 1.9%-p to 95.8% and better than target (97
Slide 11: P/C: ongoing focus on quality of business
Group financial results 3M 2004 P/C: ongoing focus on quality of business… GPW drivers Gross premiums written (EUR bn) § Focusing on profitability, we have traded some revenues for better margins in certain markets e.g. in 14.6 14.4 France (0.0%), Austria (0.9%) § We are managing the insurance cycle
Slide 12: P/C: pays off with combined ratio ahead of target
Group financial results 3M 2004 P/C: …pays off with combined ratio ahead of target Combined ratio 3M 03 3M 04 Combined ratio (in %) SGD (German P/C Group) 87.5 86.9 Allianz AG 101.4 99.8 RAS Group Italy 97.4 94.2 97.7 95.8 Lloyd Adriatico 95.4 90.0 Allianz Cornhill 94.9 94.4 72.6 70.4 Allianz Spain
Slide 13: P/C: investment result significantly increased
Group financial results 3M 2004 P/C: investment result significantly increased Investment result drivers1 Investment result2 (in % of Ø investments) § Current income up by more than EUR 250m +1.3%-p § Result from realized gains/losses increased more than EUR 140m 1.6 to EUR 719m § Positive balance o
Slide 14: AGF P/C continues successful turnaround
Group financial results 3M 2004 AGF P/C continues successful turnaround Measures taken Evolution of combined ratio (in %) § Rate increases in agent business, but Claims ratio further portfolio cleaning mainly in large Expense ratio accounts lead to a premium decrease of 2% (vs. 3M 2003) 112.3 § Repe
Slide 15: Agenda: where do we stand
Group financial results 3M 2004 Agenda: where do we stand Substantially strengthen operating profitability § Group § P/C § L/H § Banking § Asset Management § Investments Protect and enhance capital base 14
Slide 16: L/H: back to bottom-line profitability
Group financial results 3M 2004 L/H: back to bottom-line profitability Operating profit (EUR m) § Strong internal growth of 6.3% +35% § Korean business shows first signs of recovery 356 264 § Net income up EUR 260m, despite the fact that Germany is now a “regular” tax payer again 3M 2003 3M 2004 § M
Slide 17: L/H: investment-oriented products account for 51% of premiums
Group financial results 3M 2004 L/H: investment-oriented products account for 51% of premiums Statutory premium drivers Statutory premiums (EUR bn) Heterogeneous premium development: +1.5% § Weak growth1 in e.g. Italy (-18.2%, lower sales via bancassurance) 10.7 10.8 and Switzerland (-5.8%, focus on
Slide 18: L/H: investment result significantly increased
Group financial results 3M 2004 L/H: investment result significantly increased Investment result drivers1 Investment result2 (in % of Ø investments) § Current investment income up by EUR 71m +1.1%-p § Result from realized gains/losses increased more than EUR 1bn to 1.5 EUR 0.6bn § Positive balance o
Slide 19: Allianz Life Korea: first signs of recovery
Group financial results 3M 2004 Allianz Life Korea: first signs of recovery Initiatives Status § Decrease in guaranteed interest rate: - participating: by 50bp to 4,0% - non-participating: by 50bp to 4,5% 1 Repricing - interest-sensitive: by 25bp to 3,75% § Significant increase in expense loadings §
Slide 20: Agenda: where do we stand
Group financial results 3M 2004 Agenda: where do we stand Substantially strengthen operating profitability § Group § P/C § L/H § Banking § Asset management § Investments Protect and enhance capital base 19
Slide 21: Dresdner Bank: positive net income
Group financial results 3M 2004 Dresdner Bank1: positive net income Operating profit (EUR m) § Operating profit improved due to lower expenses and risk provisions; 175.6% strong revenues in PBC 174 § Non-operating result back to normal, 63 but only EUR 12m restructuring costs so far 3M 2003 3M 2004
Slide 22: Dresdner Bank: reported revenues decreased
Group financial results 3M 2004 Dresdner Bank1: reported revenues decreased ... Operating revenues drivers Operating revenues (EUR m) § 6.4% revenue growth in PBC -12.1% § Decrease in net interest income lower than RWA4-reduction (-19.4% to 1,893 EUR 108bn) 1,664 § Net trading income lower than Net
Slide 23: Dresdner Bank: stabilized on a comparable basis
Group financial results 3M 2004 Dresdner Bank1: ... but stabilized on a comparable basis Operating revenues (EUR m) 1,893 Pro forma calculation -17 -80 1,664 -62 1,657 -76 3M 2003 FX ∆ IAS 39 ∆ IRU2 ∆ RWA3 3M 2003 3M 2004 (stated) Revenue impact (comparable (stated) basis) 1) Dresdner Bank contribut
Slide 24: Dresdner Bank: cost reduction on track
Group financial results 3M 2004 Dresdner Bank1: cost reduction on track Operating expense drivers Operating expenses (EUR m) § Already more than half of “New Dresdner” FTE reduction realized or contracted (~2,500 of 4,700 FTEs) -8.4% § Reduction of non-personnel expenses 1,479 driven by IT costs 1,3
Slide 25: Dresdner Bank: improved risk profile pays off
Group financial results 3M 2004 Dresdner Bank1: improved risk profile pays off Net loan-loss provision drivers Net loan-loss provisions (EUR m) § Lower asset base -61.5% § Continued improvement of credit risk management processes and systems 351 § Shift to lower risk assets following the reduction o
Slide 26: Dresdner Bank: improvement in operating profit driven by PBC
Group financial results 3M 2004 Dresdner Bank1: improvement in operating profit driven by PBC Operating profit drivers Operating profit (EUR m) § PBC: Strong revenues, net 3M 2004 Changes vs. 3M 2003 fee & commission income EUR 70m above previous year PBC 168 109 § CB: CIR further improved to 46.5%
Slide 27: Dresdner Bank: New Dresdner well under way
Group financial results 3M 2004 Dresdner Bank: „New Dresdner“ well under way Achievements so far Business platform going forward § Revenue base stabilized (flat on a comparable basis) § Continuous cost reduction quarter by quarter § Increased focus on (minus 8.4% vs. Q1/2003) profitable growth § Imp
Slide 28: Agenda: where do we stand
Group financial results 3M 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: strong profitable growth
Group financial results 3M 2004 Asset Management: strong profitable growth Operating profit (EUR m) § Strong 3rd party net inflows of EUR 9bn and favourable market and F/X impact +31.4% lead to 6% higher AuM in Q1 2004 (vs. 180 31/12/03) 137 § Operating profit increased 31.4% based on 11.5% revenue
Slide 30: Asset Management: strong net inflows
Group financial results 3M 2004 Asset Management: strong net inflows Third-party AuM (EUR bn) Asset allocation Third-party AuM (as of 31/03/04 = EUR 598bn) Third-party AuM 565 (as of 31/12/03) Retail Institutional Σ Net inflow +9 Equity 12% 14% 26% Fixed F/X effects +10 26% 47% 73% income Market eff
Slide 31: Asset Management: CIR decreases 5.0%-p
Group financial results 3M 2004 Asset Management: CIR decreases 5.0%-p Profitability drivers (EUR m) 3M 2003 3M 2004 § Operating revenues increased Operating revenues 488 544 considerably; major contributors are PIMCO group (+19.6%) and ADAM Germany (+14.9%) Operating expenses -351 -364 § Cost-incom
Slide 32: Agenda: where do we stand
Group financial results 3M 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: Investments: profit and reserves improve
Group financial results 3M 2004 Investments: profit and reserves improve Net investment income1 (EUR m) § Investment income increased by +164% EUR 3,245m 5,219 § Decrease in equity ratio by 1.7%-p to 14.6% (since 12/2003) 1,974 § Revaluation reserves2 up by EUR 3.6bn to EUR 21.1bn mainly due to decr
Slide 34: Asset allocation: equity gearing further reduced
Group financial results 3M 2004 Asset allocation: equity gearing further reduced Development asset allocation (in %) Equities Real estate Fixed income Other Equity gearing 3M 2004 (EUR bn) 2.7 3.3 3.9 4.7 § Shareholder exposure: 22.5 4.2 6 4.5 4 4.1 5 3.9 4 § NAV ex goodwill: 19.2 § Goodwill: 12.3 "
Slide 35: Agenda: where do we stand
Group financial results 3M 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: Capital base further enhanced by EUR 1.2bn
Group financial results 3M 2004 Capital base further enhanced by EUR 1.2bn EUR m 675 29,810 421 283 -161 28,592 4.3 Unrealized Unrealized 4.7 gains/losses (EUR bn) gains/losses (EUR bn) Equity Currency Change in Net Other Equity 31/12/2003 translation unrealized income 31/03/2004 gains / losses Capi
Slide 37: In 2004, we will focus on measures to further accelerate performance
Group financial results 3M 2004 In 2004, we will focus on measures to further accelerate performance ! Outlook 2004 § Continued commitment to “3+One”-program: unchanged focus on operating improvements § However, caveats remain, e.g.: – Level of realized gains not indicative for full year – Further N
Slide 38: Summary: We have performed a good start into 2004
Group financial results 3M 2004 Summary: We have performed a good start into 2004 ! § P/C combined ratio 95.8%, ahead of target § Positive net income of EUR 247m in L/H § Quality of Dresdner Bank business improved, bottom-line profit of EUR 102m § AuM increased by 6%; CIR down to 66.9% § IFRS equity
Slide 39: Additional information
Allianz Group Additional information
Slide 40: Group: quarterly key figures
Group financial results 3M 2004 Group: quarterly key figures (EUR m) Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 ∆Q1 04/03 Total revenues1 (EUR bn) 27.5 21.9 21.6 22.8 27.2 -0.3 Operating profit 834 1,344 939 871 1,174 340 Net capital gains 890 -227 256 3738 768 -122 Net impairments -1,146 -91 -76 -647
Slide 41: Reconciliation of profit before taxes and minorities to operating profit
Group financial results 3M 2004 Reconciliation of profit before taxes and minorities to operating profit (EUR m) Asset Con- Total P/C L/H1 Banking Mgmt. solidation Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 03 04 03 04 03 04 03 04 03 04 03 04 Profit before taxes and minorities 104 927 122 505 -313 127 -75
Slide 42: P/C: quarterly key figures and ratios
Group financial results 3M 2004 P/C: quarterly key figures and ratios (EUR m) Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 ∆Q1 04/03 Total revenues (EUR bn) 14.6 9.5 10.1 9.2 14.4 -0.2 Operating profit 394 969 629 833 461 67 Net capital gains 719 -252 398 4,027 628 -91 Net impairments -722 -15 -144 -482
Slide 43: P/C: combined ratios
Group financial results 3M 2004 P/C: combined ratios Combined ratio (%) 3M 03 3M 04 Comments Improvement due to reduction of expense ratio by 1.4%-p to 26.8% SGD (German P/C Group) 87.5 86.9 (lower acquisition expense ratio and IT costs) Allianz AG 101.4 99.8 Combined ratio P/C down by 4.5%-p, no la
Slide 44: L/H: quarterly key figures and ratios
Group financial results 3M 2004 L/H: quarterly key figures and ratios (EUR m) Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 ∆Q1 04/03 Total revenues (EUR bn) 10.7 10.4 9.5 11.7 10.8 0.1 Operating profit 264 301 150 396 356 92 Net capital gains 84 -20 -9 40 151 67 Net impairments -186 15 1 33 21 207 Other
Slide 45: Dresdner Bank: quarterly key figures and ratios
Group financial results 3M 2004 Dresdner Bank1: quarterly key figures and ratios (EUR m) Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 ∆Q1 04/03 Net interest income2 611 581 491 729 517 -94 Net fee & commission income 671 573 579 564 708 37 Net trading income 611 466 320 97 440 -172 Operating revenues 1,8
Slide 46: Dresdner Bank: key figures by divisions
Group financial results 3M 2004 Dresdner Bank1: key figures by divisions (EUR m) 3M 2004 PBC CB DrKW Corp. DreBa ex IRU Total Other2 IRU 168 174 226 92 84 Operating profit -1184 -52 Net interest income 359 170 69 -156 441 75 517 Net fee & commission income 484 73 139 4 700 8 708 Net trading income 1
Slide 47: Dresdner Bank: IRU achievements 2003 and Q1 2004
Group financial results 3M 2004 Dresdner Bank: IRU achievements 2003 and Q1 2004 Cut back of exposure by EUR 18.9bn to EUR 16.6bn since December 2002 (-53%) … by portfolios … by exit types … by risk elements Selected assets -14.0 Early/regular repayments -8.7 Loans - domestic -2.8 - performing -15.6
Slide 48: Asset Management: quarterly key figures and ratios
Group financial results 3M 2004 Asset Management: quarterly key figures and ratios (EUR m) Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 ∆Q1 04/03 Operating revenues 488 544 632 574 544 56 Operating expenses -351 -361 -424 -369 -364 13 Operating profit 137 183 208 205 180 43 Goodwill amortization & -212 -
Slide 49: Group asset allocation: breakdown per segment
Group financial results 3M 2004 Group asset allocation: breakdown per segment (EUR bn) Total in % P/C in % L/H in % Bank in % AM in % Equity 50.7 14.6 16.6 18.0 25.5 11.1 8.5 33.6 0.1 10.4 Fixed income 267.0 76.8 59.0 63.7 191.8 83.7 15.6 62.2 0.5 81.6 Real estate 13.7 3.9 4.7 5.1 7.9 3.4 1.1 4.2 0.
Slide 50: Investment result significantly improved
Group financial results 3M 2004 Investment result significantly improved (EUR bn) Total P/C L/H Bank AM 3M 03 3M 04 3M 03 3M 04 3M 03 3M 04 3M 03 3M 04 3M 03 3M 04 Current income 3,261 3,715 602 864 2,551 2,622 104 228 4 2 Realized gains/losses 203 1,260 575 719 -461 595 90 -59 -1 5 Write-ups/write-
Slide 51: Revaluation reserve further increased since year end
Group financial results 3M 2004 Revaluation reserve further increased since year end (EUR bn) Off balance sheet Revaluation reserve On balance sheet Shareholders’ share Policyholders’ share 1.7 (35.6%) 2.2 (47.0%) 21.1 Real 4.0 estate At equity 0.8 Minorities 9.1 0.3 (6.3%) Available 0.8 16.3 for sa
Slide 52: Disclaimer
Group financial results 3M 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