Allianz SE · XETR:ALV
Allianz — Q3 2019 Earnings Presentation
47 slides from Allianz's earnings presentation, Nov 8, 2019
Slide 1: 3Q 2019 Analyst conference call
3Q 2019 Giulio Terzariol Chief Financial Officer Analyst conference call November 8, 2019
Slide 2: Content
CONTENT GROUP FINANCIAL RESULTS 1 3Q 2019 GLOSSARY 2 DISCLAIMER © Allianz SE 2019 2
Slide 3: Group: 9M with good profitable growth
Group financial results 3Q 2019 Group: 9M with good profitable growth Group Property-Casualty Life/Health Asset Management Total revenues 9M 19 in EUR bn (internal growth vs. prior year in %) 106.9 (+6.0%) 46.1 (+4.4%) 55.9 (+8.1%) 5.2 (-1.8%) Operating profit 9M 19 in EUR mn (vs. prior year in %) 9
Slide 4: Group: 9M with good profitable growth - comments
Group financial results 3Q 2019 Group: 9M with good profitable growth Comments • Internal growth strong at 6.0% • EPS grow 7.6% Strong internal growth in L/H +8.1% and P/C +4.4%. Good net income growth and execution of share -1.8% internal growth in AM driven by lower buy-back support EPS growth. Nu
Slide 5: Group: 3Q operating profit strong at EUR 3.0bn
Group financial results 3Q 2019 Group: 3Q operating profit strong at EUR 3.0bn Total revenues (EUR bn) Operating profit drivers (EUR mn) +8.1% -0.1% +6.4% Internal growth 30.9 33.4 2,988 +53 +62 +6 2,984 +31 -156 3Q 18 3Q 19 Shareholders’ net income (EUR mn) +0.6% Operating P/C L/H AM CO Consoli- Op
Slide 6: Group: 3Q operating profit strong at EUR 3.0bn - comments
Group financial results 3Q 2019 Group: 3Q operating profit strong at EUR 3.0bn Comments • Internal growth excellent at 6.4% • P/C – good performance Excellent internal growth in L/H +8.4% and P/C +4.8%. OP at 24% of FY outlook mid-point. Less run-off +1.8% internal growth in AM driven by higher AuM
Slide 7: Group: SII ratio on comfortable level
Group financial results 3Q 2019 Group: SII ratio on comfortable level Shareholders’ equity (EUR bn) Key sensitivities (EUR bn) +9.1% 74.6 Equity markets -30% -4.6 68.4 Unrealized 61.2 15.9 20.1 +50bps -5.1 gains/losses1 6.9 Interest rate Retained earnings2 25.4 23.5 25.5 -50bps +4.9 Paid in capital
Slide 8: Group: SII ratio on comfortable level - comments
Group financial results 3Q 2019 Group: SII ratio on comfortable level Comments • Shareholders’ equity – EUR 6.2bn increase in 3Q • SII ratio – on comfortable level In 3Q 2019, shareholders’ equity increased by In 3Q 2019, the SII ratio declined versus 2Q 2019, EUR +6.2bn. The main drivers were highe
Slide 9: Group: negative market impact, good organic capital generation
Group financial results 3Q 2019 Group: negative market impact, good organic capital generation Own funds +4.0 +0.7 82.7 (EUR bn) 79.9 -1.2 -0.6 76.8 -0.0 +2.1 +1.6 +0.7 -0.4 P/C AM L/H CO/Conso. 31.12.18 30.06.19 Regulatory/ Operating SII Market Capital mgmt./ Tax/ 30.09.19 model changes earnings im
Slide 10: Group: negative market impact, good organic capital generation - comments
Group financial results 3Q 2019 Group: negative market impact, good organic capital generation Comments • Good capital generation in 3Q • Market impact SII capital generation – net of tax and dividend – Market impact is predominantly driven by interest rates, amounts to ~3%-p in 3Q 2019. We anticipa
Slide 11: P/C: strong volume- and price-driven internal growth
Group financial results 3Q 2019 P/C: strong volume- and price-driven internal growth EUR mn Revenues YTD change on renewals 3Q 19 Total growth Internal growth 9M 19 Momentum ∆ p.y. ∆ p.y. Total P/C segment 13,185 +6.3% +4.8% +2.7% n.a. Selected OEs Germany1 2,116 +0.8% +1.0% +2.3% stable France 1,07
Slide 12: P/C: strong volume- and price-driven internal growth - comments
Group financial results 3Q 2019 P/C: strong volume- and price-driven internal growth Comments • Growth accelerates further in 3Q 2019 • Australia – strong increases in volume and price Strong internal growth of +4.8%, driven by volume Higher volume in compulsory third party liability contributes. an
Slide 13: P/C: accident year loss ratio slightly better, run-off lower
Group financial results 3Q 2019 P/C: accident year loss ratio slightly better, run-off lower Operating profit drivers (EUR mn) Combined ratio (in %) -10.4% +1.2%-p 1,503 93.1 94.3 1,347 -103 -27 -27 Loss ratio 65.6 67.4 NatCat impact2 2.0 1.2 (in %-p) Expense ratio 27.6 26.9 3Q 18 3Q 19 Operating Un
Slide 14: P/C: accident year loss ratio slightly better - comments
Group financial results 3Q 2019 P/C: accident year loss ratio slightly better, run-off lower Comments • Operating profit – on track • Expense ratio – continued progress OP of EUR 1.3bn at 24% of FY outlook mid-point. ER improves -0.7%-p yoy, driven by the administration • Loss ratio – AY LR slightly
Slide 15: P/C: OP on good level
Group financial results 3Q 2019 P/C: OP on good level EUR mn Operating profit Combined ratio NatCat impact on CR 3Q 19 ∆ p.y. 3Q 19 ∆ p.y. 3Q 19 ∆ p.y. Total P/C segment 1,347 -10.4% 94.3% +1.2%-p 1.2%-p -0.8%-p Selected OEs Germany1 290 -13.3% 91.9% +2.4%-p 1.9%-p +1.0%-p France 86 -24.0% 98.4% +2.
Slide 16: P/C: OP on good level - comments
Group financial results 3Q 2019 P/C: OP on good level Comments • Germany – good performance • UK – CR largely stable Strong CR. Underlying improvements more than offset CR broadly stable as a higher ER is offset by an by higher weather-related claims (including NatCat). improved LR. OP affected by a
Slide 17: P/C: interest & similar income resilient
Group financial results 3Q 2019 P/C: interest & similar income resilient Operating investment result1 Current yield Economic reinvestment yield (EUR mn) (debt securities; in %) (debt securities; in %) -3.9% 0.67 2.0 0.61 698 671 1.2 3Q 18 3Q 19 3Q 18 3Q 19 3Q 18 3Q 19 Total average asset base4 Durat
Slide 18: P/C: interest & similar income resilient - comments
Group financial results 3Q 2019 P/C: interest & similar income resilient Comments • Interest & similar income • Current yield and reinvestment yield Broadly unchanged income from equities and debt. Decline versus 2Q 2019 and 3Q 2018 due to • Investment expenses declining interest rates. Good perform
Slide 19: L/H: NBM good at 3.1%
Group financial results 3Q 2019 L/H: NBM good at 3.1% PVNBP share by line PVNBP by OE (EUR mn) Total L/H segment 3.5 3.1 Other OEs Germany Life 1,023 (+18.8%) 5,608 (+35.5%) Protection & health 12% USA 6.5 13% 6.3 3,642 (+20.3%) Unit-linked 17% 2.4 2.3 22% Asia-Pacific w/o guarantees 1,279 (+0.5%) G
Slide 20: L/H: NBM good at 3.1% - comments
Group financial results 3Q 2019 L/H: NBM good at 3.1% Comments PVNBP by line PVNBP by OE • New business driven by Germany Life, USA, Italy • Germany Life – capital-efficient products +41% New business with capital-efficient products is up by Share of preferred lines at 82%. 25%, respectively EUR 1.7
Slide 21: L/H: operating profit at EUR 1.1bn
Group financial results 3Q 2019 L/H: operating profit at EUR 1.1bn (EUR mn) Operating profit by source1 Operating profit by line +2.9% +2.9% +134 1,052 1,083 1,052 +27 +17 1,083 -20 184 234 -127 145 198 203 194 520 456 Operating Loadings Investment Expenses Technical Impact of Operating 3Q 18 3Q 19
Slide 22: L/H: operating profit at EUR 1.1bn - comments
Group financial results 3Q 2019 L/H: operating profit at EUR 1.1bn Comments • OP at 26% of FY target range mid-point Operating profit by line Volume growth and better technical margin more than • Protection & health offset lower investment margin. Better technical margin from the U.S. and German Hea
Slide 23: L/H: healthy VNB growth of 3.9%
Group financial results 3Q 2019 L/H: healthy VNB growth of 3.9% EUR mn Value of new business New business margin Operating profit 3Q 19 ∆ p.y. 3Q 19 ∆ p.y. 3Q 19 ∆ p.y. Total L/H segment 494 +3.9% 3.1% -0.5%-p 1,083 +2.9% Germany Life 191 +12.9% 3.4% -0.7%-p 276 +7.2% USA 79 -24.6% 2.2% -1.3%-p 221
Slide 24: L/H: healthy VNB growth of 3.9% - comments
Group financial results 3Q 2019 L/H: healthy VNB growth of 3.9% Comments New business Operating profit • NBM above target level of 3.0% • Germany Life – very good level NBM decline mainly due to unfavorable market Better investment margin in line with reserve growth. movement (-0.8%-p) partially off
Slide 25: L/H: guarantees decline in line with current yield
Group financial results 3Q 2019 L/H: guarantees decline in line with current yield Investment margin Economic reinvestment yield (debt securities; in %) (Yields are pro-rata) 3Q 18 3Q 19 2.3 Based on Ø book value of assets1 (EUR bn) 535 605 1.6 Current yield 0.81% 0.76% Based on Ø aggregate policy r
Slide 26: L/H: guarantees decline in line with current yield - comments
Group financial results 3Q 2019 L/H: guarantees decline in line with current yield Comments • Investment margin down by 2.2% to EUR 912mn • PHP up 2.9%-p to 80.8% Lower investment margin (∆ -2bps to 19bps) partially Main driver is higher PHP in Germany Life compensated by higher reserve base (+6.5%)
Slide 27: AM: 3rd party AuM increase to EUR 1.7tn
Group financial results 3Q 2019 AM: 3rd party AuM increase to EUR 1.7tn (EUR bn) Total assets under management 3rd party assets under management development +5.4% +5.6% 2,280 2,163 1,961 +4.9% 599 +49.0 1,681 571 +21.9 +22.7 Allianz Group 1,591 assets 526 346 -4.0 343 +1.1% +18.0 AllianzGI 319 Asset
Slide 28: AM: 3rd party AuM increase to EUR 1.7tn - comments
Group financial results 3Q 2019 AM: 3rd party AuM increase to EUR 1.7tn Comments • Total AuM: +5% • 3rd party net flows PIMCO: EUR +22bn Increase to EUR 2.3tn driven by Group and 3rd party net inflows from investment strategies like 3rd party assets. income, investment grade credit and diversified i
Slide 29: AM: 6% revenue growth
Group financial results 3Q 2019 AM: 6% revenue growth (EUR mn) Revenues development PIMCO AllianzGI +5.8% +10.2% -2.9% Internal growth +1.8% +5.1% -4.7% 1,835 1,277 1,734 102 5 576 1,158 559 Performance fees 123 13 AuM driven & 111 97 other revenues 1 1,611 1,733 1,145 1,271 466 463 © Allianz SE 201
Slide 30: AM: 6% revenue growth - comments
Group financial results 3Q 2019 AM: 6% revenue growth Comments • Segment revenues – higher AuM driven fees and • PIMCO margin – mix effect and Gurtin acquisition F/X Margin of 37.8bps is above 6M 2019 (37.3bps), but Revenues increase by 6% supported by higher below 3Q 2018 (39.0bps), driven by a low
Slide 31: AM: operating profit up 8%
Group financial results 3Q 2019 AM: operating profit up 8% (EUR mn) Operating profit drivers PIMCO +8.2% +13.8% +4.3% Internal growth 527 463 +59 +25 7031 6501 -23 -8 60.0 58.7 CIR (in %) 3Q 18 3Q 19 62.5 61.7 CIR (in %) AllianzGI Operating AuM driven & Performance Expenses F/X Operating profit othe
Slide 32: AM: operating profit up 8% - comments
Group financial results 3Q 2019 AM: operating profit up 8% Comments • Segment – strong OP • AllianzGI – OP down 4% Best quarterly OP since 2013. Higher AuM driven Decrease of OP driven by lower performance fees. revenues and favorable F/X contribute to a strong • 9M 2019 – OP well on track OP increa
Slide 33: CO: continuous improvement
Group financial results 3Q 2019 CO: continuous improvement (EUR mn) Operating loss development and components +61 +2 0 -1 -148 -210 -29.6% Operating Holding & Banking Alternative Consoli- Operating result Treasury Investments dation result 3Q 18 3Q 19 ∆ 3Q 19/18 © Allianz SE 2019 3Q 19 -174 13 13 0
Slide 34: CO: continuous improvement - comments
Group financial results 3Q 2019 CO: continuous improvement Comments • Operating loss at 16% of FY outlook mid-point Main reason for improvement is a better result from Allianz Technology. 9M 2019 operating loss of EUR -0.4bn at 49% of FY outlook mid-point. © Allianz SE 2019 34
Slide 35: Group: shareholders' net income strong at EUR 1.9bn
Group financial results 3Q 2019 Group: shareholders’ net income strong at EUR 1.9bn EUR mn 3Q 18 3Q 19 Change Operating profit 2,988 2,984 -4 Non-operating items -329 -242 +87 Realized gains/losses (net) 145 309 +165 Impairments (net) -189 -185 +4 Income from financial assets and liabilities carried
Slide 36: Group: shareholders' net income - comments
Group financial results 3Q 2019 Group: shareholders’ net income strong at EUR 1.9bn Comments • Shareholders’ net income at 26% of FY 2018 • Tax rate at good level Benefits from higher non-operating result and 9M 2019 tax rate at 24.4%. Allianz Group tax rate lower tax rate offset by normalization of
Slide 37: To sum it up
Group financial results 3Q 2019 To sum it up Strong Overall Strong OP 3rd party AuM Upper half of results on track and VNB at record high target range 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