Quality! Michael Diekmann, Chief Executive Officer. Merrill Lynch Banking and Insurance Conference, London, October 2011

Transcription

1 Quality! Michael Diekmann, Chief Executive Officer Merrill Lynch Banking and Insurance Conference, London, October 2011

2 Agenda A B C D Allianz at a glance Déjà vu lessons from the crisis European Sovereign Insurance Mechanism (ESIM) Outlook 2

3 Allianz at a glance Segments 1,3 Operating profit in % Regions 1,3 Operating profit in % EUR 106bn total revenues 1 AM P/C Growth markets Germany EUR 1,508bn total AuM 2 Specialty insurance EUR 8.2bn operating profit 1 22% 12% 5% 23% 180% solvency ratio 2 EUR 43bn S/H equity 2 EUR 44bn market cap 2 31% 47% 32% 28% More than 76mn customers 1 L/H Broker markets US, UK, AUS Western Europe 1) 12/2010 2) 06/2011 3) Relation of positive parts of operating profit 3

4 Market positions and brands Leading P/C insurer globally 1 Top 5 in life business globally Top 5 asset manager globally Largest global assistance provider Worldwide leader in credit insurance One of the leading industrial insurers globally Building the leading global automotive provider 1) All rankings mentioned on the slide based on 2010 data 4

5 Key developments in H Strong operating profit despite crisis, slightly below previous year due to high NatCat and negative F/X impact Total revenues EUR 54.5bn (-2.6%) H1 Operating profit EUR 4.0bn (-1.8%) Net income EUR 2.0bn (-28.0%) Shareholders equity EUR 42.6bn (-2.6%) 1) Percentage changes related to results of first half year

6 Agenda A B C D Allianz at a glance Déjà vu lessons from the crisis European Sovereign Insurance Mechanism (ESIM) Outlook 6

7 My slide shown at this conference in

8 10 years of streamlining India: Start of JV between Allianz and Bajaj Launch of "3+One" Conversion into Allianz SE Turkey: Acquisition of stake in insurance JV Russia: Acquisition of first stake in ROSNO Acquisition of Dresdner Bank & DIT i2s Minority buyout RAS ICBC: investment and cooperation agreement Hartford investment Sale of Dresdner Bank (signing) Cominvest acquisition Merger of Euler & Hermes Formation of Allianz Global Risks Acquisition of Munich Re stake in Allianz Leben Announcement of major restructuring in Germany Start of Sustainability Program and Customer Focus Initiative ADAM becomes Allianz Global Investors Foundation of AGCS TOM as part of 3+One Minority buyout AGF and AZ Leben Merger and re-branding Italy Allianz Investment Mgmt. (AIM) Rebranding AGF to Allianz France Delisting NYSE Initial CPIC investment Agreements with VW, Daimler & BMW 10th anniversary acquisition PIMCO & 20th anniversary East Germany Simplification of holding structures Repositioning AGI Merger of Russian OEs September 11 Internet bubble bursting Flood Central Europe SARS epidemic in Asia 2nd war in Iraq EU initiates Solvency II process Hurricanes in the U.S. and Caribbean Hurricane Katrina Tsunami in Southeast Asia European storm Kyrill U.S. subprime mortgage crisis Earthquake in China Bankruptcy of Lehman Brothers Earthquakes in Chile and Haiti Historically low interest rates Floods in Australia Earthquakes in New Zealand and Japan Political unrest in North Africa European sovereign debt crisis 8

9 Allianz well positioned to capture upside potential 1 Stable operating profit 1 range 2 Better starting position Operating asset base (EUR bn) 971 1,681 FCD 2 solvency ratio 120% 180% Global Lines 3 23% 36% H H H with improved risk profile Equity gearing 5 Banking exposure Reinsurance governance (RWA 4 EUR bn) 110% 108 Mega Cat Super Cat Cat bonds, Swaps % 2004 H H Additional Group retention Retentions of operating entities (OEs) and higher profit potential (EUR bn) e ) Historical reported figures excluding Banking segment in EUR bn 2) Financial Conglomerates Directive 3) Share of Global Lines in operating profit Non-controlling interests Combined ratio 10y Bund yield % H % 5 year average 4) Risk Weighted Assets 5) Net equity exposure after tax and policyholder participation as % of NAV 3.0% H % 5 year average 9

10 1 Strong capital Sound regulatory/economic capital ratios FCD solvency ratio Economic solvency ratio H % 161% 100% n.a 191% 184% 100% n.a. Regulatory capital excluding unrealized gains on bonds, but including impairments on Greek sovereign debt Economic capital based on markedto-market sovereign bond portfolio Economic solvency calibrated to 3bps confidence level (Solvency II: 50bps) All solvency ratios after 40% net income dividend accrual S&P and A.M. Best ratings affirmed in September 2011 S&P rating AA negative AA stable AA stable 10

11 1 Strong capital with moderate sensitivities FCD solvency ratio 1H 2011 Equities -30% Int. rates -100bp 180% 167% 176% 1 Equity gearing significantly reduced Regulatory solvency ratio almost immune against interest rate and spread changes Pro-cyclical banking segment discontinued Economic solvency ratio 100% 1H 2011 Equities -30% Int. rates -100bp 184% 171% 165% IFRS S/H equity (EUR bn) 1H 2011 Equities -30% Int. rates -100bp ) Lower FCD capital driven by change in DAC write-off (shadow DAC) and negative impact from reserve discounting 11

12 1 Strong capital Sound liquidity Maturity structure (EUR bn) 2011 Senior bonds Subordinated bonds 1H H H Assets Duration 3 (years) P/C L/H 2021 Group Liabilities Perpetual Mid term financing completed issuance covers maturities until Attractive conditions and intelligent timing - Allianz CoCo structure offers additional protection Sensible maturity profile Useful diversification between instruments Over ~EUR 250bn group assets eligible as collateral with central banks 2 Closely matched ALM structure Stable liabilities with long duration profile Limited interest rate sensitivity of operating earnings 4 Stable surrender ratios in L/H 1) Excluding opportunistic transactions 2) Amount may vary depending on prevailing regulatory conditions 3) Modified duration to allow for asset overhang 4) ~ EUR -200mn impact of 100bps lower yield across all asset classes during first 12 months (excluding fair value changes) 12

13 2 Sustainable profitability Balanced portfolio stabilizes operating profit We delivered Operating profit 1 (EUR bn) and DPS (EUR) in tough environment iboxx EUR overall asset swap spread in bp thanks to diversification OP by business segment in % e n.a. 8.0 ± ) Historical reported figures 2) Based on historical reported figures excl. Corporate segment and Conso. 2011: H1 Operating profit Dividend per share Bank P/C L/H AM 13

14 2 Sustainable profitability Fixed income investment landscape: more than just German Bunds EMU: Government bond yields EMU: 7-10 year corporate bond yields in % in % Investment grade Weighted average yield on 10-year EMU gvt. bonds Yield on German 10-year government bonds AAA rated BBB rated German Pfandbrief Sources: Bloomberg, EcoWin 14

15 2 Sustainable profitability resulting in positive L/H margins despite low interest rates Business in force New business 5.5% 0.2% 1 4.9% 0.2% 4.5% 4.5% 270bp 2.8% Germany Reinvestment yield of 1.5% sufficient to pay all guarantees Covered bonds 9ys mat., ~4.4% 95% A or better Government bonds 10ys maturity, ~4.1% 80% A or better ~30% ITA 11% EM 10% ~40% FRA 6% ~4.2% 200bp ~2.2% 2012e ~2.0% ~30% Other 13% Total 2 return 2010 Current 3 yield 2010 Based on aggregate policy reserves Based on book value of assets Ø min. guarantee Based on aggregate policy reserves Harvesting and other Underwriting and expenses Corporate bonds 6ys mat., ~4.1% 92% BBB or better Reinvestment yield F/I 01-06/2011 1) Net of php; in stress scenario higher shareholder share possible 2) Based on IFRS investment + underwriting result 3) Based on IFRS current interest and similar income 4) Weighted by aggregate policy reserves Ø guarantee of new business 4 15

16 2 Sustainable profitability High-quality investment portfolio Conservative asset allocation 1 EUR 448.4bn High-quality fixed income portfolio Rating profile 2 Cash / Other 2% EUR 6.8bn Real estate 2% EUR 8.6bn Equities 7% EUR 33.4bn Debt instruments 89% EUR 399.6bn AAA 45% AA 14% A 25% BBB 10% Non-investment grade 2% Not rated 3 4% 1) H1 2011, based on consolidated insurance portfolios (P/C, L/H), Corporate and other 2) Excluding self-originated German private retail mortgage loans 3) Mostly policyholder loans and registered debentures, all of investment grade quality 16

17 2 Sustainable profitability Limited exposure to peripheral sovereign debt Absolute exposure Relative exposure 1 100% 100% 100% EUR mn 1H 2011 Carrying value Unrealized loss (gross) Ireland Portugal Greece Spain 5, Sub-total 7, Italy Total 29,157 36, , % 1.6% 3.4% 1.7% 6.3% 3.2% All ratios before php and tax! Carrying value in % of total investments Unrealized loss (gross) in % of shareholders' equity 2 Unrealized loss (gross) in % of required FCD solvency cap. 2 1) Light grey ratios refer to total exposure (peripherals plus Italy) 2) Ratios slightly overstated, because net unrealized losses are already deducted from S/H equity 17

18 2 Sustainable profitability Crisis deserves attention, but don t overlook the positive operative trend 100.0% 97.5% 95.0% 92.5% 90.0% 87.5% 85.0% H 2011 Property/Casualty Strong accident year profitability Higher retention of profitable business Sound pricing momentum Disciplined cycle management AY CR ex NatCat Net retention H 2011 Life /Health Consistent reserve growth Solid margins 1 Attractively diversified business mix Technical reserves (EUR bn) - Ihs OP margin 1 (bps) - rhs H 2011 Asset Management Strong growth momentum Consistent realization of economies of scale Solid outperformance rd p. AuM (EUR bn) - Ihs CIR (bps) - rhs Products Business Steering / Central Functions Market Management Operations Distribution Corporate Target Operating Model implemented Improving operational leverage Progressive globalization of scalable businesses 1) Operating profit over average technical reserves 18

19 3 Manageable complexity Continuing optimization of strategic portfolio Divested and discontinued operations Last 12 months Banking Hungary Banking Poland Alba (Switzerland) Phenix (Switzerland) Kazakhstan Life Japan 1 Structural improvements Last 12 months Russia (streamlining) Asset Management (repositioning) Streamlining of holding structures Ongoing AGCS (portfolio consolidation) Latin America (back-office integration) FFIC (IT) Germany (P/C) 1) Discontinuation of new business beginning January

20 Agenda A B C D Allianz at a glance Déjà vu lessons from the crisis European Sovereign Insurance Mechanism (ESIM) Outlook 20

21 European sovereign debt crisis: high uncertainty and growing downside risks Government bond spreads over 10yr (German government bonds, % points) Outsized downward pressure on bank shares Greece Portugal Ireland Spain Italy MSCI EMU, Banken ( = 100) MSCI EMU ( = 100) Jan Feb Mrz Apr May Mai Jun Jul Aug Sep Aug Nov 2009 Feb May Mai Aug Nov 2010 Feb May Mai Aug 2011 Risk premiums reach record highs Rising tension in the interbank market Stock market crash Pace of economic growth in the Euro area expected to decelerate Source: EcoWin 21

22 Signs of stabilization in the Eurozone periphery Economic stabilization in EMU periphery? GDP, index Q = 100 Decreasing primary deficits reflect consolidation progress, primary balance*, as % of GDP p Greece Ireland Q Q3 Q Q3 Q Q3 Q Lower labor costs in Portugal, Greece and Ireland Total nominal hourly labor costs, index 2008=100 Q3 Portugal Spain *) net lending/borrowing excluding interest payments p Shrinking current account deficits % of GDP Q Q2 Q Q4 Q Q2 *) working day adjusted except for Ireland Q Q4 Q Q2 Q Q4 Q Q p Ireland Spain Greece Portugal Sources: Eurostat, EU Commission. 2011: own estimates. 22

23 Eurozone scenarios: gradual fiscal integration or radical change New measures (Euro summit) Ongoing slow growth and painful fiscal consolidation Economic stagnation or double dip recession in 2012 New measures (ECB interventions, EFSF, ESM tools) prevent strong contagion Greek default and/or serious contagion of bigger EMU countries (Spain, Italy) Discretionary decisions and closer fiscal and economic coordination Political and fiscal union (including Eurobonds) Dissolution of EURO Medium to high probability Low to medium probability Very low probability 23

24 Leaving the EU is not the answer Legal view Economic view Country leaves Euro only Euro and EU Likely impact on peripheral country leaving the EU Positive Negative Expulsion Extreme pressure on banking system Secession extremely arduous, theoretical option only 1 Extremely high funding costs High tariffs for export in EU Discontinuation of EU transfers Devaluation of currency export import 1) Unanimous consent of all 27 member states required, including the leaving country itself 24

25 Our proposal: the European Sovereign Insurance Mechanism (ESIM) 0% Investor 10% Investor 10% 40% 40% EUR 1.1tn x 2.5 Leverage 1 Advantages Committed funds leveraged up to 3.7 times 1 Total coverage up to EUR 2.9tn 2 Extension of program does not reduce available funds Terms tailored to specific debtor situations 100% Investor 50% Investor 50% Example 1 Example 2 EFSF ESM funds (EUR 440bn) Selected allocation of funds (contrarian to Eurobonds) (Re)enforcement of restructuring targets via pricing and allocation Pricing determined by ESIM (not CDS) Necessary support of banks still possible Investors exposure Insured by ESIM Feasible within existing legal framework: quick implementation possible EFSF (and subsequently ESM) acts as sovereign bond insurer for new funding and exchange offers Solution of Greek s solvency problem via voluntary exchange of existing bonds into insured bonds above current market values but significantly below par 1) Lower coverage for selected countries increases leverage, e.g. to 3.7 with 40% coverage for Greece, Portugal and Ireland and 25% for Italy and Spain 2) Current guarantees given to EFSF leveraged via ESIM = EUR 780bn x 3.7 = EUR 2.9tn 25

26 Agenda A B C D Allianz at a glance Déjà vu lessons from the crisis European Sovereign Insurance Mechanism (ESIM) Outlook 26

27 Our strategic priorities Priorities Capital management Operating profitability Growth Capitalization Efficiency improvement Cyclemanagement Capital allocation Risk management Pension opportunity Cash generation Investment strategy Multi-channel distribution Rating Diversification BRIC + Global Lines Attract & develop best talent Financial strength Competence Integrity 27

28 EUR bn operating profit expected in 2011 Operating profit (EUR bn) H Outlook published 02/11 H Exceptionally high NatCat P/C 2.0 CR 98.1% L/H Revenues at EUR 27bn EUR 2.1bn net inflows AM EUR 34bn net inflows CIR 59.0% Co As expected Total Please mind the seasonality of the business and our disclaimer 1! 1) Disclaimer: Impact from NatCat, financial markets and global economic development not predictable! 28

29 Recent stock performance driven by technicalities Relative performance Allianz versus STOXX Europe 600 Insurance 8% Short-selling ban limited to FRA, ITA, SPA, BEL only 8% 6% 6% 4% 4% 2% 2% 0% 0% -2% -2% -4% -4% -6% -6% -8% -10% Jan Feb Mar Apr May Jun Jul Aug Sep -8% -10% Source: Thomson Reuters Datastream 29

30 Summary: Allianz well positioned Strong market positions and brands Well positioned for the New Normal Resilient and well diversified business model High-quality investment portfolio Strong capital base EUR 7.5bn 8.5bn operating profit expected in

31 Appendix

32 Investor Relations contacts Oliver Schmidt Head of Investor Relations Phone Peter Hardy Phone Holger Klotz Phone Reinhard Lahusen Phone Christian Lamprecht Phone Stephanie Aldag IR Events Phone Investor Relations Internet Fax (English): (German):

33 Financial calendar November 11, rd quarter results 2011 February 23, 2012 February 24, 2012 Financial press conference for the 2011 fiscal year Analysts conference for the 2011 fiscal year March 23, 2012 Annual Report 2011 May 9, 2012 Annual General Meeting May 15, 2012 Interim Report 1st quarter 2012 August 3, 2012 Interim Report 2nd quarter 2012 November 9, 2012 Interim Report 3rd quarter 2012 The German Securities Trading Act ("Wertpapierhandelsgesetz") obliges issuers to announce immediately any information which may have a substantial price impact, irrespective of the communicated schedules. Therefore we cannot exclude that we have to announce key figures of quarterly and fiscal year results ahead of the dates mentioned above. As we can never rule out changes of dates, we recommend checking them on the Internet at 33

34 Disclaimer These assessments are, as always, subject to the disclaimer provided below. Cautionary Note Regarding Forward-Looking Statements The statements contained herein may include statements of future expectations and other forward-looking statements that are based on management s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. In addition to statements which are forwardlooking by reason of context, the words may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, potential, or continue and similar expressions identify forward-looking statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation, (i) general economic conditions, including in particular economic conditions in the Allianz Group s core business and core markets, (ii) performance of financial markets, including emerging markets, and including market volatility, liquidity and credit events (iii) the frequency and severity of insured loss events, including from natural catastrophes and including the development of loss expenses, (iv) mortality and morbidity levels and trends, (v) persistency levels, (vi) the extent of credit defaults, (vii) interest rate levels, (viii) currency exchange rates including the Euro/U.S. Dollar exchange rate, (ix) changing levels of competition, (x) changes in laws and regulations, including monetary convergence and the European Monetary Union, (xi) changes in the policies of central banks and/ or foreign governments, (xii) the impact of acquisitions, including related integration issues, (xiii) reorganization measures, and (xiv) general competitive factors, in each case on a local, regional, national and/ or global basis. Many of these factors may be more likely to occur, or more pronounced, as a result of terrorist activities and their consequences. The company assumes no obligation to update any forward-looking statement. No duty to update The company assumes no obligation to update any information contained herein. 34