Moving forward Oliver Bäte Member of the Board of Management Morgan Stanley European Financials Conference London, March 19, 2013
1 Moving forward 1 2012 results review 2 Strategic priorities in Europe 3 Summary 2
2012 results review Highlights of the 2012 results Total revenues increase 2.7 percent to EUR 106.4bn Operating profit grows 20.8 percent to EUR 9.5bn Shareholders net income doubles to EUR 5.2bn Solvency I ratio increases by 18%-points to 197% 3
2012 results review Strong results despite difficult environment EUR bn 2010 2011 2012 Key drivers 2012/11 development Total revenues 106.5 103.6 +2.7% 1 106.4 Solid growth in Property-Casualty and excellent growth in Asset Management Operating profit 8.2 7.9 +20.8% 9.5 All operating segments contribute to strong operating profit increase Net income Net income 5.2 +95.8% 5.5 Shareholders net income 5,053 2.8 5,169 5.2 5.1 2,545 2.5 Net income almost doubles supported by lower impairments in 2012 1) Internal growth 0.5%, adjusted for F/X and consolidation effects 4
2012 results review Operating profit exceeds target range Operating profit 2012 (EUR bn) Target range published 02/12 P/C 4.7 4.0 5.0 CR 96.3% Low NatCat L/H 3.0 2.2 2.8 Total AuM up 11.8% Higher investment margin AM 3.0 2.0 2.4 Strong net inflows Higher performance fees Co. & Con. -1.1-0.9-1.1 As expected Total 9.5 7.7 8.7 9.0 Outlook increased to > 9bn in 10/12 5
2012 results review Operating profit outlook 2013 Operating profit (EUR bn) 9.5 9.2 2.5 3.1 2.7 3.1-1.1 to -1.3 9.2 +0.5bn 8.7-0.5bn 7.9 4.3 5.1 2011 2012 2012 adjusted 1 P/C L/H AM CO + Conso. Group Outlook 2013 Range of operating profit outlook reflects diversification Disclaimer: Impact from NatCat, financial markets and global economic development not predictable! 1) From 2013 onwards restructuring costs will be classified as operating 6
2012 results review P/C solid operating performance Revenues (EUR bn) +4.7% Operating profit (EUR mn) +12.5% 44.8 46.9 2011 2012 4,719 4,196 97.8 96.3 2011 2012 Revenue growth due to both positive price and volume effects Strong increase in operating profit driven by underwriting result Combined ratio down by 1.5%-points with significant improvements in Germany, Italy and Reinsurance NatCat with 1.7%-points combined ratio impact below normalized level Combined ratio (%) 7
2012 results review L/H strong performance in challenging environment Revenues (EUR bn) -1.0% Operating profit (EUR mn) +22.1% 52.9 52.3 431 476 2011 2012 2,955 2,420 2.3 1.8 2011 2012 Selective growth with focus on margins Operating profit substantially improved due to rebound of investment margin New business margin solid at 1.8% Operating asset base up 10%, operating investment income up 20% Operating asset base (EUR bn) New business margin (%) 8
2012 results review L/H resilient margins and strong buffers Business in force (based on Ø aggregate policy reserves) New business 5.0% Current yield 1 5.3% 270bp Covered bonds 10ys mat., ~3.7% 77% A or better Government bonds 16ys maturity, ~3.5% 98% BBB or better ~3.6% 190bp Total 2 yield 2012 2.6% Ømin. guarantee 3 2012 + strong buffer EUR 19bn of RfB equal 5.7% of aggregate policy reserves Corporate bonds 10ys mat., ~3.8% 95% BBB or better ~28% ABS/MBS ~14% ~4% ~54% Reinvestment yield F/I 2012 ~1.7% Ø guarantee new business 3 2012 2012e ~2.0% 1) Based on IFRS current interest and similar income (net of interest expenses) 2) Based on IFRS current interest and similar income (net of interest expenses) + net harvesting and other (operating) 3) Weighted by aggregate policy reserves 9
2012 results review AM another excellent year 3rd party AuM (EUR bn) 1,281 +12.3% 1,438 38.3 113.6 2011 2012 Operating profit (EUR mn) 2,256 +33.6% 3,014 59.0 55.6 2011 2012 Growing AuM drive revenues and profitability Operating profit on an all-time high and 2nd highest in the Group Strong 3rd party net inflows of EUR 113.6bn Excellent cost-income ratio of 55.6% Share of outperforming assets at outstanding 96% (PIMCO) / 62% (AllianzGI) Performance fees substantially above medium-term average 3rd party net inflows (EUR bn) Cost-income ratio (%) 10
2012 results review Investments growth in operating asset base mitigates declining yields Operating asset base 1 (EUR bn) AM L/H P/C 927 971 1,186 1,239 1,240 CAGR 9.0% 1,133 1,401 1,679 1,811 2,019 CAGR 10.9% 6.9% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 0.6% Interest and similar income plus AM fee and commission income 2 (EUR bn) AM L/H P/C 15.6 16.3 17.5 CAGR 6.0% 19.3 20.0 20.4 20.4 23.0 24.7 26.4 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1) Investments for P/C and L/H incl. unit-linked assets; 3rd party assets for AM 2) AM: excluding performance fees; L/H: before policyholder participation 11
2012 results review Capitalization strong and resilient Reduced asset/liability mismatch Spanish government bonds Asset duration extended by one year Conglomerate solvency ratio 179% 197% Exposure 3 halved to EUR 2.6bn 2011 2012 Reduced financial cluster risks Exposure 1 in strategic stakes reduced by more than EUR 2bn 2 Economic solvency ratio 191% 199% 2011 2012 Italian government bonds Exposure 3 reduced by EUR 3.3bn in H2 2012 S&P capital adequacy (AA) Reduced banking debt Eurozone bank debt 3 reduced by EUR 2.1bn deficit surplus 2011 2012 Lower minimum guarantees Ø guarantee for new Life business lowered by ~40bp to 1.7% 1) Delta based on fair values as per 31.12.11 2) Includes divestments and hedging 3) Based on amortized cost 12
2012 results review Dividend balanced capital management DPS (EUR) 4.10 4.50 4.50 4.50 1 3.50 2008 2009 2010 2011 2012e Attractive dividend yield for investors Healthy capital adequacy in volatile market environment Payout ratio (%) 81 40 40 40 40 2008 2009 2010 2011 2012e Dividend yield (%) 2 5.6 5.2 5.1 5.2 3.3 2008 2009 2010 2011 2012e 1) Proposal 2) Based on average share price of fiscal year (2012: EUR 87.23) 13
Moving forward 2 Moving forward 1 2012 Group results review 2 Strategic priorities in Europe 3 Summary 14
Strategic priorities in Western Europe Quick facts of the Europe 1 business division France Italy Belgium Netherlands Luxembourg Business division (BD) Western & Southern Europe is composed of 7 countries as well as Africa Substantial contribution to Group performance for both top- and bottom-line Greece Turkey 1) Full name of the business division is Western & Southern Europe (incl. Africa). All following numbers on the business division cover these 7 countries and Africa 15
Strategic priorities in Europe BD Europe 1 delivered exceptional profitability development during recent years Life/Health Property/Casualty GPW (EUR bn) OP (EUR mn) Net income (EUR mn) flat +19% 2 +24% 2 27.8 18.6 25.6 16.5 26.4 16.9 1,538 855 1,898 754 2,192 736 844 463 826 278 1,298 466 9.2 9.2 9.5 683 1,144 1,456 381 548 832 2010 2011 2012 2010 2011 2012 2010 2011 2012 In % of Group P/C & L/H 28 26 27 21 29 29 17 21 24 Contributed ~ 1/4 of the Group s top-line and profits from the insurance segments 1) Full name of the business division is Western & Southern Europe (incl. Africa). Numbers on the business division include Africa and refer to insurance business only 2) CAGR 16
Strategic priorities in Europe Our strategic priorities for 2013-2015 Maintain operating profit stability Reduce complexity across business entities Ensure profitable growth across segments Enhance sustainability in daily business 17
Strategic priorities in Europe Maintain resilient operating profit in P/C Italy, despite difficult market conditions Allianz Italy now 2nd largest P/C profit contributor within Allianz Group 2012 OP of Allianz top-5 P/C OEs (EUR mn) P/C Italy s combined ratio significantly better than market Avg. CR 2008-2012 (%) -6.9%p 906 899 101.4 421 413 406 94.5 Germany Italy AGCS France Credit insurance Allianz Market 1 Strategic priorities Achievement so far Grow in direct channel Genialloyd 2 with 20% growth in top-line, with high cost competitiveness Promote innovation SMS-based FastQuote application generated 51k new customers Secure customer satisfaction 88% of customers highly satisfied 1) Based on regulator data for 2008-2011 and own best estimate as of 9M 2012 2) Direct business Italy 18
Strategic priorities in Europe Excellent operating profitability of Allianz Greece despite crisis Strong operating profits (EUR mn) P/C Life 11.5 9.5 2.0 14.3 11.0 3.3 19.2 15.5 3.7 18.4 15.3 3.1 2008 2009 2010 2011 23.6 19.1 4.5 2012-16% -12% -8% -3% -11% Allianz Greece highly competitive Strong operating profitability in 2012 - Combined ratio 82.4% - one of the best in Allianz Group - Returns well above cost of capital Fully de-risked investment portfolio - Highly rated core EU and supra-national assets - Sold remaining GGBs in 2012 Strong brand and customer satisfaction: - 3rd strongest brand in Greek market - Market leading NPS CR vs. Market 19
Strategic priorities in Europe Achieve leading productivity levels through Benelux integration Allianz 2012 GPW in Europe (EUR bn) Benefits: Streamlined governance: joint management functions 27.6 11.5 10.4 Shared expertise: e.g. Dutch claims management, Belgian Life operations, central functions Shared investments: new IT and pricing tools 3.4 3.4 3.0 2.4 2.3 1.3 1.0 0.8 Synergies: e.g. joint operating systems and integrated central functions DE FR IT CH ES BE 1 UK AT NL PL BeNeLux 1) Including Luxembourg 20
Strategic priorities in Europe Superior growth in Turkey Total GPW 1 growth Allianz Turkey (%) 16 Market +11%p 2012 27 Allianz Allianz Turkey picking up momentum Turkey is a high growth market, with double digit GPW growth (above GDP) Allianz growth significantly higher than the market in 2012 - Prior to 2012 Allianz focused on profit protection, by intentionally not participating in irrationally low pricing - Starting from 2012 Allianz Turkey outperformed market growth, driven by all lines, particularly Motor 1) Including Life, P/C and Health 21
Strategic priorities in Europe combined with outstanding profit, especially in P/C (9M 2012, EUR mn) P/C market net income Loss-maker Σ -181 Profit-maker Σ 104 Axa (44) Yapı Kredi HDI Anadolu (24) (21) Allianz Ziraat Ergo (21) Mapfre G. Liberty Aviva (18) (17) Ak Sompo Japan Dubai Güneş (11) (6) Halk Eureko T Nippon (4) Zurich Ray Koru (3) (2) BNP Paribas Işık Generali (2) Magdeburger Euro (2) Aegon ING E. BNP Paribas E Ergo L/P Cigna Asya L/P L/P market net income Loss-maker Σ -44 Profit-maker Σ 200 Garanti E Ziraat L/P Anadolu L/P Yapi Kredi AvivaSA Halk Hayat Vakif E Metlife L/P Acibadem Finans Groupama Allianz Axa Hayat BNP Paribas Hayat Mapfre G.Y. Demir Hayar Allianz Turkey s competitive advantages in P/C Best-in-class U/W capabilities with high level of Straight-Through-Processing State-of-the-art claims handling capabilities High customer satisfaction: rank 1 in Net Promoter Score for 4 consecutive years Source: Türkiye Sigorta Birliği insurance association of Turkey 22
Strategic priorities for enhancing sustainable success Strategic relevance: Highly relevant Relevant ( ) Currently limited Value impact France Italy Benelux Turkey Greece L/H margins and profitable growth Digital company Growth Productivity Multi access (new agency model) ( ) ( ) Commercial/ midcorp ( ) Net Promoter Score Reach loyalty leader or above market in all segments Allianz Engagement Survey Further improve in all OEs, across locations and functions 23
Moving forward 3 Moving forward 1 2012 Group results review 2 Strategic priorities in Europe 3 Summary 24
Summary moving forward Proven and well diversified business model Taking advantage of competitive strength Strong balance sheet Attractive dividend yield Continuing optimization EUR 8.7-9.7bn operating profit 2013e Resilient performance in Europe despite headwinds 25
Disclaimer These assessments are, as always, subject to the disclaimer provided below. Forward-looking statements The statements contained herein may include prospects, 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. Actual results, performance or events may differ materially from those expressed or implied in such forwardlooking statements. Such deviations may arise due to, without limitation, (i) changes of the general economic conditions and competitive situation, particularly in the Allianz Group's core business and core markets, (ii) performance of financial markets (particularly market volatility, liquidity and credit events) (iii) frequency and severity of insured loss events, including from natural catastrophes, and the development of loss expenses, (iv) mortality and morbidity levels and trends, (v) persistency levels, (vi) particularly in the banking business, the extent of credit defaults, (vii) interest rate levels, (viii) currency exchange rates including the Euro/U.S. Dollar exchange rate, (ix) changes in laws and regulations, including tax regulations, (x) the impact of acquisitions, including related integration issues, and reorganization measures, and (xi) 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. No duty to update The company assumes no obligation to update any information or forwardlooking statement contained herein, save for any information required to be disclosed by law. 26