Group financial results for the first quarter 2008

Transcription

1 Helmut Perlet, Member of the Board of Management Group financial results for the first quarter 2008 Journalists Conference Call May 9th, 2008

2 Group: robust earnings in stormy weather (EUR mn) Quarterly results Operating profit 2,677 2,794 2,660 2,255 2,870 3, % 2,604 2,153 EUR 845mn markdowns 1,856 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Net income 1,779 2,279 1,591 1,372 3, % 2,140 1, EUR 1.8bn 1 lower capital gains / higher impairments 1,148 1Q 2Q 3Q 4Q 1Q Q 3Q 4Q 1Q ) Before taxes and minorities 2

3 Agenda Group P/C L/H Banking Asset Management Summary Additional information 3

4 Market conditions hold back growth (EUR bn) Total revenues F/X impact ABS markdowns Bancassurance Italy -1.1 (in %) Total growth Internal growth 3 1Q Q AM Banking Q 2Q Q 4Q 1Q 2Q 2007 L/H P/C ) Revenues comprise gross premiums written in P/C, statutory premiums in L/H and operating revenues in Banking and Asset Management. All segment figures are based on segment consolidated numbers; figures for the Group as a whole are based on fully consolidated figures 2) AGF health business reclassified from P/C to L/H segment in 2008 (3M 08: EUR 304mn). Prior periods have not been retrospectively adjusted (impact 3M 06: EUR 295mn, 3M 07: EUR 292mn) 3) Adjusted for F/X effects and consolidation effects. Internal growth on segment level is based on segment consolidated data. Total and internal growth for total revenues are based on fully consolidated figures 4) Based on reclassified numbers (after reclassification of health business) 3Q 4Q 1Q

5 Operating profit 1 : EUR 845mn impact from ABS markdowns (EUR mn) Business segments 1Q 08 Δ 1Q 08/07 Property/Casualty Life/Health CAGR +3.3% CAGR -9.7% P/C 1, % 1,386 1,267 1, L/H % Banking -456 n.m. 1Q 06 1Q 07 1Q 08 1Q 06 1Q 07 1Q 08 Banking 547 CAGR n.m. 700 Asset Management CAGR -11.0% AM Corporate % +24.8% Consolidation +79 n.m. 1Q Q 07 1Q 08 1Q 06 1Q 07 1Q 08 Group 1, % 1) Operating profit is a measure which we believe highlights the underlying profitability of our operations. For a description of how we measure operating profit and a reconciliation to profit before taxes and minorities, see section Additional information (page 34) 5

6 Administrative expenses decrease overall (EUR mn) Property/Casualty -20.4% 1, Q 07 1Q 08 Banking (excl. bonuses) Life/Health -10.9% Q 07 1Q 08 Asset Management Group (total admin. expenses 1 ) -11.2% 3,550 3,153 1, % 1, % 1Q 07 1Q Q Q 08 1Q 07 1Q 08 1) Incl. bonuses 6

7 Growing contribution from emerging markets (EUR mn) Revenues 1,2 Operating profit 2 CAGR +10.3% 2,702 CAGR +7.4% 2,220 2, Q 06 1Q 07 1Q 08 1Q 06 1Q 07 1Q 08 % of total % of total ) Consolidated entities only (excluding e.g. India with revenues of EUR 293mn, EUR 450mn and EUR 717mn in 1Q 06, 1Q 07 and 1Q 08, respectively) 2) Calculation excludes cross-country and cross-segment consolidations 7

8 Non-operating: low harvesting in light of poor markets (EUR mn) Breakdown of non-operating items 1Q 06 1Q 07 1Q 08 Δ1Q 08/07 Realized gains/losses and impairments of investments (net) 778 2, ,791 Interest expense from external debt Restructuring charges Acquisition-related expenses Other non-operating Reclassification of tax benefits Total non-op. items , ,640 Harvesting Realized gains/losses - Equities - Debt securities - Real estate Impairments/Write-ups - Equities - Debt securities - Real estate Total Balance of unrealized gains in equities 1 1Q 07 2,073 2, ,045 12,062 1Q ,950 1) On-balance sheet unrealized gains and losses, after taxes, minorities and policyholder participation 8

9 Net income of EUR 1.1bn (EUR mn) Reconciliation to net income 1Q 06 1Q 07 1Q 08 Δ1Q 08/07 Operating profit 2,677 2,870 1,856-1,014 Non-operating items 354 1, ,640 Income before income taxes, minority interests Income taxes 3, , , , Effective tax rate of 35.4% reflects non-capitalization of tax losses due to markdowns Minority interests Net income , , , ,092 Share of minorities in post-tax income has come down 10%-p since 1Q 06 to 6.5% 9

10 Capital base remains strong (EUR bn) Shareholders equity 1 Conglomerate solvency -5.8% Requirement Available Funds Solvency ratio Unrealized gains/losses 47,753 10,470 44,981 7, % 150% 41.6 Revenue reserves 2 8,962 8, Paid-in capital 28,321 28, ) Excluding minority interests ( : EUR 3,628mn; : EUR 3,507mn) 2) Including F/X translation adjustments ( : EUR -3,656mn, : EUR -4,486mn) 3) Basel II (advanced approach) results in lower requirement of approximately EUR 1.2bn 10

11 Asset quality Insurance (EUR bn) Equity gearing 1 Duration Interest 2 rate (years) risk High Credit quality risk fixed-income book P/C Assets Liabilities P/C % investment grade 66% government/ agency, covered bonds Debt securities L/H L/H % investment grade 69% government/ agency, covered bonds 1Q 07 1Q 08 Debt securities Reduced Duration 1 matched No impairments 1) For assets only duration included for available for sale investments; definition: duration is a measure of the average (cash-weighted) term-to-maturity of bonds 11

12 Agenda Group P/C L/H Banking Asset Management Summary Additional information 12

13 P/C: strong performance based on (EUR mn) Operating profit +16.7% 1,386 1,845 1,727 1,311 1,267 1,894 1,487 1,651 1,479 Operating profit drivers , ,479 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Operating profit 1Q 07 Underwriting Investment 1 Δ 1Q 08/07 1) Includes interest and similar income (1Q 08: EUR 1,051mn, 1Q 07: EUR 1,006mn), inc. fr. fin. ass./liab. designated at fair value through income (1Q 08: EUR 14mn, 1Q 07: EUR 17mn), realized gains/losses and impairments of investments (net) on participating policies (1Q 08: EUR -96mn, 1Q 07: EUR 32mn), investment expenses (1Q 08: EUR -123mn, 1Q 07: EUR -74mn), and policyholder participation (1Q 08: EUR 50mn, 1Q 07: EUR -17mn) 2) Figures revised. Trading operating (EUR -15mn) in 1Q 07 accounted for in other result instead of investment result Other 1Q Q Operating profit 1Q 08

14 P/C: managed growth and (EUR mn) Combined GPW ratio1q06 1Q07 1Q08 Δ08/07 1 Gross premiums written (EUR bn) Germany 2 4,198 4,144 4, % AGF health business France 3 Italy UK Spain 1,713 1, ,695 1, ,394 1, % -5.9% +6.1% +0.6% % Switzerland % USA 1, % New Europe Asia-Pacific Australia Credit insurance AGCS % +15.9% South America % -0.9% 8.8% -11.3% 1Q 06 Internal growth 1-1.0% 1Q 07 1Q % -0.6% 6 1) Growth numbers refer to internal growth (adjusted for F/X and consolidation effects) 2) Excluding Allianz Re 3) AGF health business reclassified to L/H segment in 2008 (3M 08: EUR 304mn). Prior periods have not been retrospectively adjusted (impact 3M 06: EUR 295mn, 3M 07: EUR 292mn) 4) Excluding ART 5) Allianz Global Corporate & Specialty 6) Based on notionally restated numbers (after reclassification of health business) 14

15 P/C: underwriting discipline (in %) Comb. ratio 1Q06 1Q07 1Q08 Combined ratio Germany 1 France %-p Italy UK Spain Switzerland Loss ratio USA New Europe Asia-Pacific South America Exp. ratio Australia Credit insurance AGCS Q 2Q 3Q 4Q 1Q 2Q 3Q Q 1Q ) Excluding Allianz Re 2) Excluding ART 3) Allianz Global Corporate & Specialty 15

16 Agenda Group P/C L/H Banking Asset Management Summary Additional information 16

17 L/H: operating profit impacted by weak capital markets (EUR mn) Operating profit % Operating profit driver Q 2Q 3Q 4Q 1Q 2Q Q 4Q Operating profit 1Q 07 Technical result Investment result 1Q Q Expense Operating result profit 1Q 08 1) The objective of the Life/Health operating profit driver analysis is to explain movements in IFRS-results by analyzing underlying drivers on a Life Segment consolidated basis. Technical result: technical result comprises risk result (difference between total risk premiums and benefits in excess of reserves net of policyholder participation), lapse result (sum of "surrender charges" assessed and "commission claw-backs" minus deferred acquisition cost written off on lapsed policies net of policyholder participation), reinsurance result and other result. Investment result: investment result is defined as the difference between IFRS investment income net of expenses and interest credited to IFRS reserves plus policyholder dividends if any. Expense result: expense result is the difference between expense charges assessed to policyholders and actual expenses minus regular changes in deferred acquisition costs net of policyholder participation 2) 1Q 07 figures retrospectively corrected according to a methodology refinement in Q

18 L/H: statutory premiums flat overall (EUR mn) Stat. prem. 1Q 06 1Q 07 1Q 08 Δ08/07 1 Statutory premiums (EUR bn) Germany Life Germany Health France 2 3, ,460 3,039 3, % 779 1, , % +24.9% AGF health business % Italy Switzerland 2, , , % +31.9% Premiums from investmentoriented products Belgium % Spain % IFRS premiums Netherlands USA 124 2, % 1,669 1, % 1Q 06 1Q 07 1Q 08 New Europe Asia-Pacific , % +33.1% Internal growth % -2.0% +0.2% 3 1) Growth numbers refer to internal growth (adjusted for F/X and consolidation effects) 2) AGF health business reclassified from P/C to L/H segment in 2008 (3M 08: EUR 304mn). Prior periods have not been retrospectively adjusted (3M 06: EUR 295mn, 3M 07: EUR 292mn) 3) Based on notionally restated numbers (after reclassification of health business) 18

19 L/H: 3% new business margin (EUR mn, a/min) New Business Margin (NBV in % of PV of NB premiums) 2.9% +0.1%-p PV of NB premiums +7.6% 3.0% 1Q Q 2008 Internal growth: +1.3% Value of New Business 11.5% Internal growth: +1.8% Value of NB 1Q 07 1Q 08 9M 06 Δ08/07 9M 07 Germany % France % Italy % Other W. Europe % New Europe % USA % Asia-Pacific % 7,548 8,125 1Q Q Q Q

20 Agenda Group P/C L/H Banking Asset Management Summary Additional information 20

21 Dresdner Bank: EUR 845mn markdowns on ABS (EUR mn) Operating profit Operating profit drivers Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Operating profit 1Q 07 1Q 08 1Q 07 Op. revenues -845 ABS markdowns +191 Op. expenses Δ 1Q 08/07 LLP 2 1, , , , Operating profit 1Q 08 1) Including equity pickup from disposal at an associated company of EUR 171mn 2) Net loan loss provisions 21

22 Dresdner Bank: revenues impacted by credit crisis (EUR mn) Operating revenues Without markdowns Net interest income Net fee & commission Net dealing income 2 income -64.5% -25.7% -23.4% 1,884 2, , Q 06 1Q 07 IAS 39 effect Q Q Q Q Q 06-1Q 07-1Q 08-1Q Q Q ) Including equity pickup from disposal at an associated company of EUR 171mn 2) Comprises net trading income and result from financial assets and liabilities designated at fair value through P/L 22

23 Dresdner Bank: key areas of focus Area of focus Exposure definition Exposure (EUR bn) Negative P&L impact (EUR mn) Q LBO commitments Gross exposure Conduits business Drawn and funded amounts ABS trading a. CDOs Net exposure b. US RMBS Net exposure 1 c. Other ABS Net exposure EUR 845mn shown as markdowns 4. Credit enhancements Gap risk / second loss Monoliners Net counterparty risk K2 Gross exposure 1) After markdowns 2) Gross counterparty risk (mark-to-market plus add-on) after protection bought on monoliners

24 Dresdner Bank: ABS trading exposure Net exposure before markdowns (EUR bn) Net exposure after markdowns (EUR bn) Critical ABS Total Other ABS US RMBS CDO Total Other ABS US RMBS CDO Breakdown of exposure by rating 4 AAA AA A BBB BB and below 70% 6% 5% 5% 14% below BBB A AA BB and 1) As of ) As of EUR 5.4bn and EUR 3.5bn, respectively 3) EUR 877mn and EUR 961mn, respectively 4) Ratings as of , before markdowns AAA Drivers of exposure reduction in critical ABS (EUR bn): US RMBS CDO 1. FX-rate movement Additional markdowns

25 Dresdner Bank: valuation of critical ABS (EUR mn) US RMBS 1 Exposure before markdowns Exposure before markdowns Total markdowns (2007/2008) Remaining book value Prime (27%) 480 Midprime (54%) 146 Subprime (56%) 251 1,666 1, (43%) 877 CDO 1 Exposure before markdowns Exposure before markdowns Total markdowns (2007/2008) 1 Remaining book value High grade 1,615 1, (36%) 961 Mezzanine (100%) 0 1) Classification based on initial ratings 2,282 2,123 1,162 (55%)

26 Dresdner Bank: capitalization Risk Weighted Assets (RWA, in EUR bn) Tier I Ratio (in %) Tier I Ratio (Basel II) still strong at 9.2% - Reduction due to share buy-back of EUR 1.15 bn in July K2 effect on Tier I Ratio of -0.6%-p Sound liquidity profile with solid ratios - Principle II Ratio of Risk Weighted Assets eop (Basel I) Tier I Ratio (Basel I) Risk Weighted Assets eop (Basel II) Tier I Ratio (Basel II) 1) Changes vs. indication given at full year analysts' conference (RWA: EUR 111.2bn, Tier I Ratio: 10.1%) result from the application of our internal rating approach on additional parts of our portfolio compared to year end

27 Agenda Group P/C L/H Banking Asset Management Summary Additional information 27

28 AM: equity markets dampen revenue development (EUR mn) Operating profit % 392 Operating profit drivers CIR 60.0% CIR 66.9% 1Q 2Q 3Q 4Q 1Q 2Q Q 4Q 1Q 2008 Operating profit 1Q 07 1Q 08 1Q 07 Operat. Operat. revenues expenses Δ 1Q 08/ Operating profit 1Q 08 28

29 AM: Fixed Income business resilient to credit crisis Revenues (EUR mn) 3rd-party net revenue margin (12-month-rolling in bps) Cost-income ratio (in %) 3rd-party operating expense margin (12-month-rolling in bps) Other % Net fee & commission income Thereof: 1Q 06 1Q 07 1Q 08 Δ08/07 1 Thereof: 1Q 06 1Q 07 1Q 08 Fixed Income % Fixed Income Equity % Equity Distribution % Distribution ) Growth numbers refer to internal growth (adjusted for F/X and consolidation effects) 29

30 AM: positioned for future profitable growth Investment performance 1 (in %) Outperforming AuM 3rd party net inflows (EUR bn) Flows in % of AuM bop % 1.6% 3.4% Q 06 1Q 07 1Q 08 Fixed Income Equities Fixed Income Equities 1) AGI account-based, asset-weighted 3-year investment performance of 3rd party assets vs. benchmark including all equity and fixed income accounts managed on a discretionary basis by equity and fixed income managers of AGI (including direct accounts, Spezialfonds and CPMs of Allianz with AGI Germany). For some retail funds the net of fee performance is compared to the median performance of an appropriate peer group (Micropal or Lipper; 1st and 2nd quartile mean out-performance). For all other retail funds and for all institutional accounts performance is calculated gross of fees using closing prices (revaluated) where appropriate and compared to the benchmark of each individual fund or account. Other than under GIPS, the performance of closed funds/accounts is not included in the analysis. Also not included: WRAP accounts and accounts of Caywood Scholl, AGI Taiwan, AGI Korea, AGF AM and RAS AM

31 Agenda Group P/C L/H Banking Asset Management Summary Additional information 31

32 Summary: strong business fundamentals Underwriting discipline ensures superior results in P/C Profitable growth of life new business Defensive positioning of insurance own funds Remaining critical ABS trading exposure down to EUR 1.8bn (net) Strong performance and net inflows in Asset Management Ongoing efficiency gains Strong capital base Dividend policy confirmed Mid-term outlook still achievable 32

33 Agenda Group P/C L/H Banking Asset Management Summary Additional information 33

34 Group: result by segments overview (EUR mn) P/C L/H Banking AM Corporate Consolidation Total 1Q 07 1Q 08 1Q 07 1Q 08 1Q 07 1Q 08 1Q 07 1Q 08 1Q 07 1Q 08 1Q 07 1Q 08 1Q 07 1Q 08 Total revenues (EUR bn) Operating profit 1,267 1, ,870 1,856 Non-operating items , Income b/ tax, min. 1,931 1, ,556 1,902 Income taxes Minority interests Net income 1,180 1, ,240 1,148 We evaluate the results of our Property-Casualty, Life/Health, Banking, Asset Management and Corporate segments using a financial performance measure we refer to herein as operating profit. We define our segment operating profit as income before income taxes and minority interests in earnings, excluding, as applicable for each respective segment, all or some of the following items: income from financial assets and liabilities held for trading (net), realized gains/losses (net), impairments of investments (net), amortization of intangible assets, acquisition-related expenses and restructuring charges. While these excluded items are significant components in understanding and assessing our consolidated financial performance, we believe that the presentation of operating results enhances the understanding and comparability of the performance of our segments by highlighting net income attributable to ongoing segment operations and the underlying profitability of our businesses. For example, we believe that trends in the underlying profitability of our segments can be more clearly identified without the fluctuating effects of the realized gains/losses or impairments of investments, as these are largely dependent on market cycles or issuer specific events over which we have little or no control, and can and do vary, sometimes materially, across periods. Further, the timing of sales that would result in such gains or losses is largely at our discretion. Operating profit is not a substitute for income before income taxes and minority interests in earnings or net income as determined in accordance with International Financial Reporting Standards (or IFRS ). Our definition of operating profit may differ from similar measures used by other companies, and may change over time 34

35 Group: key figures per quarter (EUR mn) Total revenues (EUR bn) Delta 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 1Q 08/ Operating profit 2,677 2,794 2,660 2,255 2,870 3,288 2,604 2,153 1,856-1,014 Non-operating items , , ,640 Income b/ tax, min. 3,031 2,992 2,673 1,627 4,556 3,198 2,694 1,120 1,902-2,654 Income taxes Minority interests Net income 1,779 2,279 1,591 1,372 3,240 2,140 1, ,148-2,092 Group assets 1 (EUR bn) ) Group own assets (incl. financial assets carried at fair value through income), excl. loan portfolio Banking segment 35

36 P/C: key figures and ratios per quarter (EUR mn) Gross premiums written (EUR bn) Delta 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 1Q 08/ Operating profit 1,386 1,845 1,727 1,311 1,267 1,894 1,487 1,651 1, Non-operating items Income b/ tax, min. 1,814 2,285 1,866 1,595 1,931 2,074 1,739 1,517 1, Income taxes Minority interest Net income 1,100 1,582 1, ,180 1,380 1, , Combined ratio (in %) %-p Segment assets 1 (EUR bn) ) Group own assets (incl. financial assets carried at fair value through income) 2) AGF health business is reclassified from P/C to L/H segment in Therefore EUR 2.1bn AGF Health assets are excluded in 1Q 08 36

37 L/H: key figures and ratios per quarter (EUR mn) Statutory premiums (EUR bn) Delta 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 1Q 08/ Operating profit Non-operating items Income b/ tax, min Income taxes Minority interest Net income Stat. expense ratio (in %) %-p Segment assets 1 (EUR bn) Unit linked investments (EUR bn) Operating asset base 2 (EUR bn) ) Group own assets (incl. financial assets carried at fair value through income) 2) Grossed up for insurance liabilities which are netted within the trading book (market value liability option) 3) AGF health business is reclassified from P/C to L/H segment in Therefore EUR 2.1bn AGF Health assets are included in 1Q

38 Dresdner Bank: key figures and ratios per quarter (EUR mn) Delta 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 1Q 08/07 Operating revenues 1,884 1,628 1,601 1,691 2,023 1,770 1, ,304 Operating profit ,130 Non-operating items Income b/ taxes, min ,196 Income taxes Minority interests Net income ,125 RWA 1 (EUR bn) Cost-income ratio (in %) %-p 1) Risk weighted assets are end of period values 38

39 K2 restructuring plan in place Volume K2 (EUR bn) 23.3 K2 is a Structured Investment Vehicle (SIV) and is refinanced by CPs, MTNs and Repos Cash assets High portfolio quality: 98% of ABSassets rated AAA CDS Support from Dresdner Bank to avoid potential downgrade by rating agencies Asset quality 1 (in %) Financial institutions 51 ABS / Structured finance 44 AAA AA 67% 2 28% BBB A Support measures include mezzanine and backstop facilities and are in place since Fully consolidated under IFRS in 1Q A 4% AA AAA Sovereigns 5 BBB BB and below 1% 0% 1) Cash assets 2) Thereof Super Senior AAA: 11% 39

40 Asset Management: key figures and ratios per quarter (EUR mn) Delta 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 1Q 08/07 Operating revenues Operating profit Non-operating items Income b/taxes, min Income taxes Minority interests Net income Cost-income ratio (in %) %-p Third-party AuM (EUR bn)

41 Corporate: key figures per quarter (EUR mn) Delta 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 1Q 08/07 Operating profit Non-operating items Income b/taxes, min Income taxes Minority interests Net income

42 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 forward-looking 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, (iii) the frequency and severity of insured loss events, (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 / US 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 matters discussed herein may also be affected by risks and uncertainties described from time to time in Allianz SE s filings with the US Securities and Exchange Commission. The company assumes no obligation to update any forwardlooking statement. No duty to update The company assumes no obligation to update any information contained herein. 42