Earnings Transcript for ALIZY - Q3 Fiscal Year 2023

Oliver Schmidt : Good afternoon and the welcome to the Allianz Conference Call and financial Results of the Third Quarter 20203. As always, let me do the housekeeping first and remind you that this conference call is being streamed live on Allianz.com and YouTube. And that a recording will be made available shortly after the call. If you want to ask a question after the presentation and you join us by a web call, please click on the talk request button at the upper right-hand side of your screen. If you join us via telephone please press star 5. Today's call will be conducted by our CFO, Giulio Terzariol and our CFO elect Claire-Marie Coste-Lepoutre. That's all from my side for now and with that, I turn the call over to Giulio.

Giulio Terzariol: Thank you, Oliver, and good afternoon and good morning to everybody. Welcome to the call for the third quarter results, of Allianz Group. As always, I will start with the nine months view and then Claire-Marie will lead you through the rest of the presentation. So, if we move to Page 3, you can see there for the nine months, we have a very strong set of results. When you look at the revenue, the revenues are 7% and that's driven by the Property-Casualty segment and also by the Life segment in Asset Management we see a little bit of a negative trend compared to last year, but as you're going to see in a second in the third quarter, we have a positive growth also in Asset Management. The operating profit is $11 billion, which is 4% ahead of the last year results and also about 3% to 4% ahead of our outlook on pro rata basis. You can see that in Property-Casualty with a EUR5.3 billion operating profit. We are in line with our expectation. The combination is largely more elevated in our target of 93%. On the other side also, we are benefiting from higher investment in income. So, in totality, the operating performance is strong and at the level that we were expecting in the Life and Health segments, we have an operating profit or EUR3.8 billion, which is significantly ahead of last year. There's also due to the first time implementation in 2022. But more important the numbers on the right side about a couple of percentage points ahead of our expectations. Also in this segment we are running in a way, which is positive compared to what we were expected at the beginning of the year. The new business margin is stable, a slight I can increase, it's a very good level for 5.9. So also from a new business point of view, we see a good development in Asset Management. We have an operating profit EUR2.2 billion, which is in line with our expectation. And again, we had a quarterly positive inflows. So in total, we stand at about EUR30 billion flows for the first nine months. Net income, or better core net income is 25% ahead on last year. Here, we need to run a few normalization. You remember, we had the impact of starts last year. We had also the gain from the Voya disposal. So if we run a couple of normalization, we get basically back to a growth in core income which is pretty much consistent with the growth in operating profit. So or in all, a strong set of results I will say across the different segments. And as you might recall, last year, we had a record profit. So, we think that with the EUR11 billion operating profit after nine months, we are well positioned to have again in 2023 a strong year-end strong delivery. And with that, I will turn it over to Claire-Marie for the quarterly view.

Claire-Marie Coste-Lepoutre: Thank you, very much, Giulio Terzariol. Good afternoon. Good morning, everyone. I'm very happy to be here today and I will now present to you our third quarter results. So moving on to Page 5, there you can see that at 3Q, we delivered EUR3.5 billion operating profit, which is a good result in the light of EUR1.3 billion net CAT load, which is impacting our P&C segment. To put this load into perspective, this is the largest one we have experienced at Allianz Group over the last 10 years across all quarters. So you have to go back to January 2011 to find the similar CAT experience. We also have in particular in this quarter negative FX effects which is impacting our operating profit. So our operating profit FX adjusted will be 10% better, compared to last year. Our shareholder’s core net income is at EUR2.1 billion is basically following the operating profit and the comparison to last year is impacted by a EUR0.5 billion of positive, gains that is coming from the Voya transaction into the quarter. In terms of growth, we experienced a very good top line growth in 3Q that is stemming from all our segments. And this is also a pattern that is accelerated compared to previous quarter. If you look in particular at P&C, you can see there are very strong internal growth that is above 11%. Obviously for P&C in the combined ratio, you can see the very high effect of the net CAT load. What I think is very interesting is a very healthy underlying development of our operational loss ratio, which is as well improving quarter-on quarter and that's also very good sign I think in the sense of the actions, we have taken to offset the inflationary environment. Life is, as well delivering a very nice growth into the quarter with 8% internal growth at very good new business margin above 6%, which is as well valued of our new business margin target of 5%, together with a nice operating profit of EUR1.3 billion into the quarter. Asset Management is also delivering an operating profit of almost EUR800 million, double-digit net third-party inflows during the quarter and strong performances that are also contributing to the operating profit. So, overall, at 3Q, we see a very healthy and strong underlying business. That is impacted by the CAT events. We are very confident, we are on the right track for year end and, as well, that we have the right base for, as we are going to move into next year. If we move to Page 7, and we have a look at our solvency ratio, and our solvency ratio is at 212 at the end of the quarter, which is at three percentage point versus last quarter. And as well as I think it was noticing that our sensitivities are slightly reduced versus June to the [Indiscernible]. So, overall, I think it's an extremely solid capitalization. This despite our share buyback and the growth we are seeing through the business. And this solid capitalization is, as well, recognized by the rating agencies. Certainly, Moody's did upgrade us to AA2 from AA3, which is also very good result, I would say I'm confirming our situation. If we move to next page, Page 9, which is this is representing the development work of our solvency ratio. What I think is particularly interesting on this page is a very good organic capital generation of seven percentage point pre-tax and dividend. Life is fully self-financing into the quarter. And only P&C is requiring capital for our focus. So that's very, very good development. So, overall I would say on solvency, we have no surprises whatsoever in the quarter and we have an extremely solid base. Let's move now in to the P&C segment and let's look at Page 11. I think this page 11 is actually a very good page and that's a page, which is very much in the continuation of the second quarter. If you look at it. There we see growth that remains excellent and this is almost across all our operating entities. So that's very solid. And what we see, as well is a very strong rate change momentum that is continuing quarter-to-quarter. That is really to the credit of our operating entities, which have been injecting price actions to offset inflation. And we see that clearly materializing into that page. Let's move now to Page 13 and let's have a look at the development of our operating profit. So operating profit in P&C is at EUR1.4 billion, which is obviously strongly impacted by the EUR1.3 billion of CAT load I was mentioning before. You can see that on the insurance service results, which is down by close to EUR600 million. But that's also offset partially by the investment results, which is quite supportive of the developments. If you have a look at the right-hand side of this page, starting from the bottom on the insurance revenue, we have 17.5. So as I was mentioning really nice growth, that’s well above last year. And that's also a above last quarter by EUR0.6 billion. Our combined ratio, clearly is – as compared to last year, clearly impacted by NATCAT. If you look at our attritional loss ratio in the year it's 2.4% better compared to last year and it’s also compared to the last two quarters. So again, we see that we are acting on the inflationary trends and this is showing up into the attritional developments too Year-to-date, our retail combined ratio is at 95.6, which is a solid performance, given the NatCat environment. And commercial, I think continues its very strong to trajectory with a combined ratio at 89.7 year-to-date, which is showing not only, I think the overall environment that is supported to the commercial business, but as well the actions we have taken in that area. Just maybe before we move on to the next page, a brief word on the expense ratio, which is showing higher compared to last year. Actually, the comparison to last year is distorted due to some seasonality effects and also some transitionary effects associated to IFRS 17. What I think is important to have in mind is that this 25.1 is in line with previous quarter and is also broadly in line with our expectations in terms of expense ratio. If you move to Page 15, and we have a bit closer look at the operating entities in terms of operating profit. What you can see on this page is that clearly NatCat is impacting certain entities quite strongly in particular, Germany, Italy, France and Switzerland. I want to point out still that if you look at the year-to-date performance of those operating entities, so as an example you take Germany, we are at 94.2 combined ration year-to-date. If you normalize, as well for the CAT events, you are below 90. So clearly solid – a very solid delivery. Italy is at 92.1 or so year-to-date and if you normalize you come in the order of 92 to expect in terms of performance for those operating entities. What I think is also positive on this page, if you look at it, is that some of OEs with high inflationary pressure are stabilizing and improving. This is the case for UK, for Spain, or for Brazil. And the commercial business is very strong with AGCS at 90.7 combined ratio also impacted by some CAT effects, by the way, and trade is at an excellent 75.2 combined ratio. Let's move now to Page 17, and let's have a look at our operating investment results in the P&C segment. So we are very much in line with the second quarter on that page. We have an excellent performance with EUR800 million operating profit in the quarter. What I think is particularly interesting is our reinvestment yields. You can see it's close to 5% at the end of the third quarter. It was at 1.3 in 2021, that's not the page. But it's clearly improving very strongly and contributing positively to the performance of the segment. And also, as you as you can compute to the delta to our – between our reinvestment yield and current yield is 1.3%, and that as well is a good sign for the fixture on the profitability of the P&C segment as interest accretion is fully in line with our expectations for the quarter. So overall in P&C, we have a very good commercial business. In retail we see growth. We see accelerated rate momentum. We see, as well, supporting investment income. So, all of these makes us positive in our ability to manage the inflationary environment as we move into the first quarter and into next year. Let's move to Life now and let's have a look to Page 19. Overall, I think for Life, we see good developments. We see good developments in this quarter. We have a double-digit new business growth in local currency. We have a networking new business margin that is above 6% and we have our CSM developments and our operating profit, which are very much in line with our expectations. So now, if we have a look at more details at Page 19, what we see is a very good growth. We have our PVNBP, which is up by 6.9% and also supported very nicely by many operating entities. So you see, we see nice growth from the US, from our Italian business, as well, which has successfully launched some new products. You also see like the very good developments into the Health business of APKV And also in the current environment, and also Germany, typically as a stable development as well, what you need to have in mind is that you also have this discounting effect, which is coming into the PVNBP, because as we have higher rates, obviously, we discount more. Issuer to address for this discounting effect into the PVNBP on a year-on-year basis. Actually the growth in our in our Life business will be at 8.6%. So, much higher up. What I also think is very positive in terms of growth trajectory, is that this is building up a quarter-to-quarter. So, we see this coming through as we are also addressing to the environment. We have a very good new business margins, that is above 6% and you can see that this is also nicely spread across the various entities depending on the underlying of the business. So overall, this is leading us to value of new business that is close to EUR900 million. And this is also clearly up, compared to compared to last year and issue again a FX addressed as these developments that will be 6.1% or 6% higher compared to last year. This value of new business of EUR900 million, I just want to flag is slightly lower, compared to what you would see on for typically Q1 or Q4. Because we - the production in the third quarter always tend to be slightly lower, compared to the older Q1, or Q4 in the development of our business. Let's move now to Page 21 and let's have a look at our CSM. So there is a bit of noise on that page that is linked to some accounting effects. So you have to bear with me for a minute. I'm going to try to explain that as nicely as possible to all of you. Normally, what we would expect to see is that the growth and the net CSM will need to move in tandem. As this is not the case for this quarter and this is due to some accounting effect. Fundamentally, what I think is very important for you to remember is that this is not impacting our forward-looking value equation as the net CSM, which is a better indication for the value creation is showing, because our net CSM is actually slightly up by EUR0.8 billion. Now let's have a closer look to these CSM developments and let's maybe start with the CSM release. So you can see our CSM release is at EUR1.2 billion. Actually FX address EUR1.3 billion, compared to last year. And also - is EUR1.3 billion. So issue and this EUR1.2 is actually very close to the EUR5 billion, you will expect on a year-on-year basis. So that's very much in line with expectation. The second effect is that our normalized CSM growth is slightly below 1% is that slightly below, but this is normal and that's linked to the lower production you would expect to see in Q3 compared to the older quarter. So what matters is to have a look as the normalized CSM goes on a year-to-date basis, which is very much in line with our expectations for the entire year to be between 4% and 5%. Our CSM sensitivities on this page. As shown on this page our end change compared to last quarter and that’s also a good sign in terms of development of the of the CSM overall. Let's move to Page 23, and let's have a closer look at our operating profit. So our operating profit for the Life business is good at EUR 1.3 billion and that's in line with the CSM release. I invite you. Not to look at the third quarter 2022 on this page, because it's slightly distorted by the introduction IFRS 17. So it’s not that relevant. But what I think, we see when we move from the CSM release to the operating profit is that all the elements are broadly in line with the expectation, maybe with the operating investment results that is slightly ahead of our yearly expectations, which are EUR720 million will be the only point I'd like to flag in this page. Let's move to Page 25 and let's have a look in more details at our operating entities. So, in general, I think this page is showing the profitability that the profitability across owings. On the Life side is at a good level, without any exceptions. And that's also very, very good sign in terms of of strength of our Life and Health franchise. So overall, on Life, we see good new business at a very good new business margin. We see normalized CSM growth that is between 4% and 5%. And we have a year-to-date operating profit, which is at EUR3.8 billion, which is up versus last year, and which is fully in line with our expectations for the year. Let's move into asset management and let's have a look at Page 27. Overall, our asset management business is very resilient in the current environment and delivering in line with expectation. Our total asset under management are stable at EUR2.2 trillion and if you have a further look at our third-party asset under management, they are up two percentage point versus last year and this despite the current rising environment, we continue to see. Moving into next page to Page 29. You can see more details on the developments of our third-party asset under management. We have seen in the quarter close to EUR11 billion net inflows. And this is supported by both AGI and PIMCO. And it's mainly when going into fixed income and alternatives. And also maybe towards looking out is that on the PIMCO side we have seen since the beginning of the year EUR30 billion net inflows for fee and we have seen positive net inflows for our third quarter in a row. In terms of third-party asset management development, as well, we can observe that the negative market effect has been many years almost offset by the FX effect at this point in time. Moving to Page 31 in terms of revenues, you can see that our internal growth is 4.5% as on a year-on-year basis we have a negative FX effect, which is explaining the nominal revenue to decline. But clearly on this page, we see strong performances which are stemming from PIMCO in particular and we see resilient margins both above last quarter at AGI and PIMCO. And if you look in a bit more details, typically at PIMCO, you have our margin level is actually – maybe slightly reduced compared to last year. But we have many technical effects coming into that number and typically in that case, that's fully explained by the number of fee days as an example that is used for computation here. On AGI side, the developers are also fully in line with our expectation, because you need to address for the for the Voya transaction and for that is explaining basically the development on that page. Let's move now to Page 33 and let's have a look at our operating profit. We achieved good level of operating profit that is close to EUR800 million at 3Q. That's in line with last year and that's above last quarter and you can see nicely on this page that the revenues are contributing positively. And that we have this negative FX effect that is coming into the development of our operating profit. What I think is really interesting to see is a development also of the operating profit of PIMCO issue FX addressed these one. We have positive development of our operating profit year-on-year by close to above 9%, which is an extremely strong result. And we have, as well for both PIMCO and AGI improved cost income ratios that are definitely moving in the right direction. In particular for AGI as we want to drive our cost income ratio further down towards below 60%, 67% and over the midterm towards 60%, 65%. So also overall, our cost income ratio is a productivity that is positive at both PIMCO and AGI and that set is at 60.5% for the segment, better compared to year-on-year expectations, which are at 62%. So to sum it up on the Asset Management side, we are very stable and resilient in the current environment. We are well positioned to benefit for growth when rates will stabilize, and with an operating profit at 99 that is a EUR2.2 billion, we are where we expect Asset Management to be. I'm going to skip Page 35, because there is clearly nothing to mention on the Corporate segment. And I'm going to move directly to page 37 and to comment on our shareholder’s core net income that is at EUR2.1 billion and that's a good level given the CAT effects we have seen into the quarter. This is - I don't think there is much to comment on the 2020 fees. This is mainly following the operating profit development and just on the comparison to last year, as I was mentioning, you can see the effect of the of the Voya transaction that is showing up on the line item realized gains when you can see the positive effect of the realized gains that came through from the setting as the US AGI business to Voya. At 9 AM, our shareholder’s core net income is at EUR6.8 billion, which is clearly solid and clearly also in line with our yearly expectation, overall. Now, let me move to Page 39 and let me recap as we have a look at our year-to-date status. I think, year-to-date, we have a very we have a strong status across all dimensions. We see a good level of growth with EUR1.2 billion of revenues, that is mainly stemming from P&C. We have EUR11 billion of operating profit, which is above last year and I wanted to remind you that last year was a record year for the Allianz Group. And our shareholder’s core net income is close to EUR7 billion. We have a very strong capital base at 2.12% solvency ratio and we have a very LC capital generation, while we are delivering on our buyback. So, all of these, when, when we step back and we look at this strong status makes us positive on our ability to deliver towards year end and clearly position us really well as we are going soon to move into 2024. So with that, I hand over to you, Oliver.

A - Oliver Schmidt: Yeah, thanks, Giulio. Thanks Claire-Marie. We are now happy to take your questions. And the first question will come from Andrew Ritchie, Autonomous, Andrew, please go ahead. Your line should be open now.

Andrew Ritchie: Hi there. Thanks taking my questions. I just wonder if you could talk generally about catastrophe loss loading and expectation. I appreciate this is an unusual CAT load this year not suggesting that should be extrapolated, but clearly there might be some trends in severe combative storms, especially in Europe and you reinsurance attaché is higher than it used to. So, should we think that the CAT load ongoing is higher? Would that be offset in your view by a better attritional? So that's just the first question. I think, by the way, in relation to that on the media call this morning, you mentioned something about Q4 catastrophe load, as well. So if could clarify that? My only other question was, German P&C, why is it so good? I'm talking ex weather. There's been a lot of color that German Motor got progressively worse for the market over the year. German Motor is a large part of your portfolio. How come is your possibility as CATs held up so, well? Is this just some of the inflation reserves being fed back through on the calendar year results? Or is it genuinely good on an accident year basis? Thanks.

Giulio Terzariol : Thank you very much for your questions. On the CAT loss loading, I think it's a very good question and very timely question as we are currently now in our planning process. I think if you look at our year-to-date CAT load, we are 3.1% – sorry, if you look at our CAT load year-to-date, we are at 3.1%, which is, I mean, close to our 2.5%, but indeed higher. If you look as well at the recent years, we see that this CAT load is more around 3% I would say, as opposed to 2.5%. So as we are planning now and revisiting and also running our models likely, we are going to consider increasing this CAT load into our planning assumption and moving that up. I don't think it's going to be a massive move up. I don't think it's needed, as well. But certainly couple of BPS we are going to consider to do so. Maybe to your to your second question around the P&C performance. I think we have two effects there. First of all, we benefit from a very strong continues, very strong development into our commercial business and ex NATCAT because also commercialize being impacted by some market effects. So as the underlying combined ratio is definitely very strong here. But as well, when you look at our retail business across the board, we have been acting very strongly in terms of pricing actions, in terms of free underwriting actions also into some of our books. And this is showing up. That being said, fighting inflation is a constant journey, I would say, because as you certainly know, the claims inflation is lagging the headline inflation. So it's still continuing to show up. So we need to make sure that that we stay on the topic. And also we continue the full toolbox of actions against inflation that that we have implemented. That is not only integrating pricing actions, but also claims management actions, productivity actions and so on and so forth. So that we can manage the situation.

Andrew Ritchie: So, just can I just follow-up? I was also, after the clarity on the comments, you made on the media call around 4Q weather. And then this year, the clarity was you might add a couple of BPS, you said to the CAT load. Did you think that's an overall addition to the combined? Or you would be able to offset that on the attritional?

Giulio Terzariol : Yeah, I think if you issue today - I mean, I think probably you should take Q3, and you normalize Q3 and you add three percentage point of CAT load you are around 93% combined ratio. If you do that on a year-to-date basis, we are more around 93.5%, clearly, I think for next year, 93% combined ratio is a good - would be good level for our business. And over time, I think striving to answer 92% for our business will also be for me a healthy level. We should be striving towards. So I would not take it in addition at this point in time. Maybe on - and then on your question related to Q4, I think, clearly, we have seen CAT activities that has happened in France, in particular and also in Germany over the last ten days. We still see CAT activities clearly in Q4. So at this point in time, I would not expect that this is going to impact our CAT load well above. But I would expect our CAT load for the quarter to be in the normalized level we expect around 2.5% here.

Andrew Ritchie: Thanks very much.

Oliver Schmidt: Thanks, Andrew. We will take the next question from Peter Elliott, Kepler Cheuvreux. Peter, please go ahead to your line is open.

Peter Elliott: Thank you very much. I hope that you could hear me. And first of all, very sorry to see you move on Giulio, but it seems like you've left business in very good hands. And three questions if I may? The first one, congratulations on the good results. And I guess, one of the very few areas of where there was a bit of weakness was the non-Life expense ratio. I mean you mentioned that Claire-Marie and I appreciate you talked really from the year-on-year comparison. But I guess, we look sort of quarterly maybe we're not quite seeing the same sort of improvement that we are used to. I am just wondering if you could comment a little bit on the likely trajectory from here. Secondly, I guess, we’ve seen a couple of regulatory developments recently within Department of Labor Fiduciary Proposal keeps sort of coming and going. But they seem to be trying to do something and we're going to get a life guarantee fund introduced in Italy from next year. Just wondering if you might got a comment on the impacts you see from those and anything else that I've missed but that's sort of on your radar at the moment? And maybe, as the third question, would you be able to give us an update on your persistency experience? And how you think about your CSM assumptions in light of that? Thank you very much.

Giulio Terzariol : Thank you very much, Peter. Let me maybe start with our persistency situation in the Life business. So what we see is that our lapses level are actually being normalized in the third quarter. So you may remember that we have seen in particular beginning of the year some strong lapses in particular associated to our Luxembourg business on the French side, which is a very specific business. But typically, across the board, we now see lapse levels which are in line - which are very, very much in line with what we have seen previously. So these are stabilized quite nicely and we will not expect to be in this to address our CSM assumptions associated with that one at this point in time. On the non-Life expense ratio, there is indeed really some accounting effects, which are which are coming through into that one and there is clearly some seasonality effect into the quarter. Year-on-year, in the underlying, I think the right way to look at our expense ratio is always to distinguish between what we call the run and what we call the change, because what is very important is that, we drive the run towards higher productivity levels. So we make sure that the run part in our expense ratio is improving steadily and that we see in our in our numbers currently. So meaning our productivity actions are showing up into that number. And then there is a change budgets meaning like, how much do we invest into the future of the organization to support the transformation. And this number needs to be looked at separately. So we can come back to you with more detail on the expense ratio. But the underlying is very much in the direction that we expect strategically. On the situation relative to the regulatory developments, you know that for us at Allianz actually fiduciary - we take our fiduciary duties extremely safely. So that has been a constant focus across all our Life operations. So, we are aware of the development of those regulations. We monitor them and we also act accordingly in the Life markets as required. But we are not particularly worried at this point in time in connection to those developments.

Peter Elliott: Thank you very much.

Oliver Schmidt: Thank you, Peter. We will take the next question from Andrew Sinclair from Bank of America. Andy, Please go ahead. The line is open.

Andrew Sinclair: Thank you very much, Oliver, and congratulations both Giulio and Claire-Marie on your new roles. I have three questions for me as usual, please. First is on reinsurance. You're one of the notable here that still has a catastrophe I could get a cover in place. Just really wondered how far are you from that kicking in? And just any thoughts that you have in terms of your reinsurance program for 2024? Do you expect that to look similar to ‘23 or anything you're looking to change? So, that’s my first question. And second was just on the investment results in P&C. Good results. I just really wondered if you can give us an update on some of the guidance that you've given us on the key lines there. And third was just on pricing change. Again, generally, it looks pretty good, but Allianz partners seem to be a bit slower in Q3. I think it was 6.8% rate changes for the nine months. But it was 11.6% for the first half of the year, which suggests virtually nothing maybe even slightly negative pricing momentum in Q3. Just wondering if you can give us any color there. Thank you very much.

Giulio Terzariol : Yes, So, hi, Andrew. So, on the pricing change, maybe for Allianz partners indeed, that’s actually the only operating entity that has a pricing momentum that is reducing compared to previous quarter. That's actually mainly linked to business mix effects. We have, in particular, our US Travel business that has been performing, very well where we had also to address our pricing environment to manage the growth there. So that’s the main reason for the developments on partner side. But there is also rise on the rest of the partners’ business would be a very good, very good development I would say. On the reinsurance side so indeed we have these reinsurance aggregate cover that is in place to protect us against exceptional yearly CAT load. If you look at our year-to-date CAT loads and we are at 3.1% which is not that far away from 2.5%. So which means, we are not in an exceptional CAT load. If you look at it year-to-date so our aggregate cover is not to be triggered at this point in time. You will need to have if we get similar events as the type of events we have experienced until 3Q you will need to get something like EUR3.1 billion of total CAT load for the year, which is far away from what we have experienced. And obviously it’s not something that that we wish to experience, that we wish to expense this year. Our reinsurance program, actually we are quite happy with the reinsurance programs talk show. We have, as you know, we have ads to address it last year to also optimize from a risk return profile. But as well as reinsurance change with capita then we add to move up our attachment points to our – in particular entry points to certain CAT events. But clearly, we are happy with our reinsurance program. Broadly, we are - we want to keep it the way it is. We are always looking at options to simplify a bit, our reinsurance program. So that’s clearly something we are going to aim at further in 2024. And I'm quite confident that we are going to enter the conversations with the reinsurance in a very good way. So that we can close renewals in a good way, overall. So, I think for more details on reinsurance, actually, you can also join us at our Allianz Inside Series. That is going to take place on 24th of November where Holger Tewes-Kampelmann will share more details on Allianz in general. On our investments, investments results. So, more details in the [Indiscernible]. So we have some interest and similar income we have generated EUR 1 billion operating profits where when you need to deduct basically the interest accretion, which is at minus EUR140 million for the quarter. The guidance for the interest accretion for the entire year is around, so what we expect for our estimate, for the entire year is around EUR700 million. So that’s unchanged. And the valuation results and other is actually at minus EUR122 million. That’s normally, what we expect in the quarter is around EUR200 million. But that's better mainly linked to some FX effects. So you should expect to see some relativity into this valuation results. And also, and you typically do that – you have to do those FX effects in particular. Maybe just on interest accretion, this is naturally going to diminish quarter-to-quarter. As you know, the interest accretion the way we do is linked to our reserves associated to the previous year. You have a locked-in interest rates. So, during the year, it will not be impacted by the development associated to the interest rates. And as we - as a reserve naturally, part of the reserve runoff and you get also the payout pattern. You should expect that we start from a higher interest accretion in the first quarter. And this is going down steadily towards Q4.

Andrew Sinclair: It helps. Thank you very much.

Oliver Schmidt: All right. Thanks, Andrew. And we will take the next question from William Hawkins, KBW. Will, please go ahead. Your line is open.

William Hawkins: Hello, Giulio and hello, Claire-Marie. Thank you very much. First of all, on Slide 23, you just got the non-life investment income, but can you help me with the Life investment income please? You've highlighted the very strong figure in the third quarter and you've highlighted that it's above your expectations of EUR700 million. But I'm not sure if the implication of that is that your future expectations are now going to be higher? And if so why? Or whether there's something one-off going and we're going back to EUR700 million? So can you help me have an understanding of what the Life and Health investment income should be hereafter please? And then, secondly, keeping it simple, can you give us an update on where we are on Asset Management flows in the fourth quarter please for PIMCO and AGI? Thank you.

Giulio Terzariol : Yes, So on the Life investment income, indeed, we are a bit higher compared to our yearly expectation. I think what you should expect from that number going forward, is that it's going to be a bit volatile, because it's coming out with some complex accounting effects related to our BB and VFA business. So this quarter is higher, I think it's and maybe – Oliver can confirm that. But I think it’s mainly related to some positive effects that came from our US and French business, which are contributing positively. But I will not take that as a forward-looking expectation that you should normalize going forward. So I think the indication we have given of EUR700 million is the one you should have in mind. Then on our Asset Management flows, we have seen approximately in the months or in the month of October, we have seen approximately EUR6 billion of outflows in the quarter that are mainly coming stemming out from PIMCO. I think, given the volatile environment we have experienced in the last few weeks, in particular, associated with the geopolitical and stability as the uncertainties around the rate developments or actually like the postponing eventually of the stabilization of the of the ill environments, that's quite logical that we have seen that effect in October. And as mentioned, I think we expect that the ill environment is going to stabilize and as such that PIMCO will be extremely well positioned to benefit from that environment and we should expect to see growth there.

William Hawkins: Lovely. Thank you very much.

Oliver Schmidt: Thanks, Will. Yes, we will take the next question from Ashik Musaddi from Morgan Stanley. Ashik, please go ahead. Your line is open.

Ashik Musaddi: Thank you, Oliver, and congratulations. Claire-Marie, and Giulio for your new roles. Just couple of questions I have is, first of all, on German Life and Health. I mean, if I look at German Life and Health, both volumes and new business value and also the CSM development in the quarter, I mean, it looks a bit negative. So, any color on that would be very helpful to get, because I thought rates went up. So that should be good rather than negative. So, that's one thing. And secondly, like you did a buyback of EUR1.5 billion at the beginning of the year I think in first quarter. So, should we be expecting that for this year for 2023, the buyback is done? Or this will - this could still be in consideration at the full year results? So any color on that would be helpful or if you can give some color in case the - if cash capital has been utilized elsewhere? Thank you.

Giulio Terzariol : On the German Life and Health results, what I think, if you look at year-to-date, the GWP of our Lebanon entities are basically stable compared to last year. What we have seen in this quarter is, I mean, what we see in general is that, we have very good - we have good developments in our recurring premium coming in particular from younger customers, which is demonstrating little bit of strength of the offering of eleven where we see less positive developments currently, compared to previous year is associated to the single premium business, in particular coming from our banking channel. And that's quite logical in the rate environment that this is the case. So I'm not - I mean, I think this is positive because that’s stable and clearly we are also going to continue our focus to provide good and differentiating offering to our clients, more from a single premium perspective. As an example, the private finance policy that is working well, also in this environment and will continue to be to be a focus on the Lebanon side typically. New business margin is actually strong. So that's a translation of the volumes effect into the performance of level. So we are confident in our label franchise very clearly and we expect stable operating profit to be continued to be delivered by level. And then on share buyback. So clearly, we have we have put through EUR2.5 billion of share buyback in this year and I'm not going to comment on what we are likely or not likely to do to answer year end.

Oliver Schmidt: All right, thank you for this. Then we will take our next question from Vinit Malhotra from Mediobanca. Vinit, please go ahead. The line is open.

Vinit Malhotra : Yes. Thank you Oliver and thank you. If I can go to Slide 15 please and just I am very curious about two numbers there which stand out. One or three, but June for sure. Italy has only 5% of NATCAT, which is maybe EUR40 million, EUR50 million, I mean, comparable large insurance in Italy are running in hundreds of millions, EUR300 million EUR400 million just we heard from the reports on the weather events. I am wondering if there's any big reinsurance recovery there? Or any comments there that you would like to flag? Also, in the single vein in Germany 19%, probably one of the highest weather events if there's anything to add there and, unlocking on the Slide, Switzerland I mean, combined ratio of 90%, to the 15% debt loss must have a lot of reserve releases or other factors. If you could comment on these three numbers for the combined ratio that would be really good. And second topic, if I could ask you on the life CSM. And I know that, I mean, even the next year flat that was, are we talking about higher growth of the normalized, I mean, what's the risk that we all look at normalized CSM and put in 3%, 4%, 5% growth rate, but actually the real world CSM, if I can use the term, it seems to be much more sensitive to market, much more, flattish and or downward trending. And, and how do you see the risk that we should rather be looking at lower number of year time? Or how should we look at this real world versus normalized year trending of these? Thank you.

Giulio Terzariol : Okay. I think so the line was not very good. So, I'm a bit unsure, but I think your first question was related to Italy and the high level of NATCAT we are seeing in Italy and why this is actually lower compared to the German NATCAT effect. So in Italy, we have seen indeed very high level of NATCAT that has impacted the performance. The reinsurance program of Italy was attaching a bit - was attaching lower compared to the reinsurance program of Germany. And that's explaining why you have a lower CAT load effect in to the Italian performance compared to the German performance. On Switzerland, we have a high CAT load, but also actually, we have high CAT load, but we have a low weather-related CAT load, which is also coming as an offset to this high CAT load. And we also have some runoff effects that are coming through. And again, I think like for both Italy and Germany, if you address for NATCAT the underlying performance is actually very, very strong. Which in the inflationary environment, we see is also a demonstration that that the teams are acting very strongly and that we are maneuvering well in this environment.

Oliver Schmidt: Vinit, this is Oliver. Another truth, we fully understood your question about the CSM, but perhaps from my side, what you could do is, when you go back to our Inside Allianz Series slides that we published in June this year, there's one slide in there, where we give more details about this year's embark, and how the real world assumptions basically feed into the CSM by expected in-force return. This may answer your question. If not, I propose you just come back to us and then we can go more into detail if it's fine with you. Okay?

Vinit Malhotra : Okay, Oliver. Thank you so much. And thank you, Claire-Marie. Thank you.

Oliver Schmidt: Thanks Vinit. All right. And then we will take the next question from Iain Pearce from Exane. Iain, please go ahead. The line is open.

Iain Pearce: Hi, thanks for taking my questions. Just two quick ones on Life. Firstly, with in the Italian business, it seems to be really strong new business premium growth. Just wondering what's driving that and it passes that is sort of recapturing customers that are churning leading to an elevated number. And the second one is just on the new business margins in the US being down year-on-year anything just like that? Thanks.

Giulio Terzariol : So on the Italian business, I think addressing to the new interest rate environment, our Italian team has injected new product innovations. So they have launched three new products of us for the values channels, which are either unit-linked or a combination of capitalization products together with unit-linked and that is working very well. And is being really welcome by our market and by the market and puts, I mean, I would say like appreciate it by the agents, as well. So, that's really product innovation, I would say, on the, on the Italian side. New business margin in the in the US, I think you should not read so much into the year-on-year comparison in particular, for AZ Life as no – sorry, as we concern as new business margin for the US business is aiming at delivering the internal rate of return that is needed for our own profitability. So that you should expect to see some movements there. But overall, AZ Life is returning as the expected level of profit to us. I just stick to the environment.

Iain Pearce: Okay. Thank you.

Oliver Schmidt: Thanks, Iain. We will take the next question from Michael Huttner from Berenberg. Michael, please go ahead. Your line is open.

Michael Huttner: Thank you very much. I had to one number question and two a general. The number question is that, can you talk about the net inflows in Life? Is it’s broadly material for that - I probably missed it, I'm sorry. And then two more. One is, Allianz normally raises guidance, particularly when the numbers are ahead. And it didn't this time, maybe you can comment on that. And then the third one is, it's really for Giulio I don't know how to say, the – if you think about what is effectively a handover today, did a normally associate hand over and say, well I'm better make sure things super conservative. Is there any way that you can show us where that extra conservatism might be at phase one? Thank you.

Oliver Schmidt: So you're asking me, how to show you the extra conservatives. That's the question?

Michael Huttner: Yeah, that’s right. Yes.

Oliver Schmidt: Maybe I tell you what Jerry referred is crazy. So we’ll leave it that. Okay, thank you.

Giulio Terzariol : So, maybe like, let me, let me comment on the outlook. And so, I think overall, we are positive that we will end up above the midpoint when it comes to our outlook. But considering the elevated amount of NATCAT, we’ve seen also currently continuing into Q4. We have decided to be cautious, because we do not want to set the expectations that we will be significantly ahead of the midpoint while we might just be moderately ahead of it. So that's the main reason why we have kept our outlook stable unchanged. Onto net inflows in Life, actually year-to-date our net flows were strongly positive for the US, for Asia, for LATAM slightly negative for Spain and negative by EUR600 million for Germany and as well negative for Italy and France. So overall, our net flows will be negative at 9 AM. I think you should also take into account that traditionally 9 AM will be also at the moment in time where this is coming across as more negative, because we have less production in 3Q to offset some of the out flows we are seeing. So overall, as I was mentioning, I think we see a good momentum in our Life business and we are really demonstrating that we have a solid franchise that we are operating across the various regions.

Michael Huttner: What is the total net outflow figure?

Oliver Schmidt: Do you want it for the quarter or for the year-to-date, Michael? EUR2 billion.

Giulio Terzariol : EUR2 billion, yeah.

Oliver Schmidt: By the way, for those who have not spotted it yet and probably you are part of that group, Michael, we published this number in our supplement.

Michael Huttner: So I am looking at, all right. I am looking at it.

Oliver Schmidt: It's relatively newer. So you are excused.

Michael Huttner: Thank you.

Oliver Schmidt: All right. I have one last analyst in the line Cameron, that's you. Sorry, at last, but definitely not least. The line is open and so please go ahead.

Unidentified Analyst: Hey, Oliver. Sorry. All my questions have been answered. So I guess no follow-ups from me. So, thank you.

Oliver Schmidt: Perfect. Even better, but I see Michael again, Michael, do you have another follow-up question. If yes, please, go ahead. Your line is open.

Michael Huttner: Can you talk in more - I know you covered Germany in broad terms. Can you talk a little bit more in detail about pricing and claims inflation on all these kind of moving parts in the motor part, in particular, in Germany? Just to give you a bit of how I see it as, I perceive pricing might just struggle to reach 10% of renewals which is coming up, which are ongoing with claims inflation is probably just below. And my feeling is in motor, standalone, you'd probably only return to where you'd like to be in 2025.

Giulio Terzariol : I will say, clearly for Germany, we would expect to be where we wanted to be in 2025. And in terms of, combined ratio performance. We have observed in Germany overall a bit higher inflation effects, compared to what we had anticipated initially. But we have taken reductions and we have acted structurally over the portfolio and that you can see with our year-to-date rate momentum, which is, above 6% for Germany overall. Now to your specific points around pricing for Germany, I think we – our operating entity - our German operating entity is very well advanced in terms of technical excellence. We have pricing models, which are very precise and capable of also estimating what we will need to have in the - given also, as an example in own business, given the localization of the business and so on and so forth. Then obviously, there is a difference between the in-force book and the new business and we are slowly converging the inflows to the premium. We are slowly converging and managing the pricing level across the portfolio. So, I think we are maneuvering the inflationary environment in a very good way at our German entity. And I would expect that to show up into our performance definitely toward 2025.

Michael Huttner: If I hope that we might get a double-digit rate rise in motor at renewals just now.

Oliver Schmidt: Michael I can do. This is Oliver. I can give you a real life example. My family make up by 7% and I never drive. I mean, I parked back all year along. So you can trust that everybody, all the customers that we have that do drive their car from time to time got a double-digit rate increase already now.

Michael Huttner: Fantastic. That was what I was looking for. Thank you so much. Thank you. And good luck, both of you. All three of you.

Giulio Terzariol : Thank you.

Oliver Schmidt: All right, thanks everybody for your contributions. That's the end of our analyst call. So we say goodbye. And thank you to everybody. But before I leave, let me just remind you that we have the upcoming Inside Allianz Series in London in two weeks time. And this event will be joined by both by Claire-Marie and by Giulio. So if you want to say goodbye to Giulio and hello to Claire-Marie, that's the perfect opportunity. And I hope we all see you there in two weeks time in London. Thank you and goodbye from my side.

Giulio Terzariol : Thank you. Bye-bye.

Oliver Schmidt: Bye-bye. See you in London. Bye.

Giulio Terzariol : Bye-bye.