Allianz Aktie

Ladies and gentlemen, welcome to the Allianz conference call on the Allianz Group financial results for the first quarter 2026. For your information, this conference call is being streamed live on allianz.com and YouTube. A recording will be made available shortly after the call.

At this time, I would like to turn the call over to your host today, Claire-Marie Coste-Lepoutre, Chief Financial Officer of Allianz SE. Please go ahead, Claire-Marie.

Thank you very much, Andrew, and good afternoon, everyone. So let me start with an overview of our group results for the first quarter of 2026, and clearly, for me, the picture -- from my perspective, is one of a strong start to the year. This allows us to reaffirm really confidently our full year outlook we can do so despite an elevated market volatility and more uncertain macro environment. Across our 3 strategic levers, growth, productivity and resilience, we continue to execute with discipline and to deliver towards our ambition.

If we look in more details at Page 4, then you can see that overall, our business volume continues to show steady internal growth. It's driven in particular this quarter by our P&C and our Asset Management segments. The Life business was resilient against the first quarter 2025, where business volume was particularly high. Our operating profit momentum is excellent. We are nearly at 7% year-on-year in terms of growth, where we do benefit from the diversification of our business model. Here we see double-digit growth in P&C, where we reached a new record level of operating profit. We see an excellent performance in Asset Management, which is up 6% or even 15% FX-adjusted and Life delivered a resilient performance, even if it is impacted by FX and also by the disposal of our JVs with UniCredit and with Bajaj.

On the net income side, we do see the impact of the completion of the Bajaj disposal for EUR 1.1 billion net. And as a reminder, and as we have indicated previously, we will neutralize this accounting gain over the course of 2026 through strategic and productivity actions and as well reinvestment into higher-yielding instruments. Only a modest share of that overall amount was used in the first quarter for EUR 1.5 million net and more will clearly follow during the year.

Adjusted for the Bajaj effects, our underlying core net income achieved a strong increase of 7% year-on-year. We also achieved an ROE of 18% and as well an excellent EPS growth of 9%. So clearly, and I think it's very important. Beyond this exceptional effect, the fundamental performance is very strong and fully on track towards our Capital Market Day ambition.

At the bottom right of this page, you can also see that our Solvency II ratio ended the quarter at 221%. This is a very resilient level with well-contained market volatility and consistently delivered strong operating capital generation. Let's move to P&C on Page 5. And there, you can see that our top line momentum continued at a pace that is very much in line with 2025. Our internal growth is at 7% with a split broadly 50-50 between price and volume. The price effect in the underlying has slightly moderated, but overall, the renewal rates remained resilient across the book. As an example, we see retail motor that is running at plus 8%. And within commercial, as an example, MidCorp is at plus 4%.

As you can see as well in the further detailed pages, the growth across the P&C portfolio remains well diversified. You have plenty of examples of that growth momentum in the document, but some standout contributors would include our platform businesses like Allianz Partners or Direct that are both growing double digit. We also -- we see also a strong new business in Germany and also selective growth in commercial, where pricing meets our hurdle rates.

Across the organization, very clearly, we continue to be focused on our growth trial, achieving new customer growth, increased cross-sell and churn reduction. Our underwriting profitability is excellent with a combined ratio at 91%, that is supported by both retail and commercial. This outcome reflects broadly benign nat cat environment. But more importantly, if you go into the details, actually a robust underlying underwriting performance and an ongoing improvement in the expense ratio. The details, as always, are provided in the back of our presentation.

You should as well remember when you look at those numbers that basically the year-on-year changes on that -- in attritional loss ratio, prior year developments are affected by an offsetting accounting impact that has been introduced in the second half of 2025. Allowing for that effect, the underlying attritional loss ratio improved by 30 bps, and the runoff impact was flat year-on-year. As always, in the first quarter, and in general, we remain cautious in our booking approach, including when it comes to our initial loss ratio peak with uncertainty on the inflationary outlook at this point in time.

The sustained top line momentum and the further improved combined ratio drives our 11% operating profit growth, reaching an excellent EUR 2.4 billion of operating profit. The investment result is broadly flat including the impact of lower equity realization contributions there. The realized losses below the operating line in the first quarter in non-life will benefit the operating investment income later in 2026 and into 2027 as we reinvest into higher-yielding instruments.

We also continued to leverage AI across the P&C value chain for marketing and distribution of new business through to claims management. The main focus is on customer experience and the uniqueness of our value proposition towards our customers to fuel our growth trajectory. As an example, at Allianz Partners, we have introduced several new large OEMs relationship in the first quarter, that are supported by Agentic AI tools in roadside assistance, significantly scaling our straight-through processing of claims.

In Italy, France, Spain, our AI tools are supporting our agents to provide training or real-time support in assessing the risk via AI experts and also boost customer service and productivity at the point of sales. Similarly, in commercial, our submission allows for a much faster and higher quality answers to submission via preparation, enrichment of data and best allocation to underwriters. This is generating significant impact, both in the response time and in conversion rates of our submissions. Overall, I'm very, very pleased with the performance of our P&C segment. We see good growth. We see excellent and robust underwriting profitability across both retail and commercial.

Let me move to Page 6, giving a look at our Life and Health business, where the underlying performance of the segment is considerably stronger than the headline momentum might suggest. So the new business first. So on the new business comparison versus previous year is impacted by a very high base in the first quarter 2025, which included large tickets in Germany, strong Thailand sales ahead of the regulatory change on the medical riders and the UniCredit JV business, which has been disposed, as you may remember, in the second half of 2025.

Adjusted for those impacts and also the FX effects, the underlying new business volumes are slightly up and the new business value is broadly stable with an attractive mix with Protection and Health and unit-linked contributing 60% to this one. To illustrate a bit some of the strong development versus last year, I want to mention first Italy, where really the Italian team has been doing a tremendous job in the first quarter, building on the momentum of what they have already achieved in '25. Where you see that the new business value is up net of minorities and including associated fees with strong unit-linked growth through their financial adviser network.

The new business in Asia, if you exclude Thailand is up 12%, and we see as well a continued strong momentum in Health Germany with a continuing double-digit new business value growth. On the Life CSM development, we can see that despite the lower new business value, the expected in-force return still exceeded the release, generating a healthy 1.7% normalized growth. The overall CSM growth was impacted this quarter by the capital market volatility flowing through both the economic and the noneconomic variances, in a broadly consistent manner with our disclosed sensitivities, if you do the underlying math.

And as we speak, and some of those market impacts have already improved, we would expect our CSM to recover accordingly. Our Life operating profit was impacted by FX and also the UniCredit, Vita and the Bajaj disposals. Adjusting for this, the underlying life profit was slightly up. There was also a modest market volatility impact in our investment results. We would expect a portion of those effects to be temporary.

Overall, the life performance has been resilient in the context of a demanding comparison with last year, perimeter changes and as the market volatility we have seen in the quarter. Going forward, the perimeter impact will ease, and we expect an improved life investment results. We remain focused on achieving attractive risk-adjusted returns on new business, and we are confident we will deliver in line with our Capital Market Day targets.

Let's move to Page 7 and have a look at our Asset Management business. There, we had an outstanding start to the year against volatile capital markets. Our net inflows in the first quarter reached a record level for the first quarter, with strong growth at both PIMCO and AGI. Overall, the net inflows of EUR 45 billion correspond to an annualized organic growth rate of 9% diversified across regions and asset classes. And as we speak, this good momentum continues.

Some administration of this at PIMCO, we see continued strong traction beyond the more traditional fixed income strategies for its expanding active ETF suite and broad-based demand also across Asia and Europe. And at AGI, we see inflows across multi-asset, fixed income, equities and alternatives with new mandate wins in Asia, in particular. The product proposition of our asset managers continue to be strongly supported by our value creation for our customers via our investment performance with at least 90% of outperformance on a 1- and 3-year basis across our full third-party asset under management base.

We generated EUR 2.2 billion of revenues, up 12% FX adjusted, driven by the growth of our assets under management. The fee margins are broadly resilient with some temporary impact in the quarter from upfront distribution commissions associated with the strong flows. I am also very pleased with the productivity focus at both asset managers that is evident in an excellent cost-to-income ratio, delivering more than EUR 850 million of operating profit, up 15% on an FX-adjusted basis. It was a volatile period for capital markets in the first quarter, and there was a lot of debate around topics such as private credit.

Overall, our asset management businesses have been selective and very mindful of liquidity considerations, even when growing their private and alternative offerings, their focus in the alternative and private credit space is differentiated and focused around areas such as infrastructure or asset-backed finance. Overall, the current focus on credit and liquidity risk is a tailwind for our asset managers to continue to demonstrate the strength of their offering.

Moving to Page 8 and our Solvency II ratio development. So Allianz, further emerged with a strong solvency ratio at 221% with a 2 percentage point increase versus year-end in a volatile market environment. Beyond the traditional effects like share buyback and the usual dividend accrual, we also have the positive effect that we have announced coming from the divestment of the Bajaj JVs that is coming through. To be highlighted from my perspective are maybe 3 key points. The first one is that we have a very contained market impact. The second one is that we have a very consistent operating capital generation.

And in addition, we had various model updates, which directionally can be hard to predict that came out at a small positive in this instance, you should not assume this to always be the case going forward. So clearly, the underlying drivers of the solvency development are very strong in the quarter with volatility.

Let me move to Page 9. And here, I'm very pleased to announce that from this quarter onwards, we will be including in the backup slides, additional disclosure, providing insights into the performance of our Health and Protection business. As a reminder, we set out a target at our Capital Market Day to grow the operating profit of Protection and Health by a CAGR of 7% through to 2027 to reach EUR 2.2 billion of operating profit by then.

Our Protection and Health business is currently split across P&C and the Life segment with different product features, which is leading to different technical accounting treatments. Our disclosure will develop over time, but they are designed to give more insight into the components of profit and the nature of the products we are selling. On the left-hand side of this slide, you can see that we can segment the business into short term. Typically, that will be annual policies, including medical reimbursement health business, mostly accounted for in the P&C segment with combined ratio as being the most relevant steering KPI for that business. Great example of that will be the International & Travel Health business within Allianz Partners.

On the long-term side, this will include typically our term or whole life that is sold as riders to saving products or the German Health business, which has unique long-term features such as the aging provision. This business is accounted for in our Life & Health segment with the CSM and its growth has been one of the most meaningful steering KPI for the business. The overall Protection and Health operating profit is split roughly 60% long term and 40% short term. Across Protection and Health, we combine a strong global oversight on underwriting standards, product and pricing with customization to local market needs. In particular, we have a global coordination for our Health business through enhanced digital health. This was showcased at our finance insight session of June 2025. And for my perspective, it's definitely a good reference material if you want to get more insights into the Health business.

All our businesses have initiatives in place to further grow and to strengthen technical excellence. Some example of such initiatives are illustrated here in the middle of the page. They cover a broad range of elements such as increased use of digital channels for selling and customer servicing, the use of AI to increase the ability of our agents to underwrite health business or more systematically leveraging cross-sell opportunities to sell health alongside P&C products.

If you move to Page 10, where we are showing some financial highlights for the business, and we are illustrating the new format we will use going forward. You can see the very good momentum in the operating profit, growing 10% year-on-year adjusted for the disposal of the UniCredit JV. On profitability, you can see a healthy combined ratio of around 93% for the short-term business, both within the P&C business, driven in particular by attractive margins in health.

For the business book in Life and Health, our new business and new business margin at a good level but impacted by some scoping effects, in particular, the disposal of the UniCredit JV, the lower level of sales of medical riders in Asia and some additional tax on health and gross premium in France. So the normalized CSM growth of around 1.5% for the long-term business is healthy, and we would expect the business to deliver full year normalized growth, at least in line with the whole life segment.

Overall, the Health and Protection market is a huge market with significant growth potential also as we see selective disengagement of some states from that part. We see a strong appetite for our products also supported by our ecosystems. We are very well positioned and very confident in our ability to meet our Capital Market targets day there.

Let me recap on Page 11. So overall, we had a strong start into the year. If you normalize for the positive effect of the sale of our stake in our JVs with Bajaj, we delivered an excellent 9% core EPS growth, which is at the high end of our Capital Market Day commitments, Similarly, our productivity and our resilience focus is as well very visible in our numbers. I can just very confidently confirm our outlook for the full year of EUR 17.4 billion plus/minus EUR 1 billion.

And with that, I thank you all for your attention, and I hand over back to you, Andrew, for questions.

Great. Thank you, Claire-Marie. Okay. So we're now ready for questions. [Operator Instructions] Okay. So with that, it looks like our first question is from Andrew Baker from Goldman Sachs.

The first one, I guess, just on the reinvestment of the EUR 1.3 billion Bajaj stake sales. Should we assume that the remaining reinvestment will be predominantly from realization of investment losses? And I guess if not, are you able to give a bit more detail on the types of strategic initiatives that you are really playing into outside of this?

And then can you also just help me with the timing a little bit, so for the rest of the year, how would we expect that redeployment to come through? And I guess, would you benefit which business line should we expect the benefits to flow through as well?

And then secondly, just on the Life and Health operating investment result, comment in the presentation talking about the unfavorable impact of market movements on Allianz Life and how some of that should come back in future quarters? Can you just give a little bit more detail on the mechanics behind that and how much we should expect to come back?

So thank you very much, Andrew, for your questions. So on your first one, so basically, you are right. So we have now used the first quarter to do a tranche of realized losses on the bond side. We expect to use the rest of the proceeds actually to balance to support our strategic initiatives and also our productivity initiatives, in particular associated to the AI transformation and the opportunity we see associated there.

And depending on the exact timing of those effects, we will also be rebalancing some of those with also bond realization. So we will -- we are still flexible. It will depend a bit on the exact timing and emergence of the initiative. But -- so the exact allocation is not yet decided as we speak.

When it comes to the exact timing effect, it's also a bit difficult to assess exactly. But what I will do that you can take the remainder and then basically go into 3 tranches until the end of the year. I think it gives you a good view on what may happen on the nonoperating profit side until the end of the year by quarter.

And then when it comes to the line of business, it will be mostly coming into the P&C business as we will -- as we see also some acceleration of those transformation opportunities, I would say, in particular related to AI.

And then you were asking the question on the volatility associated to the -- so -- so I think what is important to have in mind is that indeed, the investment component within the operating profit on the Life and Health side is unusually low for this quarter because we have quite some noise in this line item for the quarter. We have actually almost EUR 60 million negative effects, which are coming from FX and from market and we also have a negative effect, if you want, coming from the comparison, is a positive effect of Bajaj previous year, right, for approximately EUR 15 million. So those 2 FX combined are basically mostly explaining the deviation.

And then if you zoom into a EUR 60 million deviation we have seen from -- coming from FX and for market. Actually, we anticipate EUR 30 million of that to come back over time. And maybe just to give you the big picture on that maybe 2 big pictures on that item, I would say -- going forward, I will say, the investment, the investment line item in the Life and Health business truly in line with our outlook guidance, which is below EUR 500 million. That's basically what you should keep in mind. So there is no -- we don't anticipate that to change.

And on the AZ Life side, what is creating this effect is that because the markets were negative, we have seen volatility as well the hedging costs went up. And basically, those costs actually will also will be deferred over time. So that's why we are going to see this recapture over time.

Next question is from Iain. Iain Pearce from Exane BNP.

My questions were just on the Health and Protection, the new disclosure. Thank you for providing that. Very helpful. Just on the sort of outlook, so is the best way to understand this that you're expecting sort of 4% to 5% growth in operating profit in the long-term business? And does that imply double-digit growth in the short-term businesses? And then also on the disclosure for Q1, so the 550, obviously, that's on run rate for your CMD 2027 target already. So just sort of if you could talk about the performance relative to target and if you sort of expect to how comfortable do you expect to exceed the 2027 target in the health and protection operating profit?

No. So basically, what I expect when you look in terms of relative growth, I expect the short-term business to grow faster compared to the long-term business, which is quite logical as well because the short-term business entails Partners, entails Turkey and Italy, which have faster growth and also then the earning of this growth into the operating profit is actually faster on the short-term side versus the long-term side.

So that's for the sort of overall view. But basically then in terms of -- and the fundamental growth, I expect growth around 8% for the short-term side and basically 6% around the long-term side. And then when it comes to the underlying features of profitability to those business, on the short-term side, I expect the mid- to low 90s type of combined ratio. And for the long-term part of the business, I expect the CSM indeed to grow around 5%, the release is around 8% to 9%, so not so differentiated compared to our fundamental business and the new business margin is obviously well above 5% for that business. So we are on track. That's what I would use. Maybe it's a bit conservative actually at this point in time, but this is still what I will use as overall reference point towards 2027.

Okay. Next question is from Fahad Changazi from Kepler Cheuvreux.

Could you comment on the retail P&C volume growth outlook for the remainder of the year and compare to plan target as well in terms of how should we see that shape? And could you just comment a bit more on what is happening with AGCS, where we had strong internal growth with rates negative, just to see the dynamics and outlook for that business and which lines you're playing in?

Yes. Thanks a lot for your question. Maybe let me start with AGCS, right? So we have a couple of items which are coming through in the growth of AGCS. So we have some booking time effect, so which have accelerated a bit some of the booking in the first quarter, which is showing up with increased growth. And then we have -- we are clearly working on developing our franchise. We have invested into teams. We have strengthened our offerings as well. And we also have new good tools in place, as I was highlighting related as an example to our ability to treat the submission that is really making also a difference in the way we are interacting with the market.

So we have the combination of both sides. Clearly, we are extremely mindful of the environment, and we are growing where we can achieve a good level of what we call APTP, which is actual price against technical price because we see that this is a very nuanced environment, and so you have to be careful in the way you are proceeding.

So I think there are really support and fundamental driver for that growth, but I will also not multiply by 4 the growth we have seen in the fourth quarter towards year-end. Then you were asking the question on the retail volume growth and where this is that we stand? So our volume growth for the first quarter was -- on the retail side was at 2.4%, which is below our ambition of 3% to 4% volume growth for the -- as commented or communicated as part of the Capital Market Day.

What we see, first of all, overall in terms of a positive driver is that we see growth in number of policies and customers across all our major retail entities. Nonetheless, what we have seen is that we have some operating entities where we had -- despite the fact we had the good momentum, we are slightly below target linked to some seasonality effects. So that's typically the case for Germany and France.

In some of our operating entities, we see clearly very good traction like the U.K., Italy or typically our platform business. We are double-digit growth, although in retail there, in direct partners of retail as an example. So we are on it. I think clearly, we are working on our Capital Market levers, still lot of work to be done. I think as we mentioned before, there is a very strong focus from the organization. We are very confident we are going to get there, and we see in the underlying really good momentum.

Next question is from William. William Hawkins from KBW.

I'm checking in with all the companies on expense leverage after some work that KBW has done. And I mean, one observation is that you seem to have remarkably low expense ratios in Germany and America, which is good, but I'm still trying to sort of figure out. Leads to 2 questions. Where in general, do you think your expenses are best of breed and where do you see the need or opportunity for meaningful improvement in expense efficiency across the business units?

And then secondly, please, when you're thinking about the impact of expense management on your EPS growth targets, do you ever envisage admin expenses actually falling as a profit driver? Or is this always going to be a relative game of making good investments so that your expense ratios may be improving, but the absolute number isn't coming down?

So I think, first of all, I mean, we are -- there are clearly like 2 components in our expense ratio, where -- admin and the acquisition part. And we are focused overall as an organization on the delivery of the 30 bps improvement year-on-year, which we think is very distinctive and is also a very strong driver also of our ability to work and to sustain some of the growth trajectory we want to achieve because part of that, and that's also associated with some of the AI actions we are doing today is that there will be benefits as we are working in terms of customer experience, optimizing the processes.

As part of that, basically, productivity becomes a sort of a byproduct of the optimized processes that then we can reinject into making our product in terms of pricing points as attractive to fuel the growth, which is a very important item. Then I mean I'm not so sure which expense ratio you did look at for the U.S. because we don't have a U.S.-based really business. They are part of our global lines. So I will not really look at that. So I'm not so sure. But basically, what we do in general is that we are -- we benchmark our businesses quite fundamentally within their own markets, also against best-in-class peers and then against internal benchmarks and what we -- and that's a part of a challenge we are operating because we believe it's also key to the strategy I was highlighting, in particular, on the retail side.

Now how this is going to evolve going forward? I think it's too early to say. But at this point in time, I would just take our 30 bps improvement as being the base until year-end 2027. And then we will further communicate on that aspect as we also see how AI overall is also providing support to our processes.

That's really helpful. If you allow me just to come back, so my observation about America was about life, not about Non-Life. And I did just wonder, beyond the 30 basis points you're talking about in non-life, which is clear and great. Do you have any similar observations about on the Life side of the business, please?

Life is always a bit more tricky, but we also actually do have -- we also look at different productivity KPIs for our Life business. So we have multiple KPIs we are looking at against reserves, in terms of unit costs and so on and so forth. So we look at different elements. And we do have targets that we are also balancing also in terms of impact overall. So I mean if you take -- and some of our business are definitely best-in-class by far and obviously we'll have an unbeatable unit cost that is also very supportive for some of the future strategy development. AZ Life is also doing really well. And we continue to look at it because we believe it will be a differentiator going forward and so on and so forth. So we also challenge our businesses because, again, the fundamental logic of having better competitiveness in terms of productivity is also a fuel for customer satisfaction and for growth.

And William, I think we've discussed the mix effects in your comparison on Life expense ratios are massive between savings and protection as well, which I think might impact some of your regional comparisons.

Our next question is from Ben. Ben Cohen from RBC.

I wanted to ask on 2 things. Firstly, on the P&C side, on the commercial rate, it looked like the sort of -- the improvement there was slightly stronger, plus 2% in the quarter versus plus 1% for the full year. I know that's a small change. But could you say anything about whether you are seeing better momentum in terms of commercial pricing across the book. And specifically, in terms of geography on the P&C side, could you talk about the very strong improvements that there have been in the combined ratio, both in the U.K. and in Italy, in particular. And I suppose in the U.K. was a bit surprised because others have talked about how competitive the market is, in general, both on the personal and the commercial side?

Sure. So on commercial rates, overall, so indeed, for the quarter, we are at plus 2% for the commercial scope. The main driver of that is actually the MidCorp business, where we have seen a bit of strengthening of rate across some of our portfolios now leading to MidCorp a plus 4% rate increase overall. I think it was driven by specific markets on top of my mind, I would have Germany in mind as an example, but we have a few others where -- where there was a need to inject some further price increase also from a market perspective.

I want to highlight that on maybe businesses like more the AGCS business for us is approximately 15% of a -- bit less than 15% of our global top line, right? There the cycle is definitely not over. We clearly see that there is some of the line of business or regions that where competition is fierce. I will put it that way and where our rates are softening that good example of that will be property large businesses. As an example, financial lines also continue a bit on that path, and we see some improvement in some other line of business. But clearly, that's a very nuanced landscape on the large corporate side, large corporate and specialty side.

And then -- and then you were asking some questions on basically the combined ratio improvement, right? First of all, I think you were asking for the U.K., I think. So in the U.K., what we see that there has been a lot of work associated to expenses management overall, so productivity focus from the U.K. team. Also a lot of rationalization that is coming through. Also, as you can see on the page I think B14 the nat cat impact is contributing positively to this development of the combined ratio is actually the main driver of that.

And in the underlying, Allianz U.K. has been cautious when it comes to runoff in general. So I think that's the main driver. So I would say in a nutshell, I will say, good focus on transformation on the U.K. team showing up in the expense ratio and also mainly benefits from the nat cat side, while still being from a technical perspective, quite conservative.

And then on Italy, so what we see there contributing to the development. First of all, I think very good development when it comes to the expense ratio, which are flowing through, also some of the mix effects related to some of the acquisition from that perspective. And also the fact that they had simply a very good also experience during the first quarter that came through into the attritional loss ratio. So overall, I think the Italian team is doing an outstanding work when it comes to technical excellence and balancing basically selection and growth at the same time.

Next question is from Michael. Michael Huttner from Berenberg.

One is the capital generation, the 6%. I know every time I ask you, we say, no, no, it's the numbers are too high, you should normalize it, but you keep beating it. And from speaking to [ excellent IR ], it sounds if it's more structural now. Can you say a little bit what's changed here? And the other one is kind of a big broad question. You're going to be very disappointed. But [ Sam ] said that this morning, AI is incredibly cheap at the moment because basically, the AI providers are providing it at below cost, but it might go up in cost once it's embedded. And -- but you sound as if it's very expensive, but putting the question really simply, what's the payback assuming on these investments? Just again, a feel for it? And then just another question, I know it's tricky. What's the number for PIMCO or inflows in April?

Okay. On the flow question. So -- so I said -- I did mention, right, that the momentum is continuing. We are in the low double-digit net inflows as we speak at both AGI and PIMCO. Yes.

Quarter-to-date or monthly?

No. Quarter-to-date, but we are still like it's...

Yes, that's collectively the aggregate of the total.

Okay.

And there is a delay as well in the report, but basically, that's quarter-to-date. And then I think you were asking the questions on the cost of AI, right? So I think the way we look at it is that I mean from my perspective, it depends. You have to nuance a lot the cost of AI from one type of tool to another type of tool depending on what you are using it for. So I think it's a very generic sentence, well, because the reason why I'm coming from that angle is that if you think about it, the way we are using AI, we are using it along the value chain to optimize in most cases, our customer experience.

And what is happening is that sometimes you need a voice, sometimes you need something that is more image related, so you have very different type of AI agents you are using, and they come with different price points. Where I agree is that we are building our processes and the optimization of our processes in a flexible manner. So we usually put in competition 2 different providers we select one. But we don't want to be constrained because that technology is evolving very fast. So we want to be in a very -- in an easy way, capable of replacing that technology with another technology, if you want.

And then the way we are looking at it is that we are looking at the value delivered against our overall target, all along of those processes, if you want. So I cannot really say it's cheaper, it's not cheap because some of that is cheap. Some of that is not cheap depending on what you are looking at. What matters from my perspective is what is it that we are really delivering in terms of impact fundamentally into the various business cases. And that's the way we look at it.

So I think on the OCG side. So first of all, thank you very much. As you know, have been working a lot as an organization on making progress on driving operating capital generation. And we see indeed that there is good value creation across our businesses. The reason why I will not say you can always take that number and then multiply it by 4 and have it available, is that there are always various components that are coming into the OCG. So you may have a bit higher growth, as an example, in some markets, which is consuming bit more capital, while value creation is going to come later on. You can have different mix effects.

So just maybe if you compare this quarter compared to same quarter last year, as an example, this quarter, we had less capital consumption in the Life and Health while we had more capital consumption in P&C as we had some mix effects that did come up into that number. So where I'm with you is that there is clearly focused, there is clearly steady and good value creation into the OCG as well just by nature and given the KPI like some volatility associated to the underlying of what's happening with our business, and we will always have that. So that's why I'm very confident with a strictly above 22 percentage points we have communicated and we continue to strive for a good development in that KPI.

The next question is from William. William Hardcastle from UBS.

You mentioned that you remain cautious on the initial loss picks for the uncertainty on inflationary risk at this time. I guess with that line, are you suggesting it was perhaps more caution than normal in light of the near-term inflationary risk when you booked this quarter or just a similar level of caution and you're just flagging it at this stage?

The second one is, first of all, thanks for mentioning some AI use cases we've been at risk of not actually discussing AI or much through the results season this time around. I wanted to get an understanding how you're ensuring you're staying ahead of competition in the use of AI beyond just that heavy technology spend? And do you have a strong view at whether the scope of gaining an edge over competition here is greater in retail or commercial. It sounds like mostly you're pointing to retail.

So maybe let me start with your first question. So I was alluding to 2 points with my comment. There is one which is, obviously, at the beginning of the year, we are generally more cautious when it comes to the accident year loss ratio pick in particular because we have less evidence before being capable of reflecting how the year has unfolded. So actuaries tend to be more conservative. So that approach we have kept and that's definitely into our numbers.

In addition to this one, given the overall environment in the Middle East, we have also done both bottom-up and top-down scenarios on what the implication of the situation in the Middle East could have on our reserve strength. And we have also further added, if you want, to our inflation buffer reserves that we had also already in place previously, where we have contributing -- we have contributed in addition in the first quarter to that one.

Now to your question on AI development and how we benchmark ourselves against competition. I will say -- we -- I mean we are fundamental -- I will say, first of all, I think we are ahead of our competition from a different angle. I mean if you look at our Capital Markets Day presentation that was 1.5 years ago and what we were presenting already in terms of how an optimized customer experience is looking like when you use AI. It's actually already quite striking. That's a presentation from CMD, and you also have quite some insights in terms of what we were already doing in the presentation from Klaus-Peter. And from there, I think, clearly, our further enhancement and developments have been accelerating themselves because the technology is faster and we see an acceleration of impact and also the new technology and the ability to replace the already-used technology with new technology is actually quite tracking.

Then I would not differentiate so much actually between retail and commercial, we see within commercial striking examples of what we can do within partners. As an example, I mentioned those OEMs relationship we have onboarded, all of the relationships have actually been onboarded with 0 added employees, we do that 100% AI, agentic AI-driven that's very impressive already today. I mentioned within Allianz Commercial, all the developments which are done along the value chain when it starts to submission, but also to booking or claims processing with AI also extremely impressive as we speak.

And then on the retail space, we are working more around verticals associated with BNP approach. So basically, our platform where we are embedding actually AI within the common vertical so that the operating entities can tap into it. From what I see, I think it's pretty distinctive. It's also pretty distinctive in terms of product offering overall. And we see that in some of the pickup of those products, yes.

Next question is from Andrew Crean from Autonomous.

A couple of questions. Firstly, on the retail. Looking forward into the second half or to the back end of the year, what are you expecting in retail pricing relative to what you're expecting at the beginning of the year? My sense -- I suppose the background of the question is the Iran war and worries over inflation will have made you think that actually you need greater resilience and that the tough market or strong market in retail will continue longer?

And then secondly, I just wanted to ask on the commercial lines combined ratio. I mean there's a good improvement about 1.4 points to 90.3%. Could you give us a sense as to what the commercial lines current year attritional core looks like first quarter to first quarter, making that allowance for the change in balance between PYD and attritional?

Yes. On your second question, you know that normally, I don't like so much to comment in the underlying. But basically, I can tell you that it's more or less flat year-on-year on the commercial side. Then when it comes to retail pricing. So -- so indeed, I think like -- so first of all, we are comfortable at this point in time where we are in terms of pricing against inflation trend, right? And you know it's different, and it has to be nuanced also by geographies and for different type of products. In particular, if you look at markets like U.K. or Australia, different situations come to France, Italy or Germany and so on and so forth.

You are right that, I mean, we are observing very carefully the inflationary trend in the current environment. So we have further reinforced what we call the triangle between pricing claims and reserving to be able to react very clearly. We are ready to price up as required. We also feel comfortable that the market is ready to do so in the current environment.

At the same time, we are also exercising a lot of nuances, I would say, from triangle. We have even more precise technical abilities, which allows us to have even more nuanced price increases. We also have an ability to reprice that is much faster, as an example, compared to the post-COVID environment. And we continue to push a lot on our distinctive assets, in particular, related to our ability to reduce cost of claims also tapping into our platforms, like so typically, what we can achieve there is a very good example of that, but also what we can achieve there basically optimization of our processes. Ultimately, what we really want to do is to balance the 2 and then to reinvest as required also into pricing power to fuel the growth, so basically to maximize value creation. That's the way we want to work with that.

Okay, we're around 2, which I'm allowing because it's -- it's a relatively light run to with the minute. So Michael, your first one round 2, for your second question is Michael Huttner from Berenberg.

The -- so low reinsurance costs, is that coming through? And amazing Germany, maybe you can give us a feel for -- are we going today at 87.6%. This looks -- I've never seen this before. The -- that's it.

Thank you very much. I think like -- so I think commenting on reinsurance ratio, I will not do right because from my perspective, reinsurance ratio have always difficult topic because you also have like topics associated with the recoveries. On balance, we expect given how the reinsurance round went at year-end to see supportive development from that angle into our performance for the year.

And just to give you a feel for the direction of my question, AXA said see 2 weeks ago, it was almost material, i.e., almost 5% on the earnings. Would it be the same for you? .

I cannot comment on the views of AXA on the technical numbers. I think for me, reinsurance ratio, in our case, I find -- I mean I will see difficult to go along those lines, given the underlying elements that are going into the reinsurance ratio. But we are very confident given what we have achieved in terms of reinsurance and if it's at one that this is going to be supportive of our performance.

And then Germany, indeed super. I'm glad also you highlighting it, I think we also need to praise other operating entities, right? When we look at this Page 14, which is really, really nice to look at, right? I mean I will not -- I cannot predict where Allianz first is going to finish the year, but they are clearly on a very strong performance track both when it comes to underlying technical excellence, but as well when it comes to their growth trajectory. So we are very proud of the business as we are, I think, as well very proud of many of our businesses, I name a few already, but we have a lot of very strongly performing entities. I also want to highlight, as an example on this page, super nice performance of Allianz Trade as well, which we are not always naming, but it's also very impressive with an 80% combined ratio in the first quarter.

We have a quick follow-up from William from KBW. .

I'm so sorry. I know it's bad form, but I kind of feel I've got lost in the detail on this discussion about underwriting. So just can I come back, the outlook for the combined ratio, you guided to 92% to 93% for the full year. and yet you've just printed 91%. And everything that I've heard you talking about is all about conservatism in loss picks and normality of reserve development and the rest of it.

So I just wanted to kind of cut to the conclusion. Are we getting a message that you're comfortably running out of your guidance already? Or what are the obvious things that's going to drag you through to the end of the year? Maybe I'm just underappreciating nat cats, it's been a light quarter and the rest of the year is going to be tough. But can you tell me with the overall punchline here about why 91% is a good against your guidance?

So basically, indeed, in our guidance, we have communicated 92% to 93%, the 92% to 93% being the guidance for the combined ratio. If you look at our 91% for the quarter, if you neutralize all the other effects, right, and you look at it and you step back, it has benefited from a lower level of natural catastrophes. So if you normalize for nat cat, we are basically in this 92% to 93% range of combined ratio. So this is only Q1. So I will -- I feel very comfortable with our guidance, 92% to 93%. We are definitely on a very strong track. But I think it's too early for addressing -- adjusting that guidance as things stand.

Okay. And next question, apologies I didn't see you on the queue, though. -- your first round of questions, Vinit. Vinit Malhotra from Mediobanca.

So my 2 questions, please. One is on growth and one is on pricing. On growth, if I could just maybe follow up maybe just get a bit more because when we talk about Germany, for example, we've always talked about how retaining customers, how getting more customers, so more retail focus as well. And I think you mentioned earlier in the call that there was a bit of slowdown in the retail side in Germany. Could you help us understand that?

And just staying on the growth topic, sorry, just a little more. The commercial growth, 6%, up from 3% in 4Q and pricing was only 2%. So you said you're comfortable with the business, but is that just to reiterate, could you just clarify that exposure kind of growth, if you like.

And on pricing, when I look down the pricing data between 12 months and 1Q, all many OEMs are reducing pricing or seeing lower prices. Obviously, inflation is the risk you mentioned, you just highlighted, you added to the buffer. Is that -- isn't to be expecting -- are you expecting it to change this direction of travel of pricing? Or what do you think is happening there?

So let me start with growth. So what I wanted to say when I was answering -- starting with growth in retail. What I wanted to say is that we see that there is -- on the volume path clearly strong underlying dynamic within our operating entities. And there is a very strong focus on the execution of what we call the growth [indiscernible], right, this new business, retention and cross-sell, so that's what we see across the businesses, and we see a very good peak of that momentum in the underlying businesses. And that's what we have also seen in the second half of the year starting on.

What we have seen as well in the first quarter sometimes is a bit more of some of -- some seasonality effect, if I may put it this way, related to mix when the business is coming up for renewal and what that means, and that also has contributed to some of those lower volume effect in our German business, in particular.

So during the -- as the year is going to unfold, there will be a catch-up that is going to contribute to volume growth of our German business as the year unfolds to be precise. Then on the commercial side, we have indeed a good internal growth that is resilient. We are around 6% for the entire commercial business. And there, we have different businesses, right? So I think you need to have that in mind. We have our partner business. We have Allianz Trade that has seen also growth development in short, as an example, we have Allianz Re, which also has seen good growth, which is like you know this type of transactional business.

And then within AGCS, we have the elements I was mentioning. So this catch-up effect, which is more technical effect, I would say. And then secondly, this appreciation of the franchise, the new tools being in place and a different way of engaging with the market and all of that being done being extremely cautious in the overall pricing environment. So that's where we are. And sorry, I realize I did not answer your question on -- no, sorry, coming in to your question on pricing.

When it comes to retail, I think my answer will be nuanced, right? I think we are ready to increase prices. We are -- we feel confident we can do so for the various reasons I was mentioning in terms of technical ability to do and operational ability and feasibility into the system. And the same point, the fact that we want to maximize value creation. So we want to optimize the price against the volume, and that's basically what we are aiming at. So I cannot predict exactly how the markets are going to react and what would be the inflationary effect in each and every market. So that will depend on that. And then we will be doing that optimization. I think that's the way to look at it.

Thanks, Vinit. We have no more questions in the queue. We had one question by e-mail to the team. Just to clarify a comment made about our flows, net asset management flows since the quarter end. So to clarify, it's low double digit for the Asset Management segment. So the combination of AGI and PIMCO. So momentum continues for the segment at that level.

With that, we have no more questions. So thank you very much. This concludes today's analyst call on our 1Q 2026 financial results. Thank you for your participation, and goodbye.

Bye-bye, everyone.

Good morning, everyone, and welcome to Allianz's First Quarter 2026 Media Conference Call. Thank you very much for joining us today. My name is Frank Stoffel, Head of Financial Communications and Valuation Relations, and I'm speaking to you from our headquarters here in Munich.

I am joined today by our Chief Financial Officer, Claire-Marie Coste-Lepoutre.

Before going into the presentation, let me briefly cover the usual housekeeping items. We will answer all questions in English. However, if you feel more comfortable asking your question in German, please feel free to do so. We will then repeat the question in English for everyone else on the call. [Operator Instructions]

Today's conference call is scheduled for 60 minutes. And as usual, we will answer your questions following our presentation by our CFO. With this, Claire-Marie?

Thank you very much, Frank, and good morning, everyone. Let me start with an overview of the group results for the first quarter of 2026. So the overall picture from my perspective is one of a strong start to the year, which allow us to reaffirm our full year outlook of an operating profit of EUR 17.4 billion, plus/minus EUR 1 billion. We can confidently do so despite an elevated market volatility and a more uncertain macro environment.

Across our 3 strategic levers: growth, productivity and resilience, we continue to execute with discipline and to deliver towards our ambition.

Moving to the numbers on Page A4. Here, you can see, overall, our business volume continues to show steady internal growth, driven in particular this quarter by our P&C and Asset Management segments. The Life business was resilient against the first quarter 2025, where business volume were particularly high back then.

Our operating profit momentum is excellent, nearly 7% year-on-year with -- where we see more benefit from the diversification of our business model. Here, we see, in particular, a double-digit growth in P&C, which is reaching a new record level of operating profit, an excellent performance in Asset Management, which is up 6% or 15% if you adjust for FX. And Life delivered a resilient performance even if it has been impacted by FX and the disposal of the joint ventures with UniCredit and Bajaj.

Our net income includes the impact of the completion of the Bajaj disposal for EUR 1.1 billion net. As a reminder, we have indicated in the fourth quarter that we will neutralize this accounting gain over the course of 2026 through strategic and productivity actions and reinvestment into higher-yielding instruments. Only a modest offset of EUR 150 million net was booked in the first quarter and more will follow through -- during the year.

Adjusted for the Bajaj impacts, our underlying core net income achieved a strong increase of 7% year-on-year with an ROE of 18% and an excellent EPS growth of 9%. So beyond these exceptional effects, the fundamental performance is very strong and fully on track towards the Capital Market Day ambition.

Finally, our Solvency II ratio ended the quarter at 221%. This is a very resilient level with well-contained market volatility and consistently delivered strong operating capital generation.

Let's move to P&C on Page A5, where you can see, first of all, that our top line momentum continued at a pace that is in line with 2025. Our internal growth is at 7% with a split roughly 50-50 between price and volume. As you can see in the further detailed pages, the growth across the P&C portfolio remains well diversified. Maybe some standout contributors for this quarter, you will see, as an example, that our platform businesses such as Allianz Partners and Direct have been both growing double digit. We have a strong new business in Germany, and we have also selective growth in commercial where pricing meets our hurdle rates.

Across the organization, we continue to focus on our growth [ 3-year ] plan, new customer growth, increased cross-selling and churn reduction. Our underwriting profitability is excellent with a combined ratio at 91%, supported by both retail and commercial. This outcome reflects a broadly benign nat cat environment for the quarter, but more importantly, a robust underlying underwriting performance and an ongoing improvement in the expense ratio. The sustained top line momentum and the further improved combined ratio drives our 11% operating profit growth, reaching an excellent EUR 2.4 billion operating profit. The investment result is broadly flat. We also continue to leverage AI across the P&C value chain, as we have been explaining also in the fourth quarter results from marketing and distribution of new business through to claims management. So basically, broadly, the main focus is on customer experience and also distinctiveness of our product offering so that we can fuel our growth trajectory.

A couple of examples maybe of what we have further tapped into during the first quarter. As an example, on Allianz Partners, we have onboarded several new large OEMs relationships where we support -- which are fully supported by Agentic AI tools, in particular on the roadside assistance side, which is by significantly scaling our straight-through processing of claims.

In Italy, in France, and Spain, as an example, we have AI tools that are supporting our agents to provide training or real-time support in assessing the risk via AI experts, and this is boosting customer service and productivity at the point of sale. Similarly, in commercial, our submission hub allows for a much faster and higher quality answers to submission via preparation, enrichment and best allocation to underwriters. This is generating significant impact both in response time and conversion rate.

So overall, I'm very pleased with the P&C performance this quarter. We see good growth, excellent and robust underwriting profitability across both retail and commercial.

Let's move to Life & Health on Page A6, where the underlying performance of the segment is, from my perspective, considerably stronger than the headline momentum might suggest. The new business comparison versus previous year is impacted by a very high base in the first quarter 2025, which included large tickets in Germany, strong Thailand sales ahead of regulatory changes in medical -- on medical riders and the UniCredit JV business, which has been disposed in the second half of 2025.

Adjusted for those impacts and the FX effects, the underlying new business volumes are slightly up and the new business value is broadly stable with an attractive mix with Protection & Health and unit-linked contributing to 60%.

To illustrate a bit some of those strong developments versus last year, in Italy, as an example, the new business value is up, net of minorities and including associated fees, with strong unit-linked growth through financial advisers. New business in Asia, excluding Thailand, is up 12%, and we see a continued strong momentum in Health Germany with a continuing double-digit new business value growth.

On the Life CSM development, we can see that despite the lower new business value, the expected in-force return still exceeded the release, generating a healthy 1.7% normalized growth. Our Life operating profit was impacted by FX and the UniCredit and Bajaj -- UniCredit Vita and Bajaj disposals. Adjusting for this, the underlying Life profit was slightly up.

So overall, the Life performance has been resilient in the context of a demanding comparison with last year, perimeter changes and the market volatility seen in the quarter. We remain focused on achieving attractive risk return profile on our new business, and we are confident we will deliver in line with our Capital Market Day targets.

Moving to Page A7 and the Asset Management business. There, we had an outstanding start to the year against volatile capital markets. Our net inflows in the first quarter reached a record level for the first quarter with strong growth at both PIMCO and AGI. Overall, the net inflows of EUR 45 billion correspond to an annualized organic growth rate of 9%, diversified across regions and asset classes.

Some illustration of this. At PIMCO, we see continued strong traction beyond the more traditional fixed income strategies for its expanding active ETF suite and broad-based demand also across Asia and Europe. At AGI, we see inflows across multi-asset, fixed income, equities, and alternatives with new mandate wins in Asia, in particular.

The product proposition of our asset managers continues to be strongly supported by our value creation for our customers via our investment performance with at least 90% of outperformance on a 1- and 3-year basis across our third-party AUM. We generated EUR 2.2 billion of revenues, up 12% FX adjusted, driven by the growth of our assets under management.

I'm also very pleased with the productivity focus at both asset managers that is evident in an excellent cost/income ratio, delivering more than EUR 850 million of operating profit, up 15% on an FX-adjusted basis. It was a volatile period for capital markets in the first quarter, and there was a lot of debate around topics such as private credit.

Overall, our asset management businesses have been selective and very mindful of liquidity considerations even when growing their private and alternative offerings. Their focus in the alternative and private credit space is differentiated and focused around areas such as infrastructure or asset-backed finance. Overall, the current focus on credit and liquidity risk is a tailwind for our asset managers to continue to demonstrate the strength of their offering.

Let's move to Page A8, looking at our solvency ratio development. It has now further emerged with a strong solvency ratio at 221% with a 2 percentage point increase versus year-end in a volatile market environment. I think on this page, beyond the announced Bajaj share buyback and the usual dividend accrual effects, the additional interesting points for me are the fact that, first of all, we have a very contained market impact. And secondly, that we have a very consistent operating capital generation. So, clearly, the underlying drivers of the solvency developments are very strong in the quarter with volatility.

Let's move to Page A9. Here, I'm very pleased actually to announce that from this quarter onwards, we will be including in the backup slides, actually additional disclosure, providing insights into the performance of our Health & Protection business.

As a reminder, we set out a target at the Capital Markets Day to grow the operating profit of Protection & Health by a CAGR of 7% through to 2027 to reach the EUR 2.2 billion operating profit by then. Our Protection & Health business is currently split across P&C and Life segments with different product features, leading to different technical accounting treatments. Our disclosure will develop over time, but it is designed to give more insight into the components of profits and the nature of the products we are selling.

On the left-hand side of this slide, we provide some more details on the products in the various segments. This is a broad offering with some key highlights -- highlight products like our new dental offering in Health Germany or our Health Travel coverage at Allianz Partners, both being accounted in different parts of the split between short-term and long-term product.

Across the Protection & Health businesses, we combine a strong global oversight on underwriting standards, product and pricing with customization to local market needs. In particular, we have global coordination for our Health business through Allianz Digital Health. This was showcased at our Allianz Insights session of June 2025 and a good reference material from my perspective, if you want to get more insights on our Health business.

All our businesses have initiatives in place, as you can see in the middle of this page to further grow and to strengthen technical excellence. Some examples of that will be, as an example, that they cover a broad increased use of digital channels for selling and customer servicing, the use of AI to increase the ability of agents to more quickly educate themselves and to better sell our Health proposition and more systematically leveraging cross-sell opportunities to sell Health alongside our P&C products.

Let's move to Page A10, that is actually showing some financial highlights for the business and also illustrate the new format we will use going forward in the backup. You can see the very good momentum in the operating profit, growing 10% year-on-year, adjusted for the disposal of the UniCredit JV. On profitability, you can see a healthy combined ratio of around 93% for the short-term business booked within the P&C business, driven in particular by attractive margins in Health.

For the business booked in Life & Health, our new business and new business margin are at a good level but impacted by some scope effects, in particular, the disposal of the UniCredit JV, the lower level of sales of medical riders in Asia and some additional tax on health insurance premiums in France.

The normalized CSM growth of around 1.5% for the long-term business is healthy, and we would expect the business to deliver full year normalized growth, at least in line with the whole Life segment. So overall, the Health & Protection market is a huge market with significant growth potential also as we see selective disengagement of states in that space. We see strong appetite for our products also supported by our ecosystems. We are very well positioned and very confident in our ability to meet our Capital Market Day targets here, too.

Let me now recap on Page A11. So overall, we had a strong start into the year. If you normalize for the positive effect of the sale of our stake in our JVs with Bajaj, we delivered an excellent 9% core EPS growth, which is at the high end of our Capital Market Day commitments. Similarly, our productivity and resilience focus is as well visible in our numbers. I can just confidently reaffirm our outlook for the full year at EUR 17.4 billion, plus/minus EUR 1 billion.

And before I hand over back, Frank, I would like to thank all our employees for their work and their engagement in delivering our results this quarter again. With that, I thank you all for your attention, and I hand over back for questions. Frank?

Thank you, Claire-Marie. [Operator Instructions] Okay. A question has reached us via email. It's from Stephan Kahl at Bloomberg, and we will read it out on your behalf. And Stephan is asking, how important is Asia Pacific for Allianz's growth ambitions in insurance? Does the company pursue any deals in the region, particularly inorganic growth?

Thank you very much, Frank, for that first question. So our M&A focus, as we have mentioned, is along, I would say, 3 lines, right? The first one is looking at P&C and is looking at making sure we are at the right scale in the markets and we need to understand markets in the broad sense of the term, where we are not in the top 3 or top 5 where we definitely need the scale to be capable to operate our machine, we believe, and to gain the traction we want to gain.

And an interesting development from my perspective along those lines is that last year, we have been looking at multiple M&A options. And what was clear is that we have an ability to grow organically that is very strong and sometimes really not making sense against other options in the markets that are offered, that are definitely too expensive versus what we are capable of delivering ourselves.

The second angle is a geographic angle. So typically, Southeast Asia will be one in terms of further rebalancing our geographical distribution across markets. So Southeast Asia is a prominent one from that angle. And you know that as well from what we have been looking at in Singapore, in particular, historically, but that's an important area of focus too.

And the last angle is more related to distribution in general. So that's basically the way we are looking at M&As across our portfolio. And there is nothing in particular to be added. We don't comment on specific elements.

Thank you, Claire-Marie. The next question comes from Tom Sims from Reuters.

Yes. Hello, can you hear me?

Loud and clear.

First, a question about artificial intelligence. Some big financial firms are hoping to get access to Anthropic's Mythos, is Allianz one of them? And if so, when do you expect to be able to use it? And what preparations or precautions are you making if you consider some sort of a security concern?

And second, a question about private credit. And forgive me if this is something that you've already elaborated on in detail in the past. But what exactly is your private credit exposure? And where exactly is that located? And if you can quantify it in some way and maybe whether you're seeing any redemptions at funds?

Sure. Maybe let me start with your second question related to private credit. I can refer to you as well -- and in our full year publication in the analyst presentation, we have a page called C51, where we provide full transparency into our non-traded basically private debt portfolio, where you can see basically the way we are operating.

And maybe before I elaborate on the structure of that portfolio, let me start with the fact that we have been operating in the private debt environment for many, many years. So for us, it's an area where we feel comfortable to operate and it's also an area where we feel comfortable to operate, because when you think about basically the credit risk, it's a risk we know well, and we understand well. We are the owner of PIMCO. We are also the owner of Allianz Trade, which both are dealing extensively with credit risk. So that's an area we understand particularly well.

Now if you look at the structure of our private debt portfolio across the Allianz Group, as displayed on this page C51, you will see that a large part of that portfolio is actually very boring and very plain vanilla portfolio. More than almost 50% of that portfolio is real estate related. As an example, 27% of our portfolio will be retail mortgages, where we expect actually pretty low return between 3% and 4%. So that's not aggressive type of returns we are expecting there. And those are retail mortgages, we are operating since many, many years, mainly in Germany and in the Benelux as an example.

Then we do have also some infrastructure debts. And infrastructure debts, they are actually also of low risk. They are more than 85% investment grade and they are really long-dated infrastructure debts, most of them also with guaranteed coupons feature, which are really supporting the quality of the investment.

We also do have a private placement part of our portfolio, which is also almost exclusively investment grade, which is highly diversified with more than 1,500 companies, with a strong focus on the U.S. and Europe, and that's almost exclusively managed by PIMCO, AGI and also Voya. So the riskier part, if you want, of our non-traded debt portfolio is the middle market lending where we expect also higher return, commensurate to the slightly higher risk we are taking in that portfolio, so between 7% and 8%. That's what we expect. And this is a portfolio that is extremely diversified and that we have been operating historically only with very few and selected partners we like. And we have a dedicated way of operating that portfolio, which means usually we are the sole lender on the risk so that we can operate in particular, the workout, if there is a need to operate the workout in a different way, which is securing also the level of losses we are planning with.

So just to give you a sense of the quality of that portfolio. So historically, that portfolio has been operated with 20 bps loss experience, while we are pricing. So we are expecting in what we are pricing for more than 100 bps of loss experience. So -- and at this point in time, we don't see new movements or relevant movements to be mentioned that we have experienced in the first quarter. So there is no deviation, if you want, versus what I have communicated at year-end when it comes to that portfolio.

And any further details you would want to go into for that portfolio, please don't hesitate. We are happy to answer.

Now coming to your question on Anthropic. So indeed, you're right, we have a specific partnership with Anthropic that cover a number of elements. And please understand that we are not in a position to comment on what are the features of our -- what are the specific feature of our relationship with Anthropic. So we are not in a position to comment.

But maybe what I can add to your question is that we are extremely engaged as a group on managing, monitoring, understanding the cyber risk, clearly. Cyber risk are evolving extremely fast. So we are developing option solutions constantly, and we are also engaging constantly with the best possible providers and peers to be able to basically operate and ensure that we are well coping with that rising risk environment.

Okay. And that sort of sounds like you're testing it now. Is that the right assumption?

I cannot comment on specifics.

Our next question comes from Susanne Schier from Handelsblatt.

Good morning. Can you hear me?

Loud and clear.

Good. There was one interesting question at the shareholders meeting, namely, how you want to measure whether investments in AI and digitalization will pay off in the future. Could you please give a little bit more insight on that? And a second question regarding cyber. Why did you decide to give the commercial business to Coalition? Is the segment not attractive enough for Allianz to operate it on your own?

Thank you very much, Susanne. Let me maybe start with your second question regarding coalition or the partnership with Coalition. So I want to start first by being very clear that we have not sold our cyber business. We have entered into a partnership with Coalition, which basically is bringing benefits to both partners and a strong value proposition to our customers. It allows greater capacity to offer this important coverage, which we are convinced is a very important risk. We need to provide support towards or against to support our customers. This is -- but as you know, this is a risk that is extremely technical and that is also extremely fast evolving.

And so we have decided to partner with Coalition, which is well known for its excellent technical expertise and service capabilities the cyber space, which includes, as an example, best-in-class underwriting based on sophisticated stress assessment that they have a proprietary and quite distinctive way of doing. So what we have decided to do is actually, we have decided to delegate the underwriting under certain conditions to Coalition. But the business is actually underwritten on our own balance sheet. And this is a partnership we are very happy to engage into and to sign, but -- and we expect it to last at least 10 years.

So from our perspective, definitely, this partnership is enhancing the expected profitability and the scalability of the Allianz Commercial offering associated to cyber. Also, we expect this extension to support in reducing volatility. And on the side of Coalition, they clearly benefit from the access to our network, which is extensive, obviously, across our geographies. They also benefit from our brand and also from our various expertise when it comes to underwriting capabilities. So we really think it's a very good marriage of basically partnership, and Allianz is clearly providing the capacity to support the growth in a very important market and to be there for its customer on that dimension as well.

Then maybe on your first question on AI return. So the way we are leveraging AI currently is, as I mentioned, right? So basically, we are leveraging AI all along the value chain with a view of enhancing our processes and also the customer experience and the quality of the distinctiveness of the products we are offering to our customers. So it allows also to do hyperpersonalization of certain features, which are adding a lot of value to the customer experience. So while we are looking at multiple KPIs when it comes to the performance of our business, also how more productive business is becoming and those type of dimension. AI is just one component out of it. So we are looking at it comprehensively, I would say, not in a stand-alone isolated manner, because that would not really make sense to us against our overall ambition.

The next question comes from Florian Muller, Financial Times.

It is on the impact of the conflict in the Middle East/Iran war. Did Allianz have any impact? And how do you see it going forward in your business? Where exactly do you see the biggest risks and what do you do in order to mitigate them?

So indeed, I think, when it comes -- so maybe like starting from the point of the situation in the Middle East, we don't own direct operations in the Middle East, and we don't have operating entities based in the Middle East. So clearly, our exposure to the Middle East is much more related to our global lines of business. And what we see is that, first of all, there was quite a good risk management and anticipation of rising stress associated to the Middle East related to those various entities to Allianz partners, Allianz Trade and AGCS, Allianz Commercial in particular, and what we have experienced in terms of losses was actually small and really well within our risk appetite and the type of exposure we are ready to take.

So I think from a direct standpoint, there is not much to highlight as being a core concern to us. We are -- where we are more exposed is definitely more to the macroeconomic development and basically to the consequence of the situation in the Middle East. For the first part of the year, actually even rising interest rate and a bit of a stronger U.S. dollar was a positive to our numbers. But basically, going forward, I think the key critical items will be the management of this volatility in general where we feel well equipped with, because we have strengthen our resilience. We have a strong solvency ratio, and we have tightened our sensitivities, but as well related to inflation, obviously, and the fact that we will -- we are looking at the inflation trends as always, I will say, but even with more accuracy as we speak. So that we can monitor and optimize and react as appropriate within our businesses.

Maybe one last item on inflation. So we are obviously monitoring ready to react as appropriate. But what I wanted to add, which I think is a very important aspect as well is the fact that we are constantly working a lot on ways to minimize the effect of inflation in particular, leveraging our ability, as an example, to tap into our platform business or into Solera as an example, that is providing opportunity for us to do -- to provide distinctive features in terms of absorption of inflation into the cost of claims as an example. So that's definitely a very important aspect on which we are always working, but we have even further doubling, as we speak, together with the productivity dimensions, which is a very important way of tackling also inflation beyond the steering and the reaction that we are ready to do, obviously, and we have demonstrated we are good at doing in the past as well.

Our next question comes from Herbert Fromme, Versicherungsmonitor.

I have 3 questions. One is on Page B10, you showed that pricing for AGCS has come down. Could you give a similar figure for the whole Allianz Commercial Group, because AGCS, of course, underwriting is part of Allianz Commercial. Second question, in November, Allianz Partners announced that they would shed more than 1,500 jobs due to more use of AI. Has that been completed? And is that other initiatives in that respect expected from Allianz companies?

And the third question, you became a shareholder of Viridium, the runoff specialist in Germany last year. And in that connection, you mentioned in March 2025 that you might move portfolios, Allianz Life portfolios to Viridium. Is that in the making? Are those German portfolios? Or what other -- what is it that you might move to Viridium?

Thank you very much. Maybe starting with your question on overall rate change on the overall commercial portfolio. We are at plus 2% for the quarter. So actually, it has increased a bit versus year-end 2025. And that's actually also linked to the -- in particular to the MidCorp business, where on the MidCorp business overall, we are at plus 4% in terms of rate change on renewals. So you can see that in the diversified book of Allianz Commercial, we have very different dynamics when it comes to the rate environment.

I didn't get the -- sorry, I didn't understand what point -- where did you get the increase from, mainly?

Mainly from the MidCorp portfolio. So within the MidCorp portfolio, we are at plus 4% across the book.

Now looking at Viridium. So on your question on Viridium. So as you know, we are a shareholder of Viridium. So we have no direct influence when it comes to their strategy and what they want to do in particular. You are right with the fact that we are constantly looking on our side at ways to optimize the risk return profile of the group. And also at the Capital Market Day, we had highlighted that we have a couple of historical life back books, which are not at the type of return we would like to see generated by those portfolios. So we continue to work on those portfolios to really find the best possible solution, either via reinsurance.

Viridium is like our divestment, like what Viridium will be providing as an example. So there is nothing for Allianz Leben definitely and for multiple reasons. First of all, because performance and overall risk return profile of the Leben portfolio is extremely strong. But also, even if you were to step back from that and look just at the key features, the unit cost at which Allianz Leben is operating is absolutely best-in-class. So there is no way a competitor like Viridium could make sense against that level of unit cost, as an example, in terms of play. So that's not an angle definitely for Allianz Leben portfolios, yes.

Then on your last question, which I think was related to Allianz Partner. So basically, we -- coming back to our AI approach, right? The right -- the way we are looking at AI is via this optimization of our processes all along the value chain and looking at where we can add most value to the customer and where the human in the loop basically is adding value also in terms of touch point from a customer experience perspective.

And so what we are doing associated with that, one is that -- and basically, the main angle we wanted to achieve associated with this one is the fact that we are fueling growth, because we are increasing customer satisfaction, and we are also increasing the distinctiveness of our products, which is supporting us from that angle.

What we do in addition, basically beyond tapping into our scale, into our brand, and into our networks, which is very important, we also upskilling our talents and providing access to the tools and also to the new learnings, which are essential as part of the AI development. Just to give you a sense, we have been spending more than EUR 100 million, both in 2024 and 2025 to train in general, our population and also to give them access to those tools.

So now when it comes to basically to Allianz Partners, I think they are currently, basically working and executing on their journey. And beyond Allianz Partners, I think there is nothing I need to report at this point in time. We can come back to you with the exact details for Allianz Partners because I don't have them with me right now, but basically, I would expect smooth execution on their side.

The question was whether they have done it already. And at the time, they said between 1,500 and 1,800 jobs. Has there been more clarity now whether it's 1,500 or 1,800?

We will come back to you, because I don't have the numbers with me. So I cannot tell you exactly.

The next question comes from [ Maximilian Voltz, ] Plato.

I have a question besides from the raw numbers. Which sales channels will gain in importance over the next 5 years and which will lose ground, both globally and specifically in Germany? And what conclusion do you draw from this?

So you are right that definitely the fact that we have a strong and diversified distribution networks are basically really playing a key role when it comes to achieving our growth ambition. And today, we have a broad distribution mix. We have obviously tied agents, we have brokers, we have direct, we have banks, we have partnerships, we have cooperation. And this mix is actually very different market-by-market, but it is definitely very important. So when we look at it globally today, brokers and tied agents are the most important distribution channels for us.

On P&C, direct is also very relevant and is definitely growing. It's now accounting for almost 10% of our premium generation already. And as I was mentioning, it's actually growing double digit.

In Life & Health, the banking channel is also highly relevant and is accounting for basically a bit more than 15% of our Life & Health premium generation in 2025. So I think if you look into the future, which is difficult to do, right? Also because when you think about it, we have been, I think as an insurance industry, we have made many predictions on what's going to happen.

And as an industry in general, we were quite wrong. I think what we expect is that the share of business that is going to be initiated online will grow obviously substantially and our ambition is definitely to further develop all of those channels. As we speak, we have a lot of actions and work that is happening in various geographies, and also in some of our more global lines when it comes to also how we are going to initiate and interact like the action and the engagement with our customers within the LLM. So it's actually very interesting.

And a lot of developments are already happening. Not all of them being live, because we have also quite a number of very interesting more legal considerations associated to having yes or no, as an example, a broker license within those channels.

So coming back to the looking ahead. So we definitely expect that much more business will be initiated online. And we are very comfortable then with the thinking that the customer will then decide how he wants to interact with us. So we are ready to welcome the customer, and we will be ready even further to welcome the customer whatever way he wants to engage with us. And in particular, I think the traditional agents will remain very relevant, because it can reach customers who value advice and also more personal touch. It can also be not always meeting physically, it will also be certainly meeting the digital interface if they want.

And through the direct channel and the platform channel, we are reaching out and we will reach out further to customers which are more price sensitive or prefer to have a purchase that is independent and quick online also a lot of embedded features that makes it very easy to purchase and to engage with us.

Now when you look at Germany specifically, I think in terms of distribution channels, we will distinguish between tied agents, brokers, banks and online distribution, such as Allianz Direct. Through these channels, we reach a broad customer base as well as specific target groups online and through personal face-to-face interactions, clearly. And we'll -- and what we observed is that in the past, the vast majority of insurance purchases was currently made through personal interaction with an intermediary. So what we expect is that there is -- what we see is that as we speak, and it's a bit counterintuitive is that there is no massive change in the way people are engaging. So they start differently, but then they come usually to an agent to have this conversation, to decide via an intermediary, and that we expect to continue also in Germany, in particular.

And we see actually also very few differences between age groups. And among the younger customers, like the one under 30, most insurance contracts are concluded with a personal contact. At the same time, we know that many customers today have had at least one digital touch point with Allianz before taking out a policy and the variety of these touch points continues to grow. So really what we see is this expansion of contacts, but then this conclusion via personal contact.

And so, I think, the conclusion is that also in Germany, we do not expect a radical shift between sales channels in 5 years from now, but we are ready to have those engagements to start the conversation whatever ways and then to conclude the conversation whatever ways. From my perspective, that's the most important, and we are ready to do that in a very advanced manner, I would say.

Thank you very much. So to sum it up, you don't think that there will be a big switch from Germany business, as an example, to Allianz Direct because of the online boom, I call it.

No. I think like, the way we see it is that basically both Allianz Direct and Allianz Sales are actually how the German businesses are working, smoothly together, and we generate exchanges. Basically, we start conversations and then we offer to the customer what he wants. And I think that's the most important answer. And we expect that there would be -- there is space for both sides given the different profile of our customers. And strangely enough, that has not evolved massively over the recent years despite the fact that it was already available.

But maybe to take another angle to what I was saying is that we have recently launched on the side of Allianz Direct, product for non-motor that is 100% AI fueled, if I may put it this way, as a product. So you can really start the conversation with an AI agent and conclude entirely on the Allianz Direct platform with your non-motor product buying. And this is actually working also extremely well. We have 30% of our customers that have started this way, that have concluded the buying of the product entirely fueled by an AI agent.

So I think what it is saying is that there is space for the 2, you need to welcome the customers whatever way. And then you need to ensure that there is a super smooth integration of the digital world together with the physical world so that you can ensure that good experience from a customer perspective.

Our next question comes from Jean-Philippe Lacour, AFP. Jean-Philippe, we can't hear you. Please feel free to share your questions then with us via email. Thank you.

The next question then comes from Michael Flamig, Börsen-Zeitung.

I have 3 questions, please. Inflation in India and Germany. We talked already about inflation. Inflation inspections have risen sharply in the short space of time. We saw this happen back in '22. At the time, Allianz took a while to adapt, I think. Will inflation impact Allianz's profitability over the next 6 months? There are offsetting measures of EUR 200 million in context with the sale of your stake in India. Could you explain what you did in the first quarter in Germany? Perhaps you could put the business performance into context.

So I think on inflation, first of all, I would not agree with you that we have not reacted well back then. I think as an organization, we did react well. And we also did react in multiple instances ahead of the market, maybe -- so ahead of the market, which also allows us to be quite well positioned to also reap the further benefits of this being ahead while also competitors had to follow up.

So I would say, at this point in time, when I look at the overall pricing environment, first of all, we believe that in most markets, actually we are pricing ahead of inflation. So we feel comfortable with the assumptions we have taken and with the way we are proceeding within our various markets. Obviously that's a conversation that requires to be quite nuanced across geographies, across line of business, because not everything is equal everywhere. But I think the long story short is that we are well positioned, and we feel comfortable where we are.

And now what we do is that we do the super tight monitoring together with our local operating entity. So at local entity level, there is this very strong cooperation between the pricing teams, the claims team, and the reserving team to be in a situation to identify what's happening and basically to react actively, if there is a need to react.

At the same time, our ability to react is very strong. We have also further enhanced our technical excellence. We have the ability to be even further nuance when it comes to pricing action, as an example, and also the frequency of the pricing actions has further evolved even if you compare to 2022. So I think that from a pricing perspective, as I was mentioning as well, we work a lot, and I think we are also very well positioned from that angle on productivity, and on leveraging everything we can do with providers like -- with Solera and its provider to also minimize some of the impact of inflation into our products.

And the last dimension from a pricing or product perspective is the fact that we are also innovating with further products, which are more steered products. So that will be the case at Allianz Direct, which as an example, offering a product with a further discount, but where basically in case of claims experience, you are steered in a very comfortable way from a customer perspective. So it's adding a lot of value from a customer experience angle, but it's also allowing us to basically have the cost of the claims under control, and as such, allowing a much better, basically overall pricing for that product. So that's basically for the inflationary angle. And overall, we feel extremely well positioned also for the rest of the year. And we -- and as mentioned, we are just monitoring it carefully.

Now coming to India and indeed, the usage of the proceeds. So what we have communicated is that we will use the proceeds for various buckets. One broad one is related to the acceleration of our strategic deployment and also the investment into productivity, AI and so on and so forth. So that's 1 angle to it. And the second one is also further basically debt realization on our investment portfolio to benefit further from the interest -- from the higher-yielding environment. So in the first quarter, we have realized EUR 200 million of debt losses into our portfolio, mostly supporting the P&C business. That's going to basically support further the investment results of the P&C segment in the second half of the year and also as we move into 2027. And that's basically what we have done at this point in time. So on a net basis, against EUR 1.1 billion, we have spent EUR 150 million, if you want, and the rest will come during the year.

And then, I think, you had the last question around the overall performance of the German business, which basically had a very good -- first, on the renewal side, we have seen a very strong renewal in the first half of -- in the 1st of January of the year. So it was a very strong first start into the year. So we have a very good level of internal growth of more than 5% for that business.

And then when it comes to profitability, also excellent level of profitability of our Life business on the P&C side with -- like a combined ratio around 88%, which is supported as well with the fact that we had a lower level of natural catastrophes in this quarter. That being said, we had a lot of frost in the first quarter, which basically led to quite some increased frequency in what we call the weather-related type of business. But as you can see, not impacting the overall expected -- the overall profitability of that business. So we are very happy with the development of the business. Really good growth and a very nice level of profitability.

So well done to the team in general. So I hope that answer or you want also a broader view on our other Life business -- our other German business also including Life? I wasn't sure if this is P&C only or more?

Our next question comes from Ben Dyson, S&P Global Markets.

One quick follow-up on the -- on Allianz Commercial's arrangement with Coalition on cyber. I just wonder if you could say how that will change Allianz Commercial's existing cyber underwriting team and whether it will need to shrink because more of the front-end of underwriting is being handled by Coalition?

So as part -- so I will not go into all details, but basically, we have 2 different elements associated to that. There is a part of the team that is basically being transferred to the underwriting team together with -- to work together with Coalition. And also, we have some level of expertise that we retain for our cyber assessment also related to the reinsurance, which is a very important aspect as well as the overall risk management of the cyber risk.

And Jean-Philippe Lacour has shared his question by email. Jean-Philippe is inquiring what are the net costs of the severe floods that have hit France in February?

So it's actually like a mid-double-digit level for Allianz France overall. So I mean -- so an impact but also well within what we would expect related to nat cat exposure overall.

Thank you. There are no further questions in the queue. Thank you for everyone who has put forward questions. Of course, we are ready to help.

Just for your calendars, we will report our second quarter and first half 2026 financial results on August 7. And in addition, we would like to remind you of our Media Barbecue on July 7 here in Munich. We look forward to welcoming as many of you as possible in person here at our headquarters.

This concludes today's media call on our 1Q 2026 financial results. Thank you for your participation, and goodbye.

Ladies and gentlemen, welcome to the Allianz conference call on the Allianz Group Financial Results 2025. For your information, this conference call is being streamed live on allianz.com and YouTube. A recording will be made available shortly after the call.

At this time, I would like to turn the call over to your host today, Mr. Oliver Bate, Chief Executive Officer of Allianz SE. Please go ahead, Oliver.

Thank you, Andrew, but I thought you were the host. But anyway, happy to be -- delighted to speak to you today. Thank you for your attention. I know it's a bit of a crammed reporting season and a few of our friends have changed their reporting. So apologies if we are having a lot of information at the same time for you.

Let me go through the slides, and I will refer to the respective page as I go through them. We would like to just put a frame on what are we discussing today because a lot of things always around reporting season are very short-term numbers comparison. The key thing I would like to highlight today is less than 15 months ago, we saw each other at the Capital Markets Day here, where we looked at the 3-year plan and put out at the time what many of you called a very ambitious plan for the next 3 years.

2025 is actually the first year of delivery on the 3-year plan. So let's bear in mind what we were looking at in December of '24 and how are we performing relative to the targets that we've given ourselves. And I find that very important in times of short-term anxieties and how we do.

If we turn our attention, please, then to Page A4 in the deck, the highlights. We are on almost every measure above what we could imagine in December of '24, whether there's revenue base, up 8% for last year, operating profit, up 8%. And again, we had some questions, what about Q4? Claire-Marie will talk about it. We are above what we thought in Q3 we could do at the upper end, and that's why we raised the outlook. Shareholder core net income, double-digit up, dividend per share, double-digit, by the way, 9 out of 10 years now increasing dividend again, this time double digit. And we are very happy because we leave many of our shareholders want and need dividend for the retirement, and that share is only going to increase.

Our solvency ratio, we've worked tremendously, and a big thank you to Claire-Marie and her team, together with particularly our colleagues in Stuttgart and having worked on strengthening that at 218 5.more importantly, please look at the stress tests and the solvency post-stress test that we saw. We wanted to be very resilient after a financial crisis. If you run even the combined stress tests, you will see now that scenario looks pretty good. And we have more to come. Remember from the sale of our Indian participation, a few points, the Solvency II revision. So we should be in very safe territory versus potential shocks from the financial side. And core equity return is 18.1%, another point up and 2 after last year. We said in the Capital Markets Day for further reference, above 17%. So we're comfortably there.

And also, as you will see later, have very strong capital generation. So not just the solvency is very good, but the key thing is OCG have been exceptionally strong. Liquidity is very strong. And that's why, because there was one of the questions, we have decided to do EUR 2.5 billion share buyback because our cash generation power is very, very strong. And we still believe that our share price is a very attractive investment for our money particularly relative, and we'll talk about it, to other investment opportunities. This is, by the way, true for a number of our peers in the industry because the insurance sector has been derisking and improving earnings quality over the last few years.

When you turn please to Page A5, we do a little bit of a deep dive in some of the numbers, a bit more top down, though, relative to what Claire-Marie is going to tell you. And for the two businesses that I believe we run, retirement and protection, every single KPI that we really care for has seen an improvement. That's rather unusual for many places because if you think about the size of Allianz, we really are now very happy about all segments delivering, whether that's the Life insurance side, Asset Management, cost-income ratio improving to 60.7. Record net flows, EUR 139 billion, a lot of that in PIMCO but also AGI, which I think is quite remarkable, 7% organic growth. 93% of our investments are outperforming 3-year benchmarks. So there is a correlation between flows and performance. So that's really strong.

The core of what people typically look at, the P&C retail side, 92 combined, while reserves continuously being strengthened. Commercial lines, the same, even below 92%. And what we look at, as you know, have been for a few years growing, the Protection and Health side, the operating profit is up 10%. So put it any way you want, you will find a hard time really poking into the delivery, which is what matters in Allianz.

Now it's not just '25. Let me go back to -- it sounds a little bit self-serving, if I may say, because I've been CEO for 10 years. But what we really put out with the renewal agenda and its chapters is we want to build a company that resoundingly delivers even under adverse scenarios. Remember, we have had COVID, we are having the war in Ukraine, we're having enormous problems with trade. We have the U.S. dollar trending down, so affecting massively our earnings from the United States. Maybe as a reminder for everybody, 50% even our P&C premium is denominated in non-euro currency, so exposed to foreign exchange. Despite all of these things, the dynamics have been very positive and accelerating, whether that's on revenues, operating profit, earnings per share and dividend per share. And we are all very proud of that.

Now the question is always, you say, well, this is the pricing for the future. But as a small reminder, we are running here a business that is trying to do well over long periods of time, not just for the next quarter. Now why are we doing really well? So I talked about the sector environment having been positive. We also had some positive effect last year when people want to point out, okay, were we lucky, not just good. Yes, we had a little bit less nat cat than was in the budget. But remember, that can change very fast. Just the EUR 300 million we had in the fourth quarter from Australia just from a 3-day hailstorm can very quickly change the equation. But we also had massive again headwinds with the U.S. dollar. And these things, we really need to be prepared for.

The way we think about it is not just resilience of the financials but actually having an organization, and we're going to be talking about it, that we are trying to make bulletproof relative to the challenges we have there, whether that's political tensions, i.e., having a fully diversified portfolio in terms of channels, customer segments, product and geography, but also being able to help society with increasing issues around affordability of products, alternative investment challenges, climate change and then, of course, the AI revolution that is going to come towards us. And we'll probably talk about it.

Against that, we keep on investing in a number of things. Customer loyalty is super important. NPS, I'll give you some more numbers. And again, these are numbers that we have audited. They are not self-acclaimed. The brand strength is super important. We are growing brand value and it's not just inter-brand. It's brand finance, It's trust parameter. So the trust in the brand has never been higher and we have the highest ever level of engagement of our employee base, and let me share some details. That the ratings are very strong is a matter of itself.

So let's look at Page A8 again. It's becoming a bit boring to see upward sloping curves like that. And are we manipulating them? Let me repeat, NPS and these numbers, brand value, were not done by us. They're are externally audited because we run them, and they are numbers benchmarked against competition. So we had 70% of our businesses now being loyalty leader. And they're moving up. We still have some that we're not happy with, but we are not allowing anyone anymore to not be above market.

Employee satisfaction on the right-hand side or motivation. We have typically two numbers we look at, the motivation plus what we call a work well index, i.e., how safe people feel at the workplace. By now, we are best-in-class for both of these numbers. When we started, by the way, a few years ago, in earnest, we started managing the details at around 2018. We could have not imagined to go where we have been. Now that's based again on deliberate strategy and is not an accident.

I will not go through Page A9. But as a reminder, we have three main levers determined and described in the Capital Markets Day December '24. It's around driving smarter growth. Remember, the historical issue for Allianz particularly in Europe was insufficient customer growth, organic customer growth. The second one is further reinforcing productivity that was already in light of the ensuing AI revolution. So that, for us, AI is nothing new, right? We've been working on that for quite a long time on pricing and other items. And further strengthening resilience because as we move into very, very uncertain times, we want to make sure not just the balance sheet and the ratings are strong, but also the organization is really reinforced whether we have the threat of cyber attacks or other stress that can be put on to the balance sheet, which may be coming from regulation.

Let me give you a couple of examples. Let me start by Page A10. The growth in our underlying customer base is increasing. If you say, are we where we need to be? The answer is absolutely not yet. We're starting the flywheel in Allianz. And as you know, large organizations always need time to really work on it. We needed to put the prerequisites into place. I talked about brand, product quality, service quality being on the rise. And particularly in light of rising prices, the price-to-value perception is always super important. It comes through very strongly in NPS. The challenge is basically in two areas. The first one is churn. We talked about it. We still have too much churn in the system. We're working on it and systematic bringing that down. That would require 2, 3 more years until it is where it needs to be.

But where we are doing better, in my mind, than I thought possible is in terms of winning new customers. So we've had enormous successes. And I can tell you just one example. And we started with the turnaround of our business in Germany around retail customers. We could have not imagined, going back over 10 million cars that we have now, at some point, we had lost 4 million cars in a row over about 10 years. We've been coming back from the low point at around 8.2 million cars, and we're going up. Now motor insurance is something that's highly competitive. So we're not doing it for the volume. We want to create value. So that's happening at the moment at very attractive rates and good levels of profitability.

Churn, I've mentioned. Cross-selling is a very important point. There are countries where we have never had success in cross-selling. Italy is one of them. We are improving our ability to increase that and there will, again, be more work to be done. Last but not least, we have consequently invested in the so-called platform business, Allianz Direct and Allianz Partners. And you see improving levels of growth and of profitability at the same time as we are starting to see returns on building scalable business models. Obviously, you, as investors, want to see that across the group. And this is one of the comments I'm going to make on AI. The way the technology develop will make it easier for Allianz to now harness, we'll talk about that, productivity gains and best practices across border because we will not be needing to go through very onerous IT processes to do so.

Let me move further on the Health and Protection side. There's a couple of things that I would like to highlight. First, we have been a winner in a number of emerging markets on Health for a long time, Turkey, we are by far the market leader, and we're accelerating our advantage. But even in Germany, where 10 years ago, many of us were asked, why do you actually have that business? Can it actually do well relative to the universal cover in the system? We are growing leaps and bounds, and that's because we have been reinventing the business model, completely new products both in comprehensive cover and supplemental cover, true market extension through our digital health product, true market extension through innovation on group health products, particularly with the innovations post-COVID. Now companies are finding it very attractive to increase employee retention and engagement to having supplemental health cover. So a true success story. 364,000 new customers just in German health with very attractive margins, something, again, a lot of people would not think possible.

And let me pick up another example. People, for a long time, there is no way to cross-sell in the agency force. Really we are product sellers. We're not really client advisory. In France, our agency channel has seen a significant uptick in cross-selling, into protection with very attractive margins, and the numbers you see here versus prior year and versus 2020. So we are on the move on health and protection, and we are working hard to continue that because it's a product that's both attractive for society and customers and attractive for shareholders.

Now let me move on to productivity. And at the risk of getting on your nose, this has been a multiyear journey. What you don't see on this page is what the peak was. We started with a PC expense ratio of 28.6% in 2018. That was the peak. And we've come to 23.9, yes, so almost 5 points reduction. And we continuously will try to meet and work very hard to take out 30 bps a year. On a like-for-like basis, ladies and gentlemen, that means we have been taking out 20% of the relative cost base. That's not true because we obviously had pricing effects on the portfolio. But on a relative basis, this number means like-for-like today, we operate 20% less cost. And we haven't really fully embraced all of the opportunities that we have across the entire value chain.

Claire-Marie can also talk, by the way, about our finance transformation program. We're working on the service unit. So we are looking at it at the entirety of the value chain. And let me point also out to the fact that most people are telling you, you can only do it on everything that's not related to distribution. It's not true. It's not even true for Allianz. You see what we've been able to do on acquisition costs. And again, we haven't really reinvented the model. We have been working on pretty layman and laywomen levers in order to drive productivity up. So there's a lot more to come.

It's coming from a few levers. One, we have decided some of the extraordinary gains that we're expecting this year. We're going to reinvest. We are already spending EUR 6.5 billion in tech, and we're getting more and more focused on new innovation and new functionality versus running the machine. So there's enormous pressure on the running cost of the machine to free up investment into new things. We are going to broaden our focus on unit cost and factor productivity across the entire organization. I mentioned that. So Andreas Wimmer is leading a program on Life. And you see it, by the way, already in the numbers for AGI. A lot of people have questions on whether they can do this. They are making great progress. PIMCO has always been very good at it. And now, again, doing step changes on redesign of process.

Yes, I'd like to say it is, first, to focus on better client experience. We really believe that artificial intelligence in any type of automation has the primary objective to make our product offerings more distinctive. So we're less worried about cheaper and cheaper and commoditizing what we do. We want to build a differentiated product and service offer. That is the key priority also for the deployment of Gen AI. And we are trying these things out in what we call our platform businesses because this is where we see these things fastest. And it's digital first. So this way, we also have to be the most competitive on customer service. And when you look at the growth patterns in both businesses and the margins, you see scale at work. So that's really important.

The next step for us, and we can talk about it if we have the time, is to help our customers to address the issue of ever rising prices for insurance product, i.e., addressing product affordability by offering distinctive services that effectively reduce the cost of risk.

Now let me continue on resilience before, very soon, I'm going to hand over to Claire-Marie. So all the finance numbers you're going to get from Claire-Marie, the only thing I wanted to say is we are increasing operating capital generation. You'll see that. So Solvency II improvement is not risk reduction really only, but it's really generating more capital and more cash in light of what we have promised to you. 25% OCG this year, and we're working on having 23% to 24%. Remember, that was the number. Cash remittance, 89% across the business. And having lower leverage than we used to have. This is what we want to do. Again, these are just the financials. We are also working on making sure the organization is more resilient, i.e., we can react to shocks, wherever they may come from, whether that is cyber attacks or other kinds of shock that happen in our environment.

Now last but not least is always a major form for short-term discussion on should we not have a different methodology for outlook. The answer is no, not for now. We are increasing that by 9% from 16% to 17.4%. We obviously have the ambition to beat that. So we will work day and night to make sure that we do more than the midpoint, and we have been when you look at the numbers very carefully over the last 10 years, for most of the time been able to do that. And we will strive to continue to build that track record. So this is the confidence. But we also will remain conservative.

Let me end that as people saying that is, are you confident? Look, guys, if we have a further massive devaluation on the U.S. dollar, it can easily take EUR 1 billion out of the OP in terms of conversion, just to give you a number, right? And that cannot be excluded. We don't expect that. But we want to be erring on the conservative side. Overdeliver rather than overpromise is the mantra that we're working on. Thank you.

Thanks a lot, Oliver. So good afternoon from my side as well to all of you. Really happy to be here today. Maybe like starting on Page B3. Before we dive into the numbers, I want to give you maybe a short overview. So you have heard it already from Oliver. We had very strong overall picture in terms of performance. What we see in our numbers is growth, is profitability and its resilience. And this is clearly demonstrating that we are on an excellent path when it comes to the delivery of our midterm targets to our Capital Market Day delivery.

So this performance is fueled clearly by the focus we have as an organization in terms of execution of our three strategic levers, growth, productivity and resilience, also as already mentioned by Oliver, And what you can see as we go through the material, I will say, in my section but also detailed part of the numbers, you will see how both our sustained financial momentum and our disciplined attention to resilience is actually supporting our confidence when it comes to 2026 and, I will say, even beyond 2026 very clearly.

So if we go into the numbers and if we start with the top line, Our top line reached a record level of EUR 187 billion with an internal volume growth of 8%. And here, all segments are contributing to this positive development. For all segments, this growth is either in line or above our Capital Markets Day ambitions. And on a nominal basis, we have seen a strong FX effect in particular in the second half of the year, which is impacting all segments. And Oliver has already highlighted some of the effects, as an example, on the P&C side.

Our operating profit grew by more than 8% emerging at EUR 17.4 billion, which is our highest level ever. And this is as well above the high end of our original outlook and as well above the Capital Markets Day expected growth rate we had communicated in December 2024. P&C clearly had an excellent year, but both Life and Asset Management delivered strong performance as well. We have an FX impact, just below EUR 400 million, in our operating profit. So excluding the FX effect, to get a sense of the true underlying picture of the performance, our operating profit growth would have been around 11% with P&C at 17% and Asset Management.

This year, we have a better nonoperating profit, which, together with our operating profit, results in a very strong core net income growth and core EPS growth of 13%, which is also clearly above our 7% to 9% Capital Markets Day target range. This 13% is building on a 12% growth that we have already achieved last year, which is making our EPS journey very attractive. In addition, our RoE is also nicely above or strictly above 17% target, emerging at 18%. Finally, our Solvency II ratio is at a strong 218%. This is the highest level it has been for over 5 years. This is demonstrating our resilience and our focus on this as an organization.

Moving to P&C. And if we look at Page B4. Here, you can see that for the year, our top line achieved its highest level ever at EUR 87 billion with 8% growth, and we have both price and volume which are contributing roughly equally to this development. Retail P&C growth, in particular, is at 9%. And as Oliver has already mentioned, our initiatives to increase our underlying volume growth are making good progress, achieving 3.5% in the second half of the year. As you can see further in our material, so in Section C, this growth is broad-based across our portfolio.

On the right side, we are overall at a healthy level of 4.6% for the year with retail, where we are at 7%, where we expect the price discipline to continue and to keep pace with claims inflation in 2026. And in commercial lines, we are close to 1% rate increase. Our book is very diversified, as you know, meaning that there are parts where rates are harder in some segments. Overall, across our portfolio, we see many opportunities to continue our growth path at profitable levels.

Talking about profitability. As you can see, our combined ratio emerged close to 92% for the year. This is clearly an excellent level. And both our retail and our commercial lines of business are contributing to this development. Once again, you can see further in the material how diversified this performance is as well across the portfolio. The main driver for the positive development of our margin compared to 2024 is a further improvement of our fundamentals in the attritional loss ratio, which I'm very happy with, although we do have some accounting effects between attritional and runoff I already announced in the third quarter, which are reducing a bit the readability of these aspects.

Overall, the low level of nat cat we have seen in 2025 is offsetting the decreased level of runoff and discounting. Even though we have seen quite some cat activities in Australia in the last quarter, our nat cat experience was better this year compared to 2024. Finally, as communicated in the third quarter, we have been very conservative in our year-end booking both in terms of runoff and in terms of current accidental peak. And we have further increased the level of prudency in our balance sheet. We also did continue, as mentioned by Oliver, our focus on productivity with our expense ratio further reducing by 30 bps versus last year as expected to in this number.

So while the investment result was slightly lower compared to 2024, in 2025, this is mainly due to FX. Our excellent technical performance and the growth we have seen allow our operating profit to emerge at EUR 9 billion. This is 14% higher compared to last year, well ahead of our Capital Markets Day assumptions of 6%. So overall, we are very pleased with the performance of our P&C business in 2025. We see excellent performance in both retail and commercial. This performance is not due to a better nat cat environment but rather is a reflection of excellent volume growth, positive underlying margin development and prudent current and prior year reserving. This positions us very well for the year ahead.

Let's move to Page B5, and let's have a look at our Life and Health business there, starting with growth. You can see on this page that our PVNBP emerged at almost EUR 85 billion, its highest level ever, with a growth of more than 5% FX adjusted, This growth comes after an exceptional new business development in 2024, where you may remember that we had seen, at that point in time, 22% growth in PVNBP back then. So I'm very happy with the new business we have captured in 2025. And we also see a good increase in net flows across our portfolio on the Life and Health side.

We continue to operate at an excellent level of new business margin, continuing to benefit from a focus on our preferred lines of business with the contribution of Protection and Health and unit-linked up to 51% of the value of new business. Adjusted for the disposal of the JV with UniCredit, the new business profit of Protection and Health and unit-linked grew by 11%, slightly ahead of our Capital Market Day assumptions. Like in P&C, our performance across the portfolio is quite diversified. So Oliver has already outlined some of our success stories in Health. So I can add some positive highlights on the rest of our Life business with, as an example, the Italian team, which has grown by 20% its value of new business adjusted for UniCredit, or the Asian team, which did grow its sales outside of Taiwan by more than 14% last year.

The Life CSM development over the year is better represented on a net basis, which allow for reinsurance and tax effect. And you can see, so in the middle part, that the net CSM adjusted for FX grew by 7.5%. Net of reinsurance, the noneconomic variances in the development of the gross CSM are modest, mostly reflecting the U.S. lapse experience. The earning of the CSM in the operating profit is in the upper end of expectations.

So looking at operating profit. We emerged at EUR 5.6 billion, which is ahead of our outlook. This operating profit growth is around 4% FX adjusted and close to our medium-term expected growth rate with this adjustment. In the fourth quarter operating profit on a stand-alone basis, our level of operating profit is a bit lower than our recent quarterly run rate of approximately EUR 1.4 billion as a result of some of the charges that we have taken for some legacy medical business in Asia. So overall, for the Life and Health business, we are pleased with the level of growth and profitability of the new business in absolute, but as well considering the demanding comparison to 2024. We see very healthy inflows and a steady development of both in-force and profit, which gives confidence for 2026 as well.

Moving to Asset Management on Page B6. Here, you can see, first of all, that the level of organic growth of our Asset Management business reflected in the flows developed strongly over the course of the year. We have seen a total net flows of almost EUR 140 billion and an organic growth rate of 7% for the full year. In the fourth quarter, the trajectory continued with EUR 45 billion of net flows, a record for a fourth quarter with strong organic growth at both PIMCO and AGI. The trajectory at AGI in the second half of the year is very pleasing to see from my perspective. So it's true from a flow perspective but also true from a productivity perspective.

Our net flows continue to be supported by our excellent investment performance. We have a share of 93% outperforming asset under management against benchmark on a 3-year basis, so clearly adding value to our customers. Net flows are diversified across geographies and with strong developments as well in terms of new products and distribution initiatives like the PIMCO active ETF suite with nearly 50% growth in 2025. This excellent flow momentum is continuing into 2026 at both asset managers.

Revenues, in the middle part of the chart, emerged at EUR 8.5 billion with margins broadly stable and lower performance fees compared to last year. Both asset managers have done an excellent job when it comes to productivity, and we emerge with a segment cost-income ratio below 61%, which we lend at an operating profit of EUR 3.3 billion, a 7% growth FX adjusted. So overall, the performance of the Asset Management segment also given the FX impact has been excellent, in my view. We see a record level of third-party assets under management, very strong flow momentum, stable fee margins and an excellent focus on productivity. So I'm very pleased here as well.

Moving to. As you may remember, resilience was an important aspect of our Capital Markets Day at the end of 2024 as we continuously strive to secure reliable delivery of profit, capital generation and cash. So here, I'm coming back to the framework and my dashboard that I had laid out at the Capital Markets Day. As you know, we look at resi holistically. And here, we have seen clear positive developments over the year, also as we work structurally on the various dimensions of the framework. So as an example, we have seen a strong operating profit evolution despite the FX headwinds and we continuously enhance our technical excellence in our P&C business to ensure a good preparation to the cycle. We have generated 7 percentage point increase of our Solvency II ratio from a refined work at modeling implied volatility.

Our Solvency II capital generation is at an excellent level, also supported by the early benefits of the focus we have of the enhanced focus we have given to that metric. We have further improved our downside management. And this downside management goes even beyond the significant improvement in post-Solvency II of plus 11 percentage points. For example, to include further diversification of our reinsurance structure, during the year, we did broaden the scope and the nature of our scenario testing to further reflect the geopolitical environment. So overall, a lot of work with positive concrete outcome as well in the numbers.

Let me zoom into the solvency ratio development on Page B8. So here, our solvency ratio emerged strongly at 218% at year-end, which is 10 percentage point increase versus year-end 2024. So you have the rounding effect. It's not that I cannot do the math between the two on the slide. As you know, we set a target to improve our operating capital generation at the Capital Markets Day. We have decided to improve this from an historic level of around 20 percentage points to 24, 25 percentage points in 2027. We anticipated this will be a journey, as you may remember, as the natural operating capital generation from our business growth in the plan was more naturally around 22 percentage points.

So now with all the early work we have done on the operating capital generation and a very strong performance we have seen in P&C in particular in 2025, we emerged at an excellent level of 25 percentage points this year. And there are a few one-offs in that number. So while I'm very proud of the achievement and of the outcome of 25 percentage point, we would estimate that the underlying level of sustainable capital generation is more around 22 percentage points in 2025 and we expect that we'll start with towards 2026 is a base from which we hope to generate at least this level in 2026.

Our sensitivities have slightly reduced over the year and, combined with the overall increase in solvency, means that our Solvency II position post the combined stress is now around 197%, which is almost 200%. This is a very strong position to operate from for the future.

Moving to remittance on Page B9. Here, you can see that our net cash remittance for 2025 is at EUR 8.6 billion, which is slightly ahead of our Capital Markets Day commitment, as is our remittance ratio of 89% against our 85% target as previously remittances continue to emerge from a very diversified base. FX is as well playing a role in the year-on-year comparison of the cash development. So on a normalized basis, our remittances grew at least in line with the operating profit growth. And on top of our normal cash remittance, we did receive the proceeds from the first tranche of the sale of the Bajaj joint venture a few weeks ago. So from a cash perspective as well, we are in a very healthy situation, which gives us also flexibility for the future.

Moving to the outlook on Page B10. And here, indeed, as already mentioned by Oliver, we are keeping our traditional approach to base our outlook on the delivered operating profit of the previous year, thus, EUR 17.4 billion plus/minus EUR 1 billion. And this is a 9% growth compared to the outlook midpoint for full year 2025, which itself was 8% above the one of 2024. So even if you take just the trajectory of the midpoint, we clearly see our earnings progress that continues to grow strongly and ahead of our Capital Markets Day commitment there.

Our range is unchanged versus last year and allows for certain uncertainties, typically around capital market volatility, FX and P&C nat cat. The details on the main assumptions which are supporting the various components of our outlook are in the back of our presentation to really explain what's happening to each and every component.

I also would like to mention that, as announced, we plan to neutralize the IFRS accounting gain related to the disposal of the Bajaj joint ventures. This gain will be reinvested partly in productivity initiatives and also in accelerating reinvestment of bonds into higher-yielding instruments. Importantly, both of those actions will have a positive and lasting impact on our future earning power. Finally, the share buyback we have announced yesterday, we'll continue to support our EPS growth journey, standing at 14.4% at this point against our Capital Markets Day target, a very attractive level.

Let me recap on Page B11. Clearly, I'm very pleased with our performance this year. With our operating profit above the highest point of our original outlook range of EUR 16 billion plus/minus EUR 1 billion, we are in excellent territory for the delivery of our targets for the 3-year Capital Market Day cycle. Importantly also, we have not only delivered a very strong financial performance but we have as well increased our resilience across all metrics. This is an excellent achievement, too. Both the financial performance momentum and the resilience of our organization provide a very supportive environment to our dividend proposal and our share buyback program. It as well gives full confidence towards 2026 and our ability to sustain value creation for all stakeholders.

With that, I thank you all for your attention, and I hand over back for questions to you, Andy.

Thank you, Claire-Marie. Great. We're ready for your questions. And just to remind you how to do that. So we're very omnichannel at Allianz. So there's lots of options. You can use the talk request button if you're accessing as far as via the web. [Operator Instructions] In case of any other technical difficulties, you can, of course, also e-mail any of the Investor Relations team or even Bloomberg. You can find most of us on Bloomberg as well. You can message us there if there's any technical problems.

So with that, it looks like our first question is from Andrew Baker of Goldman Sachs. Andrew, go ahead.

So the first one is just on the fourth quarter attritional loss ratio. Just hopefully you can help me with the moving pieces here because it's 130 bps higher year-on-year. I can see 140 bps of that is from the accounting change. But how do I think about picking apart the underlying year-on-year improvement, which presumably has come through and then your more conservative loss picks? So any help there would be helpful.

And then secondly, I guess, a broader question. Just on the German pension reform, are you expecting any positive or negative impacts on your business or opportunities and threats from that pension reform?

My personal opinion is that most of the reform initiatives do not have to come from the government employers and not just talk about biller they will not change...

[Technical Difficulty]

It will take 20 years -- sorry, my phone was off. I hope you got some of the answers. So let me repeat. Pension reform Germany, the issue is that the public discusses certain things for the public system. I will not comment on that. But what we see is increasing demand for Pillar 2 reforms. Just as a background, the group pension system in Germany are a huge success both in terms of historical penetration but value for money for the savers.

Why? Distribution costs are typically 2/3 lower. Admin costs are also significantly lower because of the way it's organized. The union is coming back and saying, we need to strengthen that. We have had already supplemental group health coming, which is a huge business for us. We are #1 in that business. It's growing leaps and bounds. I also expect further strengthening of the employee benefits businesses coming as a core strength to come through because Pillar 3 reforms, as we've seen them, will take 20, 30 years to have a material impact on reducing reliance on the public system. That's my personal opinion.

So the answer is yes, I expect further benefits. As a personal comment, we need a reform also on Pillar 2 because a lot of the requirements that we have in terms of guarantees of capital and returns are reducing the benefits to consumers. So we need to make sure that tax incentives are basically available for decumulation products beyond fully guaranteed. That's the real obstacle for additional products. But on the fund decumulation side, we expect a lot of boost. And we are happy about both. As you know, we are a leader in both segments. So the answer is yes.

I also expect, you didn't ask the question, a lot of reform on the health care side. Germany has the highest per capita spending in the EU on health care and not with good outcomes because average life expectancy is not increasing but decreasing. So we need as much reform on health care and sickness days than we have on pensions. Now, Claire-Marie, on the Q4...

Yes, I can do that. So indeed, Andrew, I think when you do on the quarterly slide on a stand-alone basis like the undiscounted attritional loss ratio is at 72.8%, which basically you need indeed to correct for the NDIC effect. So if you do the direction for the NDIC effect, your undiscounted attritional loss ratio is at 71.4%, which is basically exactly at par with last year for the fourth quarter. And the explanation to this one is that simply we've been very conservative. We have been very conservative in the current accidental peak. And we also have been very conservative the PRI reserving, as I was mentioning. So I think that's what you will see that's coming through across our portfolio. And that's an illustration of that point very clearly.

Okay. Thanks, Andrew. The next question is from Fahad Changazi of Kepler Cheuvreux. Go ahead, Fahad.

Could I ask about how our PIMCO flow is doing in Q1 2026? You mentioned the momentum is strong and there have been very strong flows in the last 2 quarters above the planned run rate.

And also in regards to the Solvency II revision that's coming up, I understand you're not give you an update and it's 5% to 10%. But where are we in terms of getting other things that perhaps don't give you as much an uplift by taking Benelux to the internal model?

Sorry, just to -- because your line wasn't clear.

It's what we are doing in addition to -- so let me start with -- so indeed, you are right. I think when you look at what we are working on in terms of basically developments as part of the resilience action as we had communicated in the Capital Markets Day, there were two type of actions, right, more like sort of a short-term focus, which we see also emerging into our OCG this year and also in some of the positive developments we have seen from the model change.

But there are things which are more complex, will take more time for all the reasons I have been mentioning repeatedly that are going to come later on, either 2027 or beyond 2027, so that typically the work we are doing as an example on bringing Benelux to the internal model, but also other actions we are doing for the U.K., also the things we are doing for Asia.

So the work is ongoing. It's working well and it's following its path, I would say. And again, so now we'll be preparing and, at certain point, we are also going to start the engagement further with the regulator. So that will take some time. But basically, that's really on the right path.

Now when it comes to the Solvency II revision. So I did further run our models, and we expect an positive outcome, which is on the high end of the range we had communicated. So we'll see that coming through after, I mean, from the 1st of January 2027 onwards. So that's basically for the Solvency II ratio.

And then you were asking questions, I believe, around PIMCO, PIMCO flows and what we see. So basically, so the trends we have seen in the fourth quarter is continuing at this point in time. So we have already a double-digit positive net inflows at this point in time coming from the Asset Management side. And that's clearly related to multiple dimensions. That's related to the fact that we have this excellent performance, I have been mentioning already. That's related to the shape of the yield curve. It's also related to the fact that we see a certain type of rebalancing. Like as an example, equities have been very well. So there is also a certain type of rebalancing in the portfolios.

Also some people are very attracted by credit strategies but rebalancing towards more liquid strategies, which is also supportive of some of the PIMCO strategy. And finally, we have a very nice level of success in some of our new strategies, new wrappers, like the ETF suite I have been mentioning. So all of that is really putting PIMCO on a very nice growth trajectory.

Great. Thank you, Fahad. The next question is from Kamran, Kamran Hossain of JPMorgan. Go ahead, Kamran.

So two questions for me. The first one is just thinking about expenses within the business. You've had clearly have like a lot of success over the years in bringing down your expense ratio, kind of economies of scale, just excellent efficiency throughout. I guess as you look at the AI trend and where things are going, I know it's not a new thing for Allianz overall, but do you think there is a potential for maybe the historic run rate to accelerate over time?

The second question is on P&C. Would you be able to talk about kind of what's happened to the reserve buffer in 2025 or discretely in Q4? Just interested to give or not giving the message on the additional prelims or the conservative loss picks in the fourth quarter.

So on the reserve development, so indeed, so we have been very cautious, right? I think also just to get a good assessment of that, if you do all the analysis, right, related to where we were for the overall runoff and then you correct the runoff of the NDIC effect, which is 0.5 percentage points, and then you remove what is the natural effect of 0.6%, basically our resulting to level of runoff is extremely small in the portfolio. So that's a very good illustration of what has happened in terms of fundamentals. So our reserve levels at this point in time are extremely strong, are certainly like in the highest it has been against our historical reference, to put it this way.

And then I think your other question was...

Yes. I can talk about, Kamran, about the productivity journey that we've been on since basically 2018. So we are planning to continue that there is no letting go, again, now increasingly across the entire value chain in terms of the upside that you're talking about, where we're thinking about is, and it has also relates to AI, has something to do with the fact that we increasingly will be debottlenecking the interface between business requirements and then IT delivery. When you come from a very fragmented historical architecture of your IT, the issue was always you need to change the back-end system, the middle layers and many of the feeder systems in order to get benefits. And the decomplexitizing is at a minimum slow and typically not just slow but also expensive.

Now why is that changing? Because a lot of the extra cost that we have in the run side of IT, and that's very important for productivity, is the parallel run between old systems and the new systems that we're bringing in because you're typically changing one product, let's say, motor, then you go into a non-motor retail, then SMC and then commercial. And it takes many years until you have every element of the value chain renewed. With a lot of things that we're seeing on new technology, it's not just we can as business people directly influence and create the code that will deliver better customer service to our clients, but we can also overcome the issues on the back-end system because the software now improves the software. So we are expecting massive productivity gains in the way we are producing code and replacing historical systems, and it's a lot about the speed by which we can do that. We can talk about that.

The second thing is we are trying to improve value proposition of our products and services for consumers. A lot of the issues we typically have in P&C is when we have massive claims events because you can often not reach our call centers, you can never staff them to peak demand. And a lot of the things that we are deploying AI for is improving customer services so you don't have service bottlenecks anymore, whether that's reachability of ours, whether there is mass claims when you have a hailstorm, whether that is getting instant support and tracking on if you have a roadside assistance availability, whether that is finding additional doctors. And therefore, we are not just looking at automation and replacing labor, but also expanding what we believe is our distinctive service suite.

Let me again give you an example. In the core of what we do in motor claims, particularly in casco in the core of Europe with our subsidiary [ SOLV ], which we are in the process of integrating and partners as a whole suite, is we are trying to reduce the cost of claims to consumers that trust us with managing their claims, including the journey through the repair jobs, the rental car and all other experiences driving the average claims cost down by 20% and 30% and then giving that as a rebase to consumers in order to dampen the quite considerable claims inflation that we've seen. I'm personally very worried about the affordability of our products, and I think that our sector will soon wake up to say we need to help consumers to really reduce the cost of risk.

So it's really important that AI will help us to deliver these services and benefits even faster. In my mind, it will also strengthen our brand and our differentiated products away from just being cheaper, which basically just drives commoditization, right? So when you ask the question, are we building a moat around our business model? In fact, we are really working on distinctive client services rather than pure automation of core processes. They will also happen, just to be very clear, I'm not kidding about that. But we are focusing a lot on innovation.

And the last one is actually innovating around distribution. A lot of clients are coming to us today already digitally even if they buy off-line with the LLM and the advice you can get from AI. There is an increasing flow to strong brands that have super high NPS, great product value and service. And we are not just hoping, but we're working to benefit from the strengths that we've built into the system. Sorry for a little, but the 30 bps is like the baseline, and we're going to show you the same numbers in Asset Management. You see that in AGI, by the way, cost-income-ratio coming down and further coming down. And we have the same initiative now, by the way, running on the life insurance side, Andreas Wimmer runs that. So we're going to see consistent productivity gains. So hopefully, that gives you a little bit of a picture of what we have been working on and are continuously working on.

Okay. Great. Thanks, Kamran. Our next question is from James, James Shuck from Citi. Go ahead, James.

I wanted to stay on the AI topic, if possible. And I was going to just understand how you see the hyperpersonalization journey in insurance in general, particularly as we move through the various configurations of AI as we go from traditional to fully agentic and ultimately to artificial general intelligence. And then specifically, how do you see the role of insurance company evolving within the LLMs? I know you spoke a second ago, Oliver, about brand and NPS scores mattering. But how confident can you be that brand will actually matter at all within an LLM? Will it not just be completely disintermediated?

Well, the issue is I don't know the future. If I knew at the invention of the combustion engine that Porsche will do really well, that's 100 years ago, it had a different job. But to give you a more serious answer is what we're doing is we're working on it every day. So when you put into various markets what's the best car insurance, what has the best service, the LLMs, as they learn, they give you an answer. And we are working on it day and night. We're putting enormous resources behind it, trying to understand what the criteria are, what the source case is. And interesting is actually better than price comparison websites who continuously push, as in the U.K. only pricing. You actually see criteria, likability, empathy, customer service, claims service, recommendation, i.e. NPS by current customers. So it's quite a broad set of things.

Second, there's a very interesting -- when I saw the sell-off, particularly in commercial lines of brokers, I thought, a lot of b***s***. If you are an incorporated company, you have as a client to get professional advice. Under German, U.S. law, French law, you need to get professional advice. So let's imagine for a second you have a small SME business. You're buying through your ChatGPT account your liability cover. You end up not getting paid when there is a claim and you have business difficulties. And you end up in court. What do you tell the people? And by the way, who has the liability for that advice to buy [indiscernible] rather than AXA or Allianz?

So we have some, in my opinion, a little bit not yet mature assessments of the outcomes because the question of who is liable for advice, who is liable for hallucination is a very important question that not just regulators in the future were addressing, they have already assessed it and says, there is no advice in purchasing without liability. So it's a great question, James. Really great. I think we don't have the time today, but it will warrant a lot more conversation.

In my opinion, there's also a lot of opportunities. Every innovation, there is a lot of downside but there's a lot of upside. I personally believe that consumers will be empowered to ask a lot more questions and get a lot more Important question answers then they can get answered today. It will put a lot of pressure on us to do one thing really well. That is, to offer differentiated value to consumers. So I personally believe it's a good thing for consumers. And I would love for you to go back to December of '24. We had quite an extensive session on what we believe AI is going to do in the business model. None of what we've seen over the last 15 months have been contradicting it.

And there's a reason why companies like Anthropic and others believe Allianz is ahead of many, many other competitors. Thank you, James, for the very good question.

Okay. Thank you, James. And I said, we're omnichannel. We have a question from Kailesh, who's submitted by e-mail. So it's Kailesh Mistry from Deutsche Bank. He's actually managed getting three questions but they're short questions. So first of all, on Slide C10, I think he's referring to the Solvency II walk, how is the SCR consumption split roughly between P&C, Life and Health and Asset Management? That's question number one.

Question number two, on the capital upstream, where did the EUR 0.6 billion excess come from? I guess, Kailesh, you're asking between Life and nonlife. Claire-Marie mentioned Bajaj, but I assume that is for '26, which is the case.

And then the third question. Reinvestment of the IFRS gain, that's related to Bajaj, should we assume this all happens in 2026? So therefore, neutralized at net income level in '26? How should we think about these movements for S2 roll forward where the sale adds 6 points in 1H '26? I think that's a straightforward, Kailesh. That will be apparent in Q1, the 5 points. And then there's a small additional 1 point will be probably most likely 2Q.

Indeed, so that was. For this one, maybe as we are still on the reinvest of the IFRS gain for Bajaj. So indeed, there is a difference between the cash view and the IFRS view, so the cash which is above EUR 2 billion will give us flexibility, and we will be reinvesting the IFRS gain in 2026. So the idea is that it's entirely neutralized in 2026 via the two main means I have already highlighted before.

Then when it comes to the EUR 0.6 billion of excess remittances, they are actually equally split between Life and Health and P&C this year. As you know, right, this excess cash is always lumpy by definition. We are constantly working on various -- I mean, we are constantly working across the various balance sheets in the organization to address the trapped cash. Directionally, we expect more cash trap in Life and Health, but that's always, always lumpy. So last year, our 2025 was 50-50 between Life and Health and P&C.

And then you were asking what is the split in terms of capital consumption, so basically the EUR 1 billion of SCR. So last year was actually, out of the EUR 1 billion, it's EUR 0.7 billion is for Life and Health and EUR 0.2 billion is for P&C. So it's remarkably low for P&C if you look at the growth we have generated in P&C. The reason for that is that we have been focusing and working a lot on various required calibration of some of the capital consumption on the P&C side, which is also showing up in that number.

Okay. Thank you, Kailesh, for that e-mailed question. The next question is from Andrew, Andrew Crean of Autonomous. Go ahead, Andrew.

A couple of questions. Firstly, can you talk a little bit about how you see pricing in retail developing over the next 12 months? I think profitability is now at a good level. Do you think you can still get pricing above your estimates of claims growth?

And then secondly, U.S. Life, where the competition is changing. You've got more private equity players in there operating at lower capital regimes and with a higher tolerance investment risk. Do you still believe that your model can compete with them? And do you wish to continue to compete with them given the relatively low multiples on public life companies out there compared with your own overall?

Okay. Thanks a lot for the questions. And also starting with the pricing on the retail side. So indeed, we continue to see good pricing momentum across our portfolio in retail. What is clear is that we continue also to see -- just as a reminder, right, so for our overall retail portfolio, we have seen in 2025 a 7% rate increase. Within that one, as an example, motor was higher, was at 9% rate increase. And what we see is that there is clearly a differentiation market by market as always. But across the board in multiple markets, there is still the need to continue to see a certain level of rates, in particular as the inflation continues to be quite high and actually above the headline inflation, in particular, coming from spare parts and so on and so forth. So there is still quite some need there. It's in particular, the case for France, but also Spain or Germany as an example.

So long story short, we believe that we will continue to see a solid level of rates in our retail portfolio and also that the rates we are getting are basically above or in line with the inflation on the loss side we are experiencing. So our strategy, overall, maybe just to step back and to move away from all those numbers, is basically to say, as you mentioned, we have a good level of margin. And from that good level of margin, we are focusing on growth across our portfolio. And we feel quite comfortable with the initiatives we are pushing through that Oliver also as already highlighted. Plus what we see, we are capable of achieving, leveraging also some of our AI tools that are supporting us on that journey.

Yes, Andrew, thank you. You see, Life, a long conversation. I'll give you the short answer. There are a couple of structural differences between what we do in some of the private equity owned business. The most important one that we are focusing more, on decumulation and retirement with different risk return profiles than the pure accumulation products. Remember, we don't do fixed annuities. We have fixed indexed annuities. But there's still risk that we need to manage, particularly behavioral options in the products. If you remember all the noise 20 years ago and 15 years ago around the VA. So the key thing is typically not asset risk. It is liquidity risk. And if and when that materializes, we are taking a lot of time to look at that.

Second, we would like to focus on retaining on balance sheet only where we believe we have, as a balance sheet owner, the appropriate returns on it. We have therefore regularly used markets to securitize parts of the portfolio. Remember, our project [ Lucy ] in '21. We've just [indiscernible] it. We will do a few more securitization exercises if there is like there has been a systematic differences in between how public markets and private markets actually price exactly the same economic risk return profile, but they come in different, if I may say, that accounting regimes. It's not just capital regimes, but they are also different accounting regimes. So we are acutely aware of that.

Last comment, my personal opinion is, but it's very personal, we always go through cycles, sometimes very extreme cycles in terms of what investors find super attractive. You see that now with the share prices, some of the private credit and private instruments players from stellar to less stellar. And we believe to look through the cycle in terms of what we believe in terms of earning proper returns on the business that we do. But we're very astutely aware of what the risks are, and we're trying to continuously improve.

I remember when we met many years ago, we were talking about German life insurance. Just to give you an example, we effectively have now for new business, and Solvency II is helping with that, 75% to 80% less capital consumption today with better customer value than we had when I joined Allianz 18 years ago. So that has been the journey in many markets, And I think the U.S. is going to see more and more rationalization in the use of capital. We will not go on the edge, if that's your question, in terms of taking investment risk. But again, my personal opinion is not default risk of the things that you see. It's actually liquidity risk under stress that is going to cause the cracks. We don't have much of that.

Okay. Thanks, Andrew. The next question is from William, William Hawkins from KBW. Go ahead, William.

The first one, just to hear a bit more about your thoughts about the extremely strong solvency ratio, north of 25% for you guys. And for many public players, it does seem excessive and it's about to step up further with the solvency reform. I fully recognize that's a very nice problem to have and it does allow you to point to the resilience of your business. But on the other hand, it may be pointing to the fact that capital is not being deployed efficiently and you're diluting returns. And it does sort of beg the question, is there ever a number where you have too much capital in the solvency ratio? Just help me understand how you're kind of framing that given the extremely strong number would be great.

And then secondly, the remittance of EUR 8.6 billion, what would you argue is your freely distributable group cash position? And how much of that is in the parent company? It's great to see the flow, but I always find it hard to think about the flow if I don't know the stock that it's contributing to.

So we've known each other for a long time, can I give you the 30 seconds? If you have 18% ROE, it's hard to see how we are not using shareholder capital efficiently. But you tell me what the proper ROE is. But on a more serious note, let Claire-Marie answer.

So I think like on our solvency ratio, I think there is a difference between solvency and cash, right? So I think it's an important aspect as well because it's not that you can entirely basically distribute your solvency ratio under the shape or form of cash. So there is a nuance between the two metrics. And while we are working a lot on the solvency ratio also to enhance our solvency ratio, over time, this is creating a lot of flexibility, from my perspective, on how we can deploy that solvency ratio associated with our strategy, so to support our strategy. And part of that also, over time, will also give more flexibility also from a cash perspective as we are able to crystallize that solvency ratio.

Now given where we are right now, I think it's a good level to be at in the current environment we are into because basically, it's an optimized amount when you look across our portfolio, across all metrics. But it also gives us a lot of ability to absorb also a quite volatile environment, right? So that's also why we are always looking at what does that mean for us post combined shocks because that's a very good way to measure how resilient we will be in a much more challenged environment which also, again, gives us a lot of strategic opportunities when you are very strong in such an environment.

So that's the way we are looking at it. And I agree with Oliver ultimately. If you look at all our metrics, we are clearly optimizing our metrics, and that's what you see in the very strong performance we have achieved.

And then you were then you were asking where do we stand in terms of liquidity overall. So in terms of liquidity, I had communicated in the Capital Markets Day that we always retained security liquidity level of EUR 8 billion. That security level is obviously completely untouched and is at this point in time. So the level of liquidity we have overall is obviously above that one. So you can be very confident on the level of liquidity that is available overall.

Okay. Thank you, William. Our next question is from Ben Cohen from RBC. Go ahead, Ben.

There were two things I wanted to ask about. Firstly, could you talk about the impact of the steepening yield curve on demand and margins in the Continental European Life businesses?

And the second question was just your views on M&A at the moment. I guess some of the comments around the Bajaj sale suggests that maybe there's a little bit of capital that's freed up there to spend. Could you just remind us your priorities with regards to M&A?

Let me take the first one because the good news, unchanged, absolutely unchanged. We are very conservative when it gets to deploying your capital for buying things. It has to be really a very clear business case. Some people call us too conservative, I don't think so, because we've been doing quite a few things like strengthening the Allianz Direct platform and a few others which we need to integrate. But what we do really want to invest, and I want to tie that to the next question, is to increase our organic growth and really grow market share. I remember some of you asked about 4 years ago, it was in the middle of COVID, and they went back to 2012 and said, at some point, you had 12 million cars in Germany and [indiscernible] had 8 million Now you have 8 million and they have 12 million. Is this going to continue?

Just wanted to give you a KPI. We have been going back to having 10 million cars, I'm sure you can always debate the relevance of auto insurance, I'm using that as just one example. And we are focusing really on deploying capital to grow organic market share. Because the story has been that we have advantages out of better products, better services, better brand, better scale. You see that and we need to prove that to you. We need to prove that we are profitably growing market share, and this is everything we're focusing on and that we really would like to do. Because we believe at this level of return relative to cost of capital, the real value added is consistent growth and expansion of our customer franchise without jeopardizing margin. And I understand investor concerns because every time we talk about that, everyone then is trying to just grow market share and profitability goes down.

So the thing to really watch is how do margins relative to growth behave. And I can assure you, we are spending all our time on how do we really make sure we get the benefits out of our investments. And whether that is in brand, customer service, product quality and other, it's the only way to answer, whether that's technical change in other.

Second, what has changed, and Claire-Marie and kudos to our finance team here is we used to have a mentality for a long time in that the average temperature of the hospital is what matters, right? So you deliver on average a 92. You are great. And then when you looked under the hood, you would find 2 years ago, we had above 110 combined i property in Germany. We do not tolerate that anymore. We are even in the more difficult lines below 100% underwriting profits, and we will let volume go if that's not the case. That's why you will see differentiated growth patterns by market, by lob, by segment because -- and here's the benefit, and I really believe in that, and I've seen it over the years now, is we have such a diversified model that we do not run out of opportunities to grow.

Now wherever you look, we are really diversified and that is helping us even if not also lenders are really humming all the time. And this is very different from when you are stuck in the reinsurance industry at this point in time, you had an enormous kind of last 6 years, lots of bottles of champagne popping. And now the world is changing. When you are only a large traded property markets, the world is changing. It's very different from us. We don't need to write the stuff. We do it if we make money. And that is really what has changed here. And we have now the numbers to prove it to you. So thanks for the question, and thank you for listening for me to reinforce that.

The biggest opportunity, by the way, of all of them that we are working on is, again, let me reiterate capital markets, the retention side of retail and to a certain degree of mid-corp. We are still having retention numbers in some markets that could be significantly higher and that will give better value to shareholders because we spend enormous amounts of money on acquiring customers. And the key lever here is not NPS. It's actually how we incentivize our distributors and how do we incentivize our management because we have been incentivizing them for 130 years on gross growth, i.e., what you bring into the front door, not in terms of what was the net retention. That is the biggest change that we are driving now, and thank you for asking. I just wanted to highlight that, and we're going to show you the numbers.

So Ben, I think Oliver answered the second topic about growth. The first question, just to clear, Ben, was on the impact of the yield curve on flows in the Life business? Or...

The Life business growth, and that's going up.

Okay. So the key point is, technically -- sorry, Claire-Marie can give you a much better technical explanation. When yield curves go up, the attractiveness of the product relative to what we used to have goes up. The issue, however, and I'll talk of it, the amount of flows that come in that you can then invest into the higher coupon. So it's not just yield curve going up, steepening. It depends on the duration of the site and the net cash flow that you're investing because we are duration matched.

So you need to have fresh net cash flow investing into higher coupons for the earnings to go up over time. So economically, it's for customers much more attractive, particularly on a risk-adjusted basis. It takes time as it works itself into the new business into the in-force. Sorry for the more long-winded answer, but that's it. So typically, you have a 24 months lag of a steeper yield curve before you see a significant uptick. And then it obviously needs to work itself through the CSM, which takes, again, a little bit of time.

Okay. Cool. Thanks, Ben. Our next question is from Michael, Michael Huttner at Berenberg. Go ahead, Michael.

I had two questions. You've got these lovely slides, C51 to C55. And I wanted to ask if you could give us a little bit more comfort on the private placement debt. So that's, I think, about EUR 22 billion in total for the group as a whole and for AZ Life. And I know you spoke a little bit about that. It's about half the total half -- it's about EUR 11 billion. I just wondered just on that slide because that's the slide which mentioned last slide where the regulators are getting a little bit more focused, what the metrics are in terms of default rate, what you're seeing the buffers from the life insurance and then all this wonderful stuff.

And then the other one is really simple. I think there were two numbers I caught. One is EUR 400 million for the headwind in FX. But I think, Oliver, you mentioned a figure of EUR 1 billion. And I just wondered whether sensitivity had gone up, maybe. That's it.

But Claire-Marie gives you the longer answer.

On the FX effect, like on the operating profit, so that's basically the level of total FX headwind we have seen in the operating profit last year. And that's basically a total FX effect, right? It's not only the U.S. dollar FX effect. And so like the numbers that Oliver was mentioning, the EUR 1 billion of possible FX effect, is related to total currencies. While the number that basically last year, you certainly may remember, which was again 10% U.S. dollar variation, we have a EUR 500 million operating profit effect.

And that number slightly moved up. When you look at the sensitivity for 2026, it's around EUR 600 million. It's simply linked to the fact that there is also growth related to PIMCO, which is showing up in the numbers. So I think the one you need to compare to last year will be against 10% movement on the U.S. dollar, EUR 600 million, which was EUR 500 million last year. So I hope it clarifies.

And then thanks for pointing out to all the work that basically the team did on the Pages C51 to C55, which is indeed providing a lot of transparency on non-traded assets, so both nontraded debt and nontraded equity, and then a new page we have introduced, which is providing full transparency as well on the investment portfolio of AZ Life. So I think what's new also on those pages is that we are providing by buckets what is the average expected return in each of the various categories and also a few elements which are explaining where we stand when it comes to those assets in terms of experience.

Now related to nontraded debt overall, maybe just building on some elements I already shared previously. First of all, we have been investing in nontraded debt for a very long period of time. We have a lot of experience when it comes to private debt. And think about the fact that it's quite a natural place for us to be invested into because we are the owner of PIMCO. We also are the owner of Allianz Trade. So credit risk is something we know pretty well, we know very well, I will say. And also related to the point of Oliver, we have a lot of focus on liquidity as part of that risk assessment.

Now if you look at this Page C51, clearly, we are very comfortable with the quality of our portfolio. And it's also not a very exotic portfolio when you really look at the details, when you look at what we are also expecting to generate in terms of return in that portfolio. Now half of that portfolio is a real estate related. We have 1/4 of that portfolio within that real estate part which is noncommercial mortgages. So that's retail mortgages essentially with Germany and within the Benelux. So that's an illustration. And then we have the infrastructure debt, which is also a very historical, longstanding, where we also have a lot of very positive experience. And then we have the private placement you have alluded to under middle-market lending, where we have very high-quality portfolio, which are also very diversified and with a very good track record.

So if I understood well, I think you were asking in particular about what is the default level we have seen within the private placement portfolio, I think, for which, last year we had given the insights, which were around 18 bps default experience. Actually, we really continue to see similar level of trend. So there is nothing new, a new type of development which are emerging in that portfolio that are deviating compared to what we had experienced at the same point in time last year. We continue to have, when it comes to pricing of those type of placement, a very conservative approach. And our experience is actually in line with what we had communicated and way below the pricing we had taken initially.

And then we have provided full transparency on the AZ Life investment portfolio which you will see there if you spend the time to go through. It's very high quality, and we are very comfortable to share that transparency to also provide more comfort.

With these things, from my perspective, I was already very impressed, it's Oliver speaking, with the Allianz Insight. Serious material, I would like to point you to that too because we knew that these concerns are coming. And the reason why I'm mentioning it, some of these things pop up when there's something like with first brands or now with some of the listed products of others. We also had said that we do not rely on the fake credit ratings that some people deploy. I just would like to reiterate, we'd like to be really Munich Bavarian boring when it gets to these things, and that is also true when we have subsidiaries on the other side of the ocean.

So the label private investment or Level 3 doesn't mean anything. The issue, again, as we try to say, is liquidity stress. We look at that. We constantly compare our marks conservative assessment. Just as a proof point, you may have seen over the last 2 years how regularly we have been updating the valuation of our real estate portfolios. And when there were required, we brought the valuations down. So we have not held to artificially high relevance. And you saw that sometimes actually to my nonpleasure, but it's just what we do. We have no interest to keep fake marks.

And I just want to make sure from the top of the house, we are trying to safeguard your money and be erring on the conservative side. It's a very important question you have, and it's a very important message for us to send. Does it mean you can never have anything? No, we don't know. But in the grounds of what do we control, we are really tight on risk.

Okay. Thank you, Michael. Our last question is from Iain, Iain Pearce of BNP. Go ahead, Iain.

The first one is just on the cash. Just looking at the cash, the capital return, obviously, the cash you're going to pay out in '26 isn't covered by the remittance that you've upstream this year. And if I just run forward the DPS sort of in line with the EPS growth target, that implies sort of EUR 350 million, EUR 400 million growth, which is roughly in line with the cash growth guidance across the plan. So just wondering when you expect the underlying cash return. I know you'll have a tailwind from Bajaj in '26 to cover the cash returns that we're expecting.

And the second was just on the retail pricing outlook. If you could just talk a little bit around the claims inflation you're seeing in retail, particularly in motor, because it sounds like there seems to be some expectation of continued claims inflation. But if you look at the '25 experience, the '25 experience seems to be very low on the claims inflation side. So if you could just talk a little bit, particularly on motor, what you saw in '25 on claims inflation and what you expect in '26, that would be really useful.

So on the claims inflation, so indeed, what we continue to see is that is a slowdown on the overall inflation, but we are we -- I mean, despite this, I would say, the slowdown in headline inflation, the price inflation for spare part remains clearly well above headline CPI. So what we continue to see is clearly a level of inflation, in particular in motors, but I think in multiple parts of retail, that is in the mid- to single digits in many parts of our portfolio, but also in some of the portfolio like Australia or the U.K. will be mid- to high single-digit type of inflation. So we have to work against a nuanced inflation environment. That is basically that we have to address.

And as always, right, we are not letting that level of inflation coming through. So we are working very actively to absorb some part of that inflation via a number of initiatives we are running for our clients in general. So we have a lot of focus, as an example, on leveraging spare parts, on settling claims very quickly, on basically guiding some of the cars, as an example, to preferred garages. So we have a lot of initiatives. And actually also even AI is also helping us from that angle also to address a lot of the fraud-related type of inflation, which is also supportive. And what we do is that we redistribute part of that benefit back to our customers to help as part of the overall affordability trajectory.

So that's a very important aspect of it, and we are clearly working with that. Obviously, now, after quite some years of that repeated experience, we know how to address it. So I think that's the way we are working on that. So I would say, if you need to have something in mind, is that for Europe, it's actually more the mid- to single digit. And for Australia, U.K., it's on the higher end.

So you had a question on remittances versus cash out. I don't understand actually the numbers but I'm not the CFO anymore. If you run the numbers in the head, so core income, why do we say core net income, because it takes the noncash items out. So 11.1, you have a remittance ratio of 85% plus. That gives you 9.6% cash. We pay out 6.7 as dividends, 2 plus 5, that's 9.2. So I wouldn't understand why we were spending, paying, then we get in the holding. Then you have the cash buffer at the holding that we are also feeding through optimization of capital, i.e., we lift out excess capital out of the OEs that we do not count as remittances, so there may be a definition issue.

So actually, I do not understand how you come to the numbers. But maybe Andrew can talk to that. We would never pay more money than we generate unless we want to consistently do that in a stressed environment. Remember, we had Structural Alpha, where it was very important for us to reassure investors that we deliver dividend, and that's why the payout ratio relative to accounting net income was higher. But usually, we have a significant buffer relative to the cash we generate for holding relative to what we pay out. Everything else would not be prudent and we wouldn't do that. But maybe I have missed the question and then Andrew can pick it up after the call.

I think as well, maybe, I mean, the way to look at it, and you can refer back to the slide we went through as part of the Capital Markets Day, right, is that we pay out approximately 90% of the cash we generate from the operating entities. And basically, the 10%, as mentioned by Oliver, we want to retain. We need that also to keep some flexibility to fuel some of the transformation and some of the deployments we want to do. I think that's the other way to look at it. And clearly, we have been optimizing from various angles. And I think this is really the level of cash we need to retain to be able to operate our business in an optimized manner.

Okay. Thanks, Iain. And that concludes our Q&A. Thank you, everyone, for your interest. Any questions, any follow-up, please feel free to reach out. And we'll see a number of you on the road in the next week. Thank you very much. Thanks.

Okay. Good morning, everyone and welcome to Allianz's 4Q and 12 Months 2025 Conference Call. Thank you very much for joining us today. My name is Frank Stoffel, Head of Financial Communications and Valuation Relations. And I'm here at our headquarters in Munich with our Chief Executive Officer, Oliver Bate; Chief Financial Officer, Claire-Marie Coste-Lepoutre; and Group Head of Communications, Lauren Day. Today's conference call is scheduled for 75 minutes. And as usual, we will answer your questions following our presentations by our CEO and our CFO.

With this, it is my pleasure to hand over to our CEO, Oliver Bate.

Yes. Thank you, Frank. And thank you and good morning from sunny Munich -- for joining us. I hope we have an interesting time despite the fact we are going to go through the material.

I will, for better reference, since we are not seeing each other, will go through the various slides and let you know where we are, where I am in terms of the presentation. If I can turn your attention, please, to Page A 4, where, we are summarizing some of the key financial outcomes for the year. I'll talk about nonfinancials in a little while. We are very happy to report that -- and we are very joyful that we have had another wonderful year 2025 for our company, 8% more volume to EUR 187 billion. Operating result, 8% up same number by coincidence to EUR 17.4 billion, which is above our outlook, again, increased further from what we thought [indiscernible] in the third quarter. Our shareholder net income is up actually double digit to 11 -- by 11% to EUR 11.1 billion And our dividend per share consequently is going to -- as a proposal to the AGM, is going to go to EUR 17.10. I would particularly highlight the point around Solvency II. We had a significant bounce upward for the year to 218%.

And more importantly, when you will listen to Claire-Marie's comments, post stress, we now have one of the most comfortable positions in the industry. So we've been closing a little bit but some people said, are you high enough? Return on equity, we call that core return on equity because we take the shareholders' core net income, is at 18.1%, 1 up -- 1.2 percentage points up. Remember, at the Capital Markets Day, we were asked whether we are not very ambitious to say it's above 17%. Last year, we did a share buyback of EUR 2 billion. This year, we just announced EUR 2.5 billion. Why EUR 2.5 billion? We have very strong capital generation, very strong solvency, very strong cash flows, very strong what we call operating capital generation as a number. So we are very confident in our cash and cash generation position and that allows us to invest more. And we believe, particularly on a relative basis, our share is a very attractive investment to invest into.

Let me then go more into some of the important details, at least from our perspective, on Page A 5. And I would like to start with a little thing on the lower right-hand side. All these numbers that we want to explain to you show that we are very well on track to deliver on our Capital Markets Day targets that we have discussed with many of you in December of '24. There was a question on how the first year would look like and we are very well on track to deliver on the targets that at the time seemed quite a stretch. Let me start on the upper left-hand side. Our Property-Casualty retail business is very, very -- doing very well at very high levels of profitability, even though in the fourth quarter, we have done, again, another strengthening of the balance sheet. Our combined ratio in commercial is even better at below 92%. And the health and protection business that we've been growing more than the rest of the business over the last few years, the profit has been growing 10% again. And we'd like to make sure it grows.

For those of you that wonder how the number comes back, please mind that we have been changing the reporting scale in order to better reflect our 2 core businesses, protection and retirement. As highlighted in the Capital Market Day, we obviously still report financially in the segments, P&C, Life and Asset Management. On the retirement side, the net CSM grew up 8% adjusted for FX. Please, all these very good numbers that we are reporting in euro were massively impacted by the weakening of the U.S. dollar. Also, as a reminder, more important maybe for analysts, we do hedge a dividend. So we had no negative impact on cash flows. Our asset management numbers improved further. The cost/income ratio at 60.7%, strong fee discipline at PIMCO anyway.

But also great results from Allianz Global Investors who are working very hard on productivity and achieving it. And on top of that, we had outstanding net flows of EUR 139 billion, organic growth of 7%. And again, both asset manager, mostly PIMCO but also AGI having positive net flows despite a challenging picture on the pure equity side. So that's a testimony to the strong Asset Management segment. When we -- when people ask us what do we really look for because we always report quarters and then annual numbers, I'd like to turn your attention to Page A 6. Why do I do that? Because we are on a long-term trajectory. We do really manage the business for the long term and we want to accelerate the growth of our business as we have reached now a very good level of profitability.

And Page A 6 is supposed to highlight the trend that we've been taking on revenues, on operating profit, on earnings per share and dividend per share. We are almost now when you look at dividend per share at EUR 10 more than we had in 2015. And we've been consistently growing the dividends out of the last 10 years, 9x increase in dividends. Why is this important? Because many of our investors do need dividend. They do need it for retirement income. As the baby boomers are retiring, dividend income is a very important source. And we are also the share that -- from what I know, we are the most widely held share in Germany by retail investors. And we now have more than 70% of our employees as shareholders and they are benefiting from higher dividend. By the way, as a side note, we are again giving free shares to our employees this year, one for free for everyone, plus matching shares because we really believe we need to capitalize retirement income and we want to contribute to that as much as we can.

Now why is Allianz doing very well? You can say, isn't that a bit odd, the world is a crazy place and you are doing so well. What does it actually mean? Page A 7 gives you the Allianz-specific answer but I would say, in general, the insurance sector has been systematically improving itself. And while everyone always criticizes regulation, I can tell you, Solvency II has been a very good regulation for us because it's purely risk-based. And when I joined Allianz, we had too much risk on the investment side relative to what investor appetite was. That has been optimized. We're getting much better risk-adjusted return on investments now. We're taking the returns and the risk where they are appropriate. So a much better balance sheet structure. The productivity in this sector has been improving, not just at Allianz. So I think first backdrop is, the industry is doing better. We are pricing our guarantees and life insurance better. So this is the first part.

Within the insurance and asset management sector, if I may say, we're doing extremely well. We are one of the few that have been able to really build a successful asset management business. You see that. It's often asked why? Well, we have been at it for a long time and we believe it's a core part of the retirement value proposition. But there are other things that I'd like to highlight. And when you turn to A 7 again, that in an environment where you have enormous geopolitical and society tensions, the AI revolution, climate change, the most important thing is the trust from our customers. I'll talk about that. The Net Promoter Score, again, let me repeat what this is, the willingness of our customers to recommend our services and product to their families and friends, the value and the power of our brand. We are by far the highest value insurance brand. And in terms of financial services, in Interbrand, we are only #2 behind JPMorgan, who are much more large than we are.

And certainly not least, we have really made a lot of progress on employee engagement. According to our data, we are now the benchmark within the insurance and financial services industry. And we obviously make sure that we have good financial ratings but that comes as no surprise. Page A 8 shows you the journey. And I would always like to tell you, believe it or not, all these numbers are audited because they're part of incentive structures. We do have very clear scientific numbers. It's not like we are sucking our thumb and come up with stuff that looks good, whether that is on loyalty, leadership, whether that's on brand value and it's not just Interbrand, Brand Finance, the Trust Barometer of Edelman and you see what we call IMIX, is employee engagement. It's based on a database of 2,000 companies in the world. And all of these KPIs help us to do well for our shareholders at the end of it.

Let me now talk about strategy and reinforce what we've been telling you during the Capital Market Day. But if you allow me, I would like to go into some of the examples what's driving our success and I would like to start with Page A 10, where we're highlighting. One of the most fundamental opportunities for Allianz is to grow faster and to grow our customer base. We've always done fairly well on revenue but the customer base growth, particularly in the core of Europe for a long time was anemic. It had a lot to do with the improper balance between price and value, which we've been working on, a lot of work on, not just brand but product quality and service quality over the last 10 to 15 years. And that is starting to show. Some of you remember the history in Germany where we were losing market shares against our competitors in auto insurance, leaps and bounds year after year in the retail business.

We've been able to turn that around. Let me do a particular shout out to our colleagues in Germany, particularly in health and in property, casualty and in life for doing a great job in improving customer service quality and product quality. And you see that on Page A 10, our new business policies in Germany have been growing 12%. I think we are now back to more than 10 million cars that we insure, discussed with some of you, as we went down to 8 million and others were growing. That we have been turning around.

We're not finished yet. The second thing is the key number to work on and this is just an example for the United Kingdom is to reduce policy churn. The highest churn, by the way, in Europe is in the U.K. Retention is only below 70%. It's the #1 opportunity. We still have a lot of work to do but we're improving in reducing churn as we speak. And last but not least on this page is increasing cross-sell. We have quite a few markets where we're improving them. I would like to call out Italy, where for a long time, we were seen to be world-class on motor insurance but not on many other things other than life. We're increasing cross-sell as we speak. 2% looks like a small number. If you compound it, it's quite significant.

And the last box on this page is the volume growth that we are continuously seeing on our so-called platform businesses, Allianz Partners and Allianz Direct. Allianz Partners is a little bit more volatile. The first 3 quarters were much stronger than the fourth but momentum long term will be very strong. Allianz Direct is showing very good level of profitability and double-digit growth in volume, which is a really nice thing to report and we are very happy about that. Page A 11 talks about what's very important for us, to grow health and protection. It is not just highly appreciated by our customers and you have a few examples on the page that I'm going to highlight but also shareholders like it because it is an underwriting business and is something that society needs as the public health and protection systems are culling back. Just a couple of examples. We have been growing market share in Turkey for a long, long time, a country that's under severe stress from high inflation. So it's on the back of already being a market leader.

I'm super proud about what our health team in Germany has been doing. Allianz Private Krankenversicherungs has had super success both in supplemental but also now in the core product after having completely revamped it. We are also now #1 in the group health business, supplemental health business and that has been a growth engine, by the way, because of great collaboration and distribution with the team in Stuttgart. And you have a couple of other examples. The last one on this page, I'd like to turn your attention to is the lowest box, is we're increasing cross-selling. We have really spent a lot of time in France on trying to cross-sell, particularly for new customers, protection products. It took a long time to come. Now it's really working. We have 28% higher cross-selling in the protection side and the numbers are up to 81%, which is quite stunning.

And as always in Allianz, we are trying to expedite these changes and bring them to other markets on a consistent basis. So that's what we are trying to do on the growth side. And again, it's the beginning of the journey. It's not the middle or the end of it. A 12 talks about productivity. And again, we're probably going to talk about what does AI do to us. We would like to point back to, if you have a chance, look at our website, look at the stuff we said at the Capital Markets Day at the end of '24, that's barely 16 months ago. We were very clear that productivity is one of the sources of competitive advantage in the future and we are at it consistently. What you don't see here, we started the journey in 2018 with an expense ratio in P&C of 28.6%.

We've brought that down to 23.9% at the end of last year. And we aim to continue the journey with about 30 basis points every year, an improvement. And both and you see that in the smaller numbers to work on administration expenses but also on the larger bucket, which is distribution costs. Now you will ask yourself, how is this possible because distributors always ask for more. The way we think about that is using the strength of our brand, the digital attraction that we have for clients and bringing that to our distribution partners to reduce acquisition costs, which help also in the value proposition to our clients, the price of the product and then, of course, for our shareholders, too.

So what are we going to do going forward? That's really important. So we will accelerate further the investment into productivity initiatives because we have very strong profitability. We have some extraordinary gains this year. We talked about it in the last quarter of -- third quarter of last year that we want to use significant amount of money that we are getting, for example, for our joint venture in India, into doubling down in technology and productivity initiatives. Again, the focus of those is not to take the cost out first. It is actually improving customer services.

This is the #1 priority that we have. People reward us not for being cheaper but being better. So that's the focus. We need to obviously now then translate that into unit cost and factor productivity. So we also have programs in life and asset management. You see that in the great progress at Allianz Global Investors. And now we have the advantage that we can be a lot more fast than we were in the past with AI. Why? Because these translation mechanisms that you had, from business requirements into business organization, into technology specification and then the programming is being shortened and accelerated.

And this will have a productivity impact because a lot of the IT cost are there because we need to run parallel systems for many years and that so-called parallel runs times have to come down and they will come down. And last but certainly not least, a lot of the innovation we're testing first in Allianz Partners and Allianz Direct because they are built with the idea of being digital first and then rolled out to the rest of the businesses. That means that we don't have innovation anywhere else but we can sort of test many of these things there first and then move. So that's on productivity, a long-term story that will not change. And again, we believe in the power of consistency and not in the power of having a new story every day. Page A 13 talks about another consistency that we've been working on, that's resilience. By the way, resilience is not just a financial number or a financial expression, as you see, with better financial leverage, higher net cash remittances, higher solvency ratios.

And again, for those of you that are experts, you know we have a Solvency II reform that's coming, that's going to give us further boost. We have a few points coming from our India divestment. So our solvency position is now first class, certainly post stress. But also capital generation has been extremely strong and we're going to use that to reinvest in the strength of our franchise. So with that, there is only one page that we will always debate, that's the outlook page. If you had asked me, you found that revolutionary, I wouldn't do an outlook because I believe people should know that Allianz is a strong deliverer. And when you look at the Page A 14, you find what the midpoint of our outlook was, what the actual results are, we always are careful with what we do because remember, there can be sudden shocks to markets and we want to make sure that we'd rather overdeliver than overpromise.

Page A 15 is a nice transition into Claire-Marie's part that reminds everyone of what our capital management approach is, 60% payout, at least the dividend per share of the previous year and an additional capital return. That's exactly what we're doing this year, right? So we have done the EUR 2.5 billion share buyback because we have an extremely strong liquidity capital generation position and it nicely fits to our 60% payout. So for '25, we will be above that with an estimated total payout ratio of 79%. And again, a small reminder for someone like me as a fan of dividends, growing dividends [indiscernible] 9% per year for the last 10 years.

So that's it from my side. Thank you for your attention. And with that, I'd like to hand over to Claire-Marie.

Thank you very much, Oliver and good morning as well from my side. So let me start on Page B 3, where I would like to share some highlights when it comes to our overall results for the full year 2025. So overall -- and before I go into any details, I think the overall picture and you have heard that from Oliver, is very strong and is very strong in terms of growth, in terms of profitability and resilience. And clearly, that picture demonstrates from my perspective, an excellent start into our Capital Market Day targets. This performance is fueled by the rigorous focus of the organization in terms of execution of our 3 strategic levers, growth, productivity and resilience. And indeed as we go through the material, you will see how both our sustained financial momentum and our disciplined attention to resilience are supporting our confidence towards 2026 and beyond, I would say.

So moving to the numbers and starting with top line, you can see that we have reached a record top line of EUR 187 billion with an internal growth of 8%. All segments, you can see that on a small pie chart are contributing to this positive development. And for all segments, this growth is either in line or above our Capital Market Day expectations. On a nominal basis, we see a strong FX effect, in particular in the second half of the year, which is impacting all segments. On the operating profit side, we have been growing by more than 8%, emerging at EUR 17.4 billion, our highest level ever. This is above the high end of our original outlook and as well above the Capital Market Day expected growth rate we have communicated in December 2024. P&C clearly had an excellent year but both Life and Asset Management delivered strong performance as well from my perspective.

We have an FX impact into that number. Just to give you a sense, excluding FX, to get a sense of the true underlying picture of our performance, our operating profit growth would have been around 11%, excluding FX, with P&C at 17% and Asset Management at 7%. This year, we have a better nonoperating profit, which together with our operating profit results in a very strong core net income growth and core EPS growth of 13%, clearly above the 7% to 9% Capital Market Day target range. This 13% of core EPS growth is building on the 12% we had achieved already last year, making our EPS journey very attractive clearly, as already also highlighted by Oliver. In addition, our ROE is at 18%, also nicely above our target of strictly above 17%. Finally, our Solvency II ratio is at a strong 18%. This is the highest it has been over the last 5 years, demonstrating our resilience and our focus on this as an organization.

Let's move to Page B 4 and let's have a look at the P&C results. So for the year there, our top line achieved its highest level ever at EUR 87 billion with 8% growth and both price and volume are contributing roughly equally to that development. On the retail P&C side, the growth in particular is at 9%. And as Oliver has already mentioned, our initiatives to increase our underlying volume growth are making good progress. We have achieved 3.5% in the second half of the year on that dimension. As you can see as well further in the backup or in the further details of the material, the growth is broad-based across our portfolio. On the rate side, we are overall at a healthy level of rate of 4.6% for the full year.

Now talking about profitability. As you can see, our combined ratio emerged close to 92% for the year. This is clearly an excellent level and both our retail and our commercial lines of business are contributing to this performance. Once again, you can see further in the material how diversified this performance is as well across our portfolio. The main driver for the positive development of our margin compared to 2024 is a further improvement of our fundamentals in the attritional loss ratio, which I'm very happy to see. So overall, we have seen a lower level of natural catastrophes in 2025 but this has been offset with a lower level of runoff and discounting. And even though we have seen quite some heavy nat cat activities in Australia in the last quarter, our overall nat cat experience was better this year compared to 2024. As communicated in the third quarter as well, we have been very conservative this year on the year-end booking, both in terms of runoff but as well in terms of current accident year and we have further increased the level of prudency in our balance sheet.

We also did focus during this year on productivity, as you have heard from Oliver as well with our expense ratio, which has been further decreasing by 30 bps versus last year as expected. And while the overall investment results were slightly lower in 2025, mainly due to FX, our excellent technical performance and growth allows our P&C operating profit to emerge at EUR 9 billion. This is 14% higher compared to last year, well ahead of our Capital Market Day expectations of 6% operating profit growth in P&C. So we are very pleased with the performance of our P&C business in 2025. We see excellent performance in both retail and commercial. This performance is not due to a better nat cat experience but rather a reflection of an excellent volume growth, positive underlying margin development and prudent current and prior year reserving. This position us very clearly very well for the year ahead.

Let's move to Life & Health on Page B 5. And there, I'm starting with growth, where you can see on this page that our PVNBP emerged at almost EUR 85 billion, its highest level ever with a growth of more than 5% FX adjusted. This growth comes after an exceptional new business development in 2024, where in 2024, we had seen 22% growth of PVNBP back then. So I'm very happy with the new business we have captured in 2025. We also see good increase in net flows across all our portfolio. We continue to operate at an excellent level of new business margin, continuing to benefit from a focus on our preferred lines of business. Like in P&C, our performance across the portfolio is quite diversified. Oliver has already outlined some of our success stories in health.

So I can add some positive highlights on the rest of our Life business with, as an example, the Italian team, which has grown by 20% its value of new business adjusted for the divestment of the UniCredit JV or the Asian team, which did grow its sales outside of Taiwan by more than 14% last year. The Life CSM development over the year is better represented if you look at the net development of the CSM on the page, so in the small capsule, which allows for reinsurance and tax effects. So the net CSM adjusted for FX did grew by 7.5%. Moving to Life operating profit. We emerged at EUR 5.6 billion, which is ahead of our outlook. The operating profit growth is around 4% FX adjusted and close to our medium-term expected growth rate with this adjustment. In the fourth quarter, on a stand-alone basis, our level of profit is a bit lower than the quarterly run rate of around EUR 1.4 billion as a result of some charges that we have taken for some legacy medical business in Asia.

So overall, for the Life & Health business, we are pleased with the level of growth and the level of profitability of the new business. In absolute, I will say but as well considering the very demanding comparison to 2024, we see very healthy inflows and a steady development of both inflows and profit, which also gives confidence for 2026. Moving to Asset Management and looking at Page B 6. Here, the level of organic growth of our asset management business reflected in the flows developed strongly over the course of the year. We have seen total net flows of almost EUR 140 billion and an organic growth rate of 7% for the full year. In the fourth quarter, the trajectory continued with EUR 45 billion of net flows, a record for the fourth quarter with strong organic growth at both PIMCO and AGI. The trajectory at AGI since the second half of the year is very pleasing to see from that -- from my perspective.

Our net flows continue to be supported by our excellent investment performance. We have a share of 93% outperforming assets under management against benchmark on a 3-year basis. Clearly, we are adding value to our customers. Net flows are diversified across geographies and with strong development as well into new products and distribution initiatives like the PIMCO active ETF suite with nearly 50% growth in 2025. This excellent flow momentum is continuing into 2026 at both asset managers. Revenues emerged at EUR 8.5 billion with margin broadly stable and lower performance fees compared to last year. Both asset managers have done an excellent job when it comes to productivity. So it's not only productivity for P&C, we also do productivity Life & Health but as well on the asset management side. And here -- so both asset managers have done really well when it comes to that focus. But here, I want, in particular, to praise AGI, now almost at 62% cost-income ratio for the full year and below 60% in the fourth quarter.

With the segment cost/income ratio below 61%, we land at an operating profit of EUR 3.3 billion, a 7% growth FX adjusted. So overall, the performance on the Asset Management segment, also given the FX impact has been excellent in my view. We see a record level of third-party assets under management, very strong flow momentum, stable fee margin and an excellent focus on productivity. So I'm very pleased here as well. Moving to Page B 7. As you may remember, resilience was an important aspect of our Capital Market Day at the end of 2024, also as highlighted by Oliver. And we continuously strive to secure reliable delivery of profits, capital generation and cash as an organization. Beyond the fact that the group derives considerable resilience from its diversification across geographies and segments, here, I'm focusing back on the framework and the dashboard that we had laid out at the Capital Market Day.

As you know, we look at resilience holistically. So we have seen clear positive development over the year also as we work structurally on the various dimensions of the framework. Let me go through a couple of examples. First of all, we have seen a strong operating profit evolution despite the FX headwinds and we continuously enhance our technical excellence in our P&C business to ensure a good preparation to the cycle. We have captured 7 percentage point increase of our Solvency II ratio from our refined work at modeling implied volatility. Our Solvency II capital generation is at an excellent level, also supported by the early benefits of our enhanced focus there. And we have further improved our downside management.

This even goes beyond significant improvement in the post Solvency II of plus 11 percentage points, for example but also to include further diversification of our reinsurance structure. And throughout the year, we did broaden the scope and the nature of our scenario testing to further reflect the geopolitical environment. So overall, a lot of work with positive concrete outcome as well in the numbers. Let me zoom into the solvency ratio development to further illustrate on Page B 8. I hope you have a way to see the slides because it looks like we have a technical issue. So I hope you can see that. It's certainly going to come in a few seconds.

So I think we should interrupt the webcast for a moment until we have reestablished the connection. Sorry for any inconvenience. We'll be back shortly. Thank you.

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So we are back. I hope you can all see Page B 8. So where we can look at the development of our solvency ratio. So yes, no, 1 before on the solvency ratio. So B 8. Yes, very good. Thank you very much. So basically, you can see that our solvency -- no, so hopefully, we'll get it back. So our solvency ratio emerged very strong actually at 218% at year-end, which is 10 percentage point increase versus year-end 2024. So our presentation is fine. This increase is, in particular, fueled by the early work we have performed on our operating capital generation and the very strong performance that we have seen in our P&C business, in particular. This allowed our operating capital generation to emerge 25 percentage points -- at 25 percentage -- at an excellent 25 percentage point in 2025.

You can see also on the right-hand side that our sensitivities have slightly reduced -- will be good to go to Page B 8, if we can. And combined with the overall increase of solvency, this means that our Solvency II position post the combined stress is now around 197%, so almost 200%, which is 11 points higher compared to year-end 2024. So clearly, this 200 -- almost 200 percentage of solvency ratio post stress is a very strong position and a very good position to operate from in the future. If we move to remittances on Page B 9, here you can see that our net cash remittance for 2025 is at EUR 8.6 billion, which is slightly ahead of our Capital Market Day commitment of EUR 8.5 billion, as is our remittance ratio at 89%, which is against our 85% target. As previously and I think it's very important, our cash remittances are coming from a very diversified base. It's very broad-based, as you can see on the right-hand side.

FX are playing a role in the year-on-year comparison of the cash development. On a normalized basis, actually, our remittances grew at least in line with the operating profit growth. On top of our normal cash remittance, we did receive the proceeds from the first tranche of the sale of the Bajaj joint ventures a few weeks ago, which will also give us further flexibility for the future. So overall, as well from a cash perspective, we are in a very healthy position too. Let's move to Page B 10 and let's have a look at our outlook. So we are keeping our traditional approach to base our outlook on the delivered operating profit of the previous

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unchanged versus last year and allows for some uncertainties, typically around capital market volatility, FX and P&C natural catastrophes.

I also would like to mention that as announced, we plan to neutralize the IFRS accounting gains related to the disposal of the Bajaj joint venture. This gain will be reinvested in productivity initiatives and also in accelerating the reinvestment of bonds into higher-yielding instruments. Importantly, both of those actions will have a positive and lasting impact on our future earning power. Finally, the share buyback we have announced yesterday will continue to support our EPS growth journey, standing at 14.4% at this point against our Capital Market Day target, a very attractive level. Let me recap now on Page B 11. Clearly, I'm very pleased with our performance for this year. And I also would like to warmly thank all our employees and teams for their work and dedication at best servicing our customers across the globe, which allows for such results.

With a operating profit above the highest point of our original outlook range of EUR 16 billion plus/minus EUR 1 billion, we are in excellent territory for the delivery of our targets for the 3-year Capital Market Day cycle. Importantly, also, we have not only delivered a very strong financial performance but we have as well increased our resilience across all metrics. This is an excellent achievement too. Both the financial performance momentum and the resilience of our organization provide a very supportive environment to our dividend proposal and our share buyback program. It as well gives full confidence towards 2026 and also our ability to sustain value creation for all stakeholders going forward.

So with that, I thank you very much for your attention and I hand over back for questions to you, Frank.

Thank you, Oliver. Thank you, Claire-Marie. Before we start our Q&A session, let me please mention the usual housekeeping items. [Operator Instructions]

Okay. Let's take the first question. No. The question has disappeared.

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Okay. We are not seeing any questions on the line. Can you just check whether there's a technical problem, please?

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In light of that, would you have any concluding remarks?

Yes. Normally, we have a lively debate. I don't know whether the numbers are so stunningly positive that nobody wants to ask a question. So please use the opportunity during the day. I know there's a lot of reporting going on also by other companies. We had Munich Re, we had AXA with great results. So the sector is doing really well. I hope we're doing well for customers, too. And again, thank you for your attention and thank you for your support. We are available. In case that format is not the best one, Frank and Lauren have their mobile phones live and we'll be happy to speak to you.

And we have an analyst call later. If there are more things on the technical level you'd like to understand, you're obviously welcome to also participate in that. But let me summarize, we have super strong financial. We have enormously added to resilience too. We're using the opportunity to strengthen ourselves for whatever may lie ahead. We want to use the financial resources to further double down on strengthening our brand and customer service and over time affordability of our products. I thought that would be a base for discussion today. And we are happy to see you also in person and speak in German whenever you have the desire to do so. Thank you for listening.

Thank you.

Thank you very much.

Ladies and gentlemen, welcome to the Allianz Conference Call on the Allianz Group Financial Results for the Third Quarter of 2025. For your information, this conference call is being streamed live on allianz.com and YouTube. A recording will be made available shortly after the call.

At this time, I would like to turn the call over to your host today, Claire-Marie Coste-Lepoutre, Chief Financial Officer of Allianz SE. Please go ahead, Claire-Marie.

Thank you very much, Andrew, and good afternoon, everyone. I'm very pleased to report on another very strong quarter for the group, which is building to an excellent contribution to the year and our 3-year plan. Our results are supported by both ongoing top line momentum and an attractive margin development. Across the organization, we are working on our 3 strategic levers of smart growth, productivity and resilience, with first signs of materialization in our numbers.

As you can see on Page A4, year-to-date, our business volume growth continues to be very strong at 8.5%. As previously, this growth is diversified from a segment perspective and within the segment across businesses and geographies, which gives us a lot of strength for the future.

Our operating profit is now up by more than 13% versus last year. That number FX adjusted, would even be 13%. Here as well, we see positive developments in all segments. Our core net income growth is accelerating compared to the first half of the year. Year-to-date, it grows by 10.5% or 8% adjusted for the disposal of -- for the disposal gains on the Life JV with UniCredit in Italy that we did book in the second quarter and the anticipated tax effect on the disposal of our stakes in Bajaj in the first quarter.

Our core EPS adjusted for the same effect is now up 10%, which is very strong and ahead of our 7% to 9% target range. Similarly, our core ROE is above 18% and well ahead of our target level as well. Our solvency ratio emerged at 209%. Our operating capital generations continued to be very strong, which gives us flexibility for current and future capital deployment.

Given the excellent performance of the organization at the end of September, I'm very happy to indicate that we have adjusted our outlook upward yesterday night and that we expect to land for the full year at least at EUR 17 billion operating profit. Of course, the year is not over, and we can still see natural catastrophes or market movements. But clearly, we are very confident in the overall outcome.

Turning to P&C and having a look at Page A5. Here, we had another excellent quarter, building on previously excellent quarters achieving another record level of operating profit, now up 15% versus last year, as you can see on the right-hand side of this slide. Year-to-date, our total business volume is at plus 8%, which is excellent. This 8% growth is ahead of our assumed medium-term growth rate of 6% to 7%. Approximately half of the growth is volume, rest is price. And compared to the first half of the year, the volume growth has been accelerating from both retail and commercial.

Our internal top line growth for the third quarter is in line with what we have seen for the second quarter as is our rate change on renewal for the full book at around 5%. The renewal rate continues to be higher in retail at plus 7% versus commercial, which is at plus 1%. The competitive conditions clearly are differentiated market by market in general, but in general, actually, personal lines continues to see a positive environment, especially in core Continental Europe with retail motor and fleet, as an example, pricing at plus 9%. Commercial lines remains more resilient in mid-corp than large corporate, but no real significant change compared to the second quarter.

We are as well making good progress with growth initiatives in the retail P&C business, which nonetheless will take time for full impact as we expect actually. We see good traction in Germany, in France, in Latin America, in Australia, as an example, and we will keep the focus on continuing to roll out our tools to deliver higher retention, new business and cross-sell to grow volume. In commercial, we have good ongoing momentum in some areas like our partners business, in particular on the health side, and we remain disciplined as required where pricing conditions are tight.

As you can see as well, we achieved a very good level of combined ratio at the end of the third quarter at 91.6% with both retail and commercial performing. Also, as you can see now our material, this performance is very broadly spread across the portfolio. In particular, I'm very happy with the development of our attritional loss ratio with more than 1 percentage point progress year-to-date. This has been particularly driven by our retail business with the benefit of the underwriting and pricing actions earning through.

Also, our constant focus on productivity continues to deliver with our expense ratio down around 30 bps to just below 24%. The third quarter was very mild from a natural catastrophes perspective, but we booked no runoff overall. So we further increased our reserve confidence during the quarter.

Overall, our P&C business is doing excellently. We see volume growth, which reflects a mix of strong ongoing developments, especially in retail and targeted growth in commercial as we are also working together with the cycle management, our profitability is not just a reflection of more benign nat cat, but also very strong attritional improvements, relentless focus on productivity and significant prudence when it comes to the recognition of runoff.

Let's turn to our Life results on Page A6, where you can see here that we are fully on track to meet our targets. The numbers are more impacted compared to P&C by FX. And as a reminder, we also have the disposal of the UniCredit JV in the third quarter that is impacting our numbers.

Our value of new business is up 4% FX adjusted with our PVNBP up 5% at a very stable new business margin, which is well above our 5% ambition level. We see good developments across businesses. Life new business can always be a bit lumpy. And last year, our third quarter was extremely strong benefiting from various promotions. You may remember that our U.S. life business was up 60% last year in the third quarter, and we had some large ticket transactions, in particular at Allianz Leben.

So if you want to get a good illustration of our fundamental growth in new business value, you can take the growth over the last 2 years between 9/9/2025 and 9/9/2023, which is 20%, which gives an estimated annual growth rate of around 10% FX adjusted. We also continue to have a strong year-to-date increase in net flows, even with slower new business growth in the third quarter versus the first half. And if you look in more details at the profile of our business development, you will see as an example, that we continue to grow at 93% in our preferred lines that our health business in Germany continues to show exceptional momentum once again with year-to-date new business profit up 56%. Italy as well is really worthwhile to mention, because we see a very good growth of 13% if you exclude the UniCredit business with the vast majority of that growth coming in unit-linked.

Moving to the contractual service margin. As you know, the net CSM development is the indicator which matters most for us as it reflects on the stock of profit to be earned by us in the future. So net CSM year-on-year is up 5% or 8% FX adjusted. This is well on track for our targets as is the normalized growth of the CSM just under 4% at the end of the third quarter. In the gross CSM work, there is some variances this quarter from the annual assumption update and the tax adjustments. This is mainly coming from the lapse patterns we see in the AZ Life business, which is then offset in the net view given the reinsurance that is in place.

The trajectory of our net CSM is a better indicator for the business. Net of reinsurance, the noneconomic variances and the assumption changes are actually negligible year-to-date. Our Life operating profit emerged at EUR 4.2 billion, growing 6% adjusted for FX. This puts us well on track against our targets. And this emergence of operating profit is driven by both the CSM release and improved variances in the underlying. Overall, our Life business momentum is good. Our new business profitability is at attractive level, and our IFRS profitability is emerging as expected from a diversified portfolio.

Moving to Asset Management on Page A7. Here, you can see how structurally our business is doing well at navigating the market environment, delivering outstanding net flows, performance and profitability. We had our best third quarter ever in terms of net inflows at EUR 51 billion, which brings the annualized year-to-date growth rate to around 7%. Net flows in the third quarter are positive, both at PIMCO and AGI across various strategies, platforms and geographies. Our Asset Management franchise continues to be supported by the performance we deliver to our clients with 92% of our third-party asset under management outperforming the benchmarks on a trailing 3-year basis as of the end of the third quarter.

If you look further in our material, you will see that our third quarter revenues are up 9%, FX adjusted. They are supported by the higher average assets under management, continued resilience in fee margins at both our asset managers together with performance fees in solid territory. Overall, this leads us to revenues at EUR 6.2 billion at 9M, which translates into EUR 2.4 billion of operating profit for the segment. This is supported by the continuous focus of both asset managers and productivity, which is fueled by cost discipline, operating leverage as we grow our revenues, overall resulting in a cost income ratio improving 60 bps year-to-date to now below 61%. So overall, on Asset Management, we see an attractive diversified franchise with growth momentum and profitability.

On Page A8, you can see the development of our solvency ratio, which is characterized by a continued very strong operating capital generation, fueled by the excellent performance of our P&C business, in particular. This capital generation continues to support our attractive payout, both dividends and share buyback, together with some of our recent capital deployment like the investment into Viridium or the partnership with RAA in South Australia.

As part of our Capital Market Day commitment, we are focusing on the implementation of our capital management framework, and we are confident to achieve our full year objective of more than 20% in terms of operating capital generation. Our sensitivities are almost unchanged at a low level and continue to offer confidence on the resilience of our profile. So overall, we are in a very good position, both in absolute level, sensitivities and ability to generate solvency through our business portfolio. While we benefit from some positive one-offs in our operating capital generation this year, there are fundamentally a lot of positive elements to be appreciated here.

On Page A9, we are actually focusing on special events we had this year. As you can see, we are celebrating the 25-year partnership with PIMCO and Allianz following the completion of our first investment into PIMCO back in 2000. We thought it's very worthwhile to do a zoom on this. Clearly, it has been an exceptional partnership. We are very proud of it. and it has generated considerable value.

If we move to next page, we will see evidence on multiple metrics. PIMCO has, for instance, grown its assets under management sevenfold, its operating profit ninefold. The latter now making up nearly 20% of Allianz Group operating profit. PIMCO is as well adding value through its strong management of almost 50% of the group's assets. PIMCO's franchise as a leading active fixed income manager has been underpinned by a consistently strong investment performance at the end of the third quarter, as an example, 97% of assets under management were outperforming on a 3-year basis.

As I have already mentioned, PIMCO has seen outstanding flows this year and continues to capture a high market share on the flow seen by the industry into active fixed income strategies together with the support from some recent initiatives. As an example, the activity of product I have already mentioned in the second quarter.

We continue to look for ways to further increase the synergies between PIMCO and the wider Allianz Group as we leverage the benefits of an integrated asset management and insurance group. The relationship is very symbiotic alongside PIMCO being a manager of our general account assets, Allianz insurance businesses can seed new strategies for PIMCO and help expand distribution. PIMCO as well is supporting and benefiting from our third-party capital optimization vehicles, such as Sconset for Allianz Life in the U.S. Beyond all of these and what may be less identified in the case of PIMCO is how innovative this business is.

The success of PIMCO plays as well in its ability to constantly look across the business at new and better ways of acting or investing. You have multiple examples of that in the Capital Market Day presentation performed by Christian Stracke, as an example.

Looking ahead and as we outlined at the Capital Market Day last year, we are very positive about PIMCO's future as a leading active manager with skill in both the public fixed income markets and across a broad range of alternative strategies, which are a fast-growing part of its business. So focus is mainly on asset-based finance strategies, that support the real economy as an example, by investing in data centers. So overall, after 25 years of success, we look forward to many more years of working together, seizing growth opportunities and delivering excellent performance to our clients.

Let me wrap up on Page A11. Clearly, we have an excellent year, so far, where our delivery momentum continues across all our segments. Together, we are working on executing the Capital Market Day levers, including the focus on higher capital generation and the strengthening of the resilience. As part of that, both the fundamentals and the diversity of our business continue to give us confidence even if the environment can be volatile or uncertain. With all of this in mind, and given the performance achieved at the end of the third quarter, we have confirmed yesterday in our ad hoc, a EUR 17 billion to EUR 17.5 billion range for the outlook. This is subject to the traditional caveats, but clearly, we are very confident.

What is important for me to highlight is the fact that we would want to land the year at a level which gives us confidence in our ability to sustainably grow from and to deliver on our planned trajectory. This may mean that even if we are already today very comfortable with the quality of our balance sheet and underwriting, we are prepared to do as we did in the third quarter last year when it comes to our current accident year or previous accident year bookings. This may lead us to a higher combined ratio for the first quarter versus what we have experienced year-to-date, bringing our combined ratio for the year up versus 9 months.

With this, I would be very happy to take your questions, and I hand over back to you, Andrew.

Great. Thank you, Claire-Marie. [Operator Instructions] Okay. Great. So it looks like the first question is from Andrew Sinclair of Bank of America.

Andrew Sinclair. First for me was just on P&C. And you've confirmed you're building more prudence in those reserves, maybe even some more prudence to come in Q4. Can you help us put some numbers around that? It's always tough to quantify and put context on the reserving strength. Anything that you can do to give us some color on the reserving strength -- strengthening, shall I say, that's taken place over the past year or so?

And then just second question is on PIMCO. You talked about the opportunity for PIMCO in private markets, that's a space which has also fully attracted a bit more scrutiny recently. Just what's your outlook on private fixed income risks for that market? And what Allianz has done to really mitigate those risks across the group?

Thanks a lot, Andrew, for your question. So I think you were first asking because on our side, we need to work on that further. The line is not very good. So it was a bit difficult to fully understand. So I think you were asking to provide more color on the P&C reserves, right? And basically, what was the level of confidence we have increased.

So I think please understand that in general, we don't provide detailed information when it comes to our overall level of reserves. But as I have mentioned already, we are very comfortable with the quality of our balance sheet. We have increased the level of confidence in our results in the second quarter and in the third quarter as well.

And when I look forward, we are now in the process -- in the yearly process to do this fundamental revisiting of our reserve level and globally at group level, we are also in a very comfortable situation. So what I think is important is we are obviously benefiting this year from a lower level of natural catastrophes and as much as possible to leverage that environment to further provide flexibility for the future is an important aspect, I believe, for us overall.

And then I think on PIMCO, you were more asking questions on the private fixed income environment overall or that was more related to our own portfolio in general?

So probably both of those, to be honest, just kind of outlook for private credit at the moment. And I think it's an area that's got a lot of scrutiny recently. What you've done across the group to manage those risks?

Yes. So thanks a lot for the question. Obviously, we are very well aware of the current discussions which are happening today around private credit or private debt in general. We are very confident with the quality of our own assets. As you know, we have been invested here for a very long period of time, and we have also a very long experience when it comes to the management of private debt in general. There are different ways to look at the numbers. But clearly, we have disclosed -- we have provided -- or I have provided a full detailed disclosure at the Capital Market Day on those numbers. And we have also updated those numbers at the end of last year.

And if I look at the portfolio provide at the end of the third quarter, actually, the numbers have not changed much compared to the disclosure we have provided at the end of the fourth quarter last year. So you can definitely refer to the appendix to get the full details on the portfolio.

In general, clearly, I mean in this portfolio, there is nothing very exotic at all, right, given the fact -- I mean, given what I have already mentioned. And if we do a bit of a zoom high level, right, into that portfolio, approximately, I mean, over 50% of that portfolio is real estate related, approximately 20% of that portfolio is connected to infrastructure. And both the middle market lending portfolio and the private credit portfolio are of very high quality, highly diversified with very good loss experience.

As an example, in the middle market lending portfolio, we have an average loan size that is lower than EUR 10 million. So that's just to give you a sense on how that looks like. So finally, I think when you think about credit -- about private credit, we have a lot of insights within the group, right? So we have PIMCO on one hand, but we also have Allianz Trade. So this is a very natural place for us to be, and this is why we are extra comfortable, I will say, with our own balance sheet from that perspective too.

Thanks, Andrew. Next question is from Andrew Baker from Goldman Sachs.

So the first one is just on the P&C attritional loss ratio. It looks like there's some noise coming through in the fourth quarter from AGCS accounting change, and I guess, presumably some continued underlying earn-through. So just are you able to give us a sense of how you think the attrition will develop, I guess, in 4Q and then into 2026? And then secondly, on the asset management cost income ratio. Clearly, third quarter was very strong. Top line has helped there. I think the press release mentioned some management actions. Are you able to just give a bit more detail on what those management actions were? And then sort of is Q3 a good level that we should be thinking about going forward? Or is there any one-offs in there?

Thanks a lot. So just to start with, indeed, is good you are highlighting this point. Indeed, we have -- it's related to IFRS 17. We have -- I mean, we have the so-called nondistinct investment component, and we need to do small adjustments in the AGCS portfolio to address for that effect as part of the IFRS fine-tuning of the transition, if you want. So it's just a story of geography. So the overall combined ratio is the same, but we have an effect between the runoff and the attritional loss ratio, which is coming.

So for the discrete fourth quarter slides, we would expect to have our undiscounted attritional loss ratio to have a negative effect of 1 percentage point and the runoff ratio to be better by 1 percentage point as well because we have a catch-up effect which is materializing in the fourth quarter. So you should not extrapolate the fourth quarter effect to 2026 because the run rate will be lower from that one.

So if you want more details on the exact IFRS 17 effect, you can reach out to IR team, they will explain with pleasure, but I will spare everyone the details of that one. Then on the cost-income ratio of the asset managers. Actually, I would not say that there is anything specific that is coming into the cost income ratio at this point in time for both asset managers. I think, it's really the focus that they are having on general cost discipline and then the earning through of some of the growth that is coming through, but we have obviously also dedicated projects, which are aiming at harvesting some of the benefits in particular of the technological improvements that are being pushed through by both asset managers into their operating model.

Thanks, Andrew. Next question is from Michael, Michael Huttner of Berenberg.

And you must be really happy, Claire-Marie, to be most profitable insurer in the world, I think. Anyway, 2 questions. The first 1 is on PIMCO and actually it's 3 because I'm not so -- so on PIMCO 2 or asset management more generally, is there any exposure to the 2 names First Brands and Tricolor. And then more generally on PIMCO, given the enthusiasm that you put more slides in there about PIMCO, are you close to buying in the minorities? And how much could that cost? And what would be the benefit? Is there some numbers there?

And then you alluded to further progress in retail P&C from the message you're taking, which I think are mainly to reduce churn, but there may be others. I just wonder if you can talk to a little bit about -- more about that, the potential benefit to come. I can't see where it would come because you're already sky high. Your revenue is up 8%, your pricing is up, your combined ratio is down. I just wondered where -- if you were to get a benefit from reduced churn or from increased retention, where would it be? And how much would it be worth?

Thanks a lot. So thank you very much for your kind words. Obviously, as an organization, we are very proud of what we are delivering. Thank you. And also, I mean, I did not mention it, but obviously, it's the outcome of a lot of hard work by many people. So it's nice to hear as well from your side. So maybe just start on the PIMCO minority. So today, we own 91% of PIMCO. We are very happy with the current arrangement. We also like the alignment that we have between us and the PIMCO partnership. So there is nothing additional to report at this point in time when it comes to that setup.

Then I think to the specific names you were mentioning in terms of credit. So you know we never report anything on a name-by-name basis. That's very important for us, not to do so, also given the engagements we have with our various parties. But I mean, it's maybe an opportunity just to highlight the very strong performance of Allianz Trade in particular. So you have seen the results as well. So Allianz Trade continues to operate at an excellent level of profitability, and we are extremely confident in the ability of Allianz Trade to manage in the current environment we are experiencing in particular. So the names are mainly related to the automotive industry, right? And that's a sector that is definitely under the radar screen of trade, given, I mean, the tariff and also the supply chain issues in particular. So those are the typical names where we have an ability to see things coming and to react as appropriate to basically secure our trajectory.

Now coming to retail P&C and where we are standing today in terms of growth experience, I would say. So what we see in the underlying of the numbers, and this may be interesting to have a look at is that our overall -- where we see -- I think overall, we are in the context of the Capital Market Day -- of the execution of the Capital Market Day strategy, right? And the execution of the Capital Market Day strategy, you remember on P&C was in particular going against 2 angles, one which was a platform play. And the second one was more the retail and the growth triathlon where we want to generate that uplift of 3% to 4% volume growth, right?

So on the platform play, we see good progress at this point in time. So as an example, Allianz Direct has achieved a very strong level of internal growth of 14%, out of which 7% is actually volume, and we also see a good trajectory when it comes to partners.

And on the retail side, we had a 3.5% volume growth at the third quarter and -- which is promising, clearly, and we are happy with the development we are seeing, which is related, as I mentioned, to some -- to the pickup out of the toolbox of some of the -- some progress in some geographies. In a way, at the end of the -- year-to-date, we are slightly above 2% in terms of volume growth. So we are on the right path, if you want, but we are not yet at the path we wouldn't want to be of this 3% to 4% growth.

So that's important, we continue to execute, and we are happy with what we see, but we still need to continue to work hard actually to deliver fully against our target. And why is it that I am saying that? Because we also expect that the pricing momentum is going to reduce itself over the next few years. And so we need that volume effect to offset some of the pricing momentum. So that's the way to think about it, and that's the way we have constructed actually our plan.

And just a little add on, any idea of timing? Are you ahead of plan or just behind plan on this 3% to 4%?

It's a bit difficult to answer this one. I think we are happy with the pickup at this point in time. And I also think we need to continue working quite hard.

Michael, that was 4 questions. So on lack of time, you got a yellow card.

Four questions, I beg your pardon, I'll shut up. Sorry. Sorry. [ You have to give a ] red card next time so...

Thanks, Michael. Great. Next question is from William, William Hawkins from KBW.

Given how well 2025 is going, when you think back to the 7% to 9% EPS CAGR you presented a year ago and you're raising the bar slide, what key line items are most front of your mind that needs revising? That's question one, please.

And then question 2. Sorry, maybe to focus on a negative when everything is really so good. But can you just come back and explain in simple terms the impact of the lapse assumption review in AZ Life and what this means for future earnings? Because on my side, I see an assumption change for higher lapse is a bad thing and sharing with reinsurance to make a gross negative into a net positive, again, sort of a mixed message. I think you've got a more constructive view on what's going on. So I just wonder if you could help me get a bit more comfortable with what we've seen in AZ Life, please?

Yes. Thank you. So I think while we are very happy with the development of our results year-to-date, right? I think the way to read it is clearly we are -- I mean this is very strong contribution to the 3-year plan. This is putting us -- ourselves also in a very strong position to deliver against the plan. But we still have like quite some time to go. The environment is a complex environment, and we also need to manage the overall pricing environment quite carefully. So clearly, I continue to see the 7% to 9% CAGR on the EPS being both a very good base and as well also challenging for the organization to deliver. So clearly, we have no intention to revisit that at that point in time.

On the lapse assumption review for the life -- for AZ Life. So you are right. So we did revisit our lapse assumption, which is clearly an industry situation because with the increase of the overall yield, there was an increased level of lapses, which is also translating itself on the positive side into a higher level of new business of -- in the industry in general. So there is a sort of recycling in the overall logic. But we have reflected in the third quarter, the lapse level that we see in the AZ Life business at the current industry experience level, if you want. So that's coming as a negative into the gross CSM. And as you know, this book is -- I mean, it's partially reinsurance. And so we get also a partial benefit from the reinsurance we have in place because reinsurer have to take a share of that negative effect.

What we see as well is that we have reflected also some of those effects into the investment results, which is also contributing as a positive into the quarter. So that's the way to look at it. The tax effect is a different topic. The tax effect is related to the German health business, where we are sharing the benefit -- where we are sharing the tax effect with our policyholder. So this is coming as a negative effect in the gross CSM because we are sharing with the policyholder, the future profits, benefits out of that one. But on the net CSM, it's actually coming as a benefit to us because we are also benefiting from the change -- from the future change in the tax effect on the health portfolio side. So that's the way to look at those 2 effects.

The next question is from Vinit, Vinit Malhotra from Mediobanca.

Yes. My question is one on PIMCO, please, and one on P&C. On PIMCO, it's quite remarkable, the 97% number that you obviously flagged on Slide A10. And I'm just curious that -- has that been driven by some recent push to alternatives or how would you say this happened? And how -- and has this been in your view really instrumental in this very record-breaking 3Q that we have seen? So I'm just curious to hear your views on the importance and relevance of this number.

Second question is just on the retail P&C strategy or story. The motor is an important part of that, I think, and motor has been, I thought, benefiting. But when I see 2Q and 3Q combined ratios, I think that the disclosure is they were unchanged at 94%. So I'm just curious, is that something that we should have expected to be getting better? Is that something you -- is that in line with your expectation? And then if not motor, then where is the retail improvement coming from? Because I think that is driving some of the underlying improvements too.

Okay. So let me start with the PIMCO question. So I think like the performance of PIMCO is simply related to the way they are basically managing the environment and assessing the environment. So it's a structural performance of the asset management as an organization. So nothing particular, I believe, to reflect there. And the flows from our perspective are the outcome of obviously, the performance and the relationships that PIMCO has been having over many, many years and has been developing over many, many years with multiple counterparties, but it's also linked to the environment when it comes to active fixed income strategies and the fact that the absolute level of rate is a good one, also the fact that the slope of the curve is also a good one and that there is also an overall positive environment, which is leading to inflows in the active fixed income strategy. So that's one angle to it.

And the second angle to it is that there is also a good success and pick up on some of the recent initiative that PIMCO has been sponsoring or fueling like the active ETF product, which is also contributing to that positive development.

And then when it comes to motor, so we have been seeing a strong improvement actually in terms of -- in our combined ratio in motor. So if you look at the year-on-year comparison of the combined ratio in motor, it's now at 94%, as you rightfully mentioned. But a year ago, it was at 97%. So we have a very strong improvement coming there, which is in line with what we were expecting to see also given the underwriting actions we have been pushing through in the portfolio. So we are very happy with the development, and that's definitely one of the driver as well of the improvement in the attritional loss ratio.

Next question is from Iain, Iain Pearce of Exane.

The first one is just on business volumes in P&C. So if I take out AGCS ex-fronting reinsurance and look at the business volume growth, it looks like it's roughly 3% versus 7% at H1. So I'm just trying to square that with the 8.1% retail internal growth number that you've given. And also just trying to understand why the reinsurance number was so strong in Q3?

And then the second one was just on PIMCO and a really, really strong flow number that was delivered. I'm just trying to understand if anything is sort of viewed as one-off in that number. I mean, clearly, you mentioned data centers in your commentary, there was clearly a very big data center deal announcement in the quarter. Is that included in the net flow number? And is that sort of an expectation of a strong pipeline for that sort of deal that could lead to these sorts of flows being benefiting in the coming quarters?

So just on PIMCO, very briefly, the short answer is no. There is nothing of that. So it's very natural inflows that we have observed during the third quarter, and by the way, actually, like at this point in time, we are seeing also inflows in our overall asset management portfolio at the similar pace as what we have seen as well in the third quarter.

Then now on the P&C, I think on your question on the overall -- is on the overall growth or maybe I can focus on the volume growth, which I think will give you a good sense overall on where we are standing. So what we have in terms of overall internal growth for commercial, we are at 11%, right? And we have in that number, I mean, I think the commercial business, you always need to think through that it can always be a bit lumpy and we always have also nonrecurring items that may happen from one quarter to the next. So I think that's also the way to look at this quarter. And I will not take that as being the forward-looking level of growth, you should anticipate in the commercial portfolio.

Indeed for AGCS, it's -- we have a growth effect, which is linked to the fact that last year, we had a lower level of ART business. And this year, it's higher. So it's contributing very positively to that growth effect. But then for the rest of our portfolios, we see good development in our mid-corp business, which is growing nicely in the mid-single-digit level.

We also see a good growth level, as I've been mentioning on the Allianz Partner side that's coming from the health business, which is also developing very nicely this quarter, but also with a bit of lumpiness there for sure. And both at trade, we see good growth development and as well on the reinsurance side, in particular, where we have captured good opportunities in the structured business -- structured reinsurance business side, together with some of the Allianz X strategy as an example.

And then I think, as I mentioned, volume growth overall for retail is at 3.5%, which keeps -- which still gives us room for further development. And overall, I will always go back to the 6% to 7% overall growth range we have given as being the right reference to consider for our business at this point in time.

Next question is from Kamran Hossain from JPMorgan.

First one, just on P&C. I think it's clear in a few markets there have been frequency benefits, particularly in motor. Can you just talk about to what extent you're seeing kind of that come through? And is this fully visible in the attritional performance in P&C?

The second question is on Solvency II. I guess, recent changes going on with Solvency II. Can you just outline any kind of high-level assumptions on how much this might benefit Allianz?

Yes. So I think, indeed, on the frequency benefits on P&C motor. We actually have indeed, identified a bit of that. I would say, in an anecdotical manner in some of our countries or operating entities. We also see in some operating entities, actually, the opposite. So we have not -- I mean we have not reacted yet at those frequency benefits neither in our reserving nor -- I mean, nor in our pricing conditions at this point in time because it's too anecdotical, I will say. And it may very well be that some of the frequency positive effect are simply related to the fact that we had known natural catastrophes, as an example. And then you were simply driving under better conditions, which is also supportive in terms of frequency experience at this point in time.

And then I think on the Solvency II reform, indeed, so that's going to come up into place on the 1st of January 2027. At this point in time, I have no refined update to share with you in terms of number effects. So we had previously mentioned to you that we were estimating 5 to 10 percentage point positive effect into our Solvency II ratio. We are, as we speak, actually recomputing the effect. So I will definitely come back to you with more insights towards year-end numbers.

Next question is from James, James Shuck of Citi.

I just wanted to return to the lapse point actually on the FIAs in the U.S. I appreciate there's no impact for you net of reinsurance, but I just wanted to understand just conceptually what is driving the increase in lapses? And whether this actually has any implications just Sconset Re because I know part of that portfolio was reinsured into Sconset Re and the plan was to try and develop that unit more.

Secondly, just on the expense ratio in P&C, so 23.9%. I know you sort of indicated before, should fall by about 30 basis points per annum. Are you able to split the expense ratio for me into kind of admin ratio and kind of acquisitions like other? And kind of what's the outlook for the admin side of things. I guess I'm trying to think about the potential for positive operational leverage given your quite strong volumes in P&C at this point?

So lapsing point in the books of AZ Life. So as I've been mentioning is an industry situation overall, right, with the higher level of interest rate, actually, there is also like a fiduciary duty to the intermediaries to the customer actually to migrate contracts that have been signed under lower interest rate environment towards new contracts with -- which are benefiting from the higher interest rate environment.

And what we see is that it comes in phases, obviously, because some of those contracts still have penalties, right? So you need to wait for the penalty period to be over before you start transferring some of the contracts. So that's why you have this recycling effect, if you want, into the portfolio. And then it has -- I'm not for sure what was your exact question related to Sconset, but I don't think it has a direct implication to Sconset. I think Sconset had 2 parts, right? There was a part which is simply reinsurance, right? So then when there is a reinsurance, there is a sideways -- I mean this translation of the effects we are seeing into the reinsurance portfolio. And then there is a forward-looking part in Sconset, where basically together with our partner, we are benefiting from the new business being underwritten.

And then you had a question indeed on the expense ratio, where we are structurally aiming at this 30 bps improvement. What we see at -- in our third quarter number on a stand-alone basis is that our admin ratio moved down from 6.2 to 5.8. And our acquisition ratio actually moved up from 17.5 to 17.8. So you are right to point out that we -- I mean we are obviously directly focusing and acting with our productivity initiatives, which are leveraging, in particular, automation, AI, where there's a lot of activity that is ongoing in the organization to drive the improvement on the admin side.

On the acquisition side, you always have to be mindful of the mix effect that is always playing a very big role. So you can always see swings associated to the admin side -- to the acquisition side. But as well, we want to improve also the developments on the acquisition side because we want, as an example, to make our agents even more productive. And so that's also part of the plan because there is a moment at which I mean we will be at a level of admin costs where you cannot do much and so you really need as well to have a focus more broadly on the acquisition expenses as well.

Next question is from Andrew, Andrew Crean from Autonomous.

Just a couple. You talked a little bit about mid-corp saying that the volumes are growing 5% and the combined ratio is 89.6%. Could you actually tell us a bit about large corporate? What's happening to volumes, rates and combined ratios there? And then on the life side, I think your new business margin is at 5.7% and stable at that level. Your target is 5%. Why is it higher? And should we assume you can keep it at this higher level? And therefore, what are the factors which are keeping it there? Or what are the factors which might drive it down to the 5%?

Yes. Thank you very much. So large corporate for the -- on the volume side, right, for the third quarter on a stand-alone basis, you have 2 effects. You have this catch-up effect or like this lumpiness effect, if you want, which is related to the ART business where we were particularly low in the third quarter, and we have been running at a normal level of new business, if you want, in the third quarter this year, which is creating that high level of internal growth that you can see in our disclosure.

On the rest of the business, also on the other line of business, we are flat year-on-year. And when it comes to the rate change on renewal, we are -- obviously, has seen there as well, we are in negative territory. What we see is that, I mean, overall, we are still in terms of pricing adequacy on average across the portfolio rate adequate. So we are at the level where we can underwrite the business, but we have to be cautious. And we see that there is -- I mean, there is quite some sharp price decrease or price decrease in general across the portfolio, but liability, which is maintaining a positive price development at this point in time. And then it's quite anecdotical, you have other parts of the business, like as an example, airlines that also finally is starting to move slightly up as maybe now bottomed in terms of pricing adequacy.

Now on the new business margin. So we are indeed happy with our excellent level of new business margin. What we think is -- I mean, it's not what we think. So basically, it's related to the fact that we have a different business mix compared to what we have exactly planned with. And in particular, we have a higher share of protection and health into the new business mix, which is coming with a 9.5% new business margin. So that's also explaining why we are above. But so I will take at this point in time the strictly above 5% as being a good reference point for the future as well.

Okay. We have a couple of follow-ups. The first one is from William, William Hawkins from KBW.

Sorry, I know it's cheeky to follow up. Small question, on Slide B21, Claire-Marie, what is the life in-force running yield against which the 4.7% reinvestment rate that you disclosed should be compared? I'm really not sure whether your reinvestment rate is implying that you've still got an uplift in new money or a downdraft?

We're just looking that number up, William, give us a second.

So I think your question was on the -- so actually, right now, we are running slightly higher. So in 2024, we were at 3.7%. And now we at 4.6% reinvestment so obviously, slightly higher is the answer.

Sorry, is the 3.7% the in-force yield?

Yes, indeed.

Okay. So it's about 100 basis points uplift?

Yes.

Yes. You can follow up well if you want more detail on that.

Fahad -- sorry, next question is from Fahad Changazi from Kepler.

Can I just follow up on retail, please. It's good to see the 3.5% in the middle of your range, but you're yet to deploy your tools and get the growth. But I suppose, on the other side, as pricing turns, the pool of business that you will be getting will be, I suppose, smaller. So we shouldn't get more excited. We should just stick to the 3% to 4% at this stage of the whole plan is probably the likely right answer, but could you focus -- give some color around that?

And two -- and just a question on Solvency II capital generation. The Q3 had a noneconomic variance in life. What was it? And how much was it? And on the SCR, I mean, it's a tiny little increase of only EUR 40 million. So can you just give some color around that? And I suspect we still should stick to the 2% to 3% guidance you've given. So just final question, management actions to get us the 24%, 25% part of the strategy, any visibility or any update on that?

Sorry, if I could just summarize, your first question is a bit confusing. You just want an update on the 3% to 4% retail volume growth objective. Is that right?

Yes. Yes, because you haven't deployed all your tool kits but then we shouldn't get excited.

Sure. And then the second questions are all focused on cap generation, it sounds like. Okay.

Okay. So I think on the P&C side, as I mentioned, so we are at indeed 3.5% volume growth in the third quarter on a stand-alone basis. If you look at it year-to-date, we are at 2.1%. So we are not yet entirely where we want to be within the 3% to 4%. So I think it's a really good first progress, but we still need work to be in the 3% to 4% full execution of the Capital Market Day actions or landing point we want to see.

And the way to look at it is that overall, we also expect because we benefit still from a good level of price increase, right? We believe there will be in the coming years, a reduction of price increase, which is going to be offset in our thinking by the volume growth we are capable of achieving. And as such, overall for our entire portfolio, right, we are confirming the 6% to 7% overall growth for the P&C business. So that's really the way I will think about it at this point in time.

And then I think on your question on OCG. So I think OCG overall, I mean, at this point in time, is at this -- I mean at this stage in the year is extremely, extremely good. We are at 19%. I think we had promised for the year that we will be strictly above 20%. I think that's the right way to think about it. We have a benefit from some variances at that point in time. So if I normalize a bit for those variances, I believe the right reference point for the OCG for the entire year is something like 21 to 22 percentage points for the full year. So that's the way to think about it.

Now when you look at the third quarter on a stand-alone basis, you had the negative effect of the assumption change and of the adjustment of the tax that basically did come through on the life side, but you had also very positive elements that came on the P&C side, in particular, on P&C, the fact that we have a very strong performance for the quarter. And as well, the fact that we have been working very hard as an organization in deploying the capital management framework.

And there is really good pickup within the organization as an example, revisiting entirely how we are prioritizing as an example, the P&C business, which has led also to some positive effect into the P&C capital generation for the quarter on a stand-alone basis. So that's why you have a very strong positive on P&C this quarter, a bit of negative on Life and Health. You had very -- you had some positive on the Life and Health side at the beginning of the year. So overall, when you step back and you look at where we are now, I would say, 21 to 22 percentage point OCG for the year is the right reference. So very successful. I'm very happy with the development, but with some nuancing or normalization of the variances.

Okay. Final question. Michael, you're very lucky. I'm allowing you a follow-up despite your yellow card. This is not setting a precedent.

I'll stick to 2. Viridium and the pipeline on deals and nonlife EUR 1,000, which Oliver sometimes refers to and whether this number could grow because you just gone into partnership with HUK-COBURG on the garages. That's it.

I'm completely confused. What -- I don't understand one question.

I thought I was doing really well. So Viridium, what's the pipeline on deals there? And more generally, what's the pipeline on M&A? And then on -- you remember at the dinner, and I think in previous occasions, Oliver has always mentioned this, if you get your policyholder to go to the [indiscernible] so we have a new agreement, you get -- it's a EUR 1,000 lower charge for the repair. And I just wondered, a, how successful that strategy is? Is it still a theoretical number? Or is it actually happening? And b, whether you're now in partnership with HUK-COBURG on those franchise, garages, whether that EUR 1,000 has gone up?

Okay. I think the second one is more about our claims initiatives in Germany, if I was the interpreter, that's -- yes. The first one is Viridium. Is it Viridium specifically, Michael?

Is it Viridium? [ Or any ] pipeline?

Both. I mean, if I have the opportunity, both.

Claire-Marie can answer on other deals, but just a Viridium, we should clarify, we're an investor. We don't own or run Viridium, Michael. So we would not -- we don't have a view on the pipeline of deals. On other M&A, Claire-Marie, do you want to...

So basically, on M&A, there is absolutely no update to be shared with you. I think the -- I mean, the direction we have always -- I mean, you know the principle of our M&A strategy. It's a bolt-on. It's focusing on developing and gaining scale in our P&C businesses where we are not in the top 3 because we believe we really need to be in the top 3 to be able to deploy our infrastructure in terms of technical excellence, in particular. This is also focusing on Southeast Asia, where we would like to further grow in terms of geographical diversification, in particular. And then as required, constantly screening and looking and being open as well if anything could make sense for our asset management business. So no update whatsoever on that side.

And then I think overall, there is a lot of initiatives on the side of Allianz Versicherungs in Germany when it comes to claims and claims management and claims steering as well together with as a result. So I don't have an update on the specific number you were mentioning, but there is quite a number of initiatives that are very successful in particular leveraging AI, which allows to do either a fast settlement or to facilitate as well the reading of the conditions by the claims handler to accelerate as well as, an example, the indemnification of our clients. But as well, I mean, together, we solve both for Allianz Direct and for Allianz [ Affairs ] really leveraging the system for the steering and then creating benefits for our clients. So this one is in full swing. I don't have the exact impact available with me. But last time I discussed with both CFOs, they were very happy with the outcome on that side.

Great. Okay. Well, that concludes our Q&A call and call for the third quarter. I appreciate it's been a very busy week with results across the sector. So thank you for your interest. If I could do a small plug at the end, just to remind everyone, if you haven't registered our next Inside Allianz will take place in London on the 28th of November. So please reach out if you'd like to attend that. Great. With that, thank you very much, and good weekend, everyone.

Good morning, everyone, and welcome to Allianz's Third Quarter and 9 Months 2025 Media Conference Call. Thank you for joining us today. My name is Frank Stoffel, Head of Financial Communications and Valuation Relations, and I'm here at our headquarters in Munich with our Chief Financial Officer, Claire-Marie Coste-Lepoutre; and our Group Head of Communications, Lauren Day. Today's conference call is scheduled for 60 minutes. And as usual, we will answer your questions following our presentation.

With this, it is my pleasure to hand over to our CFO, Claire-Marie Coste-Lepoutre.

Thank you very much, Frank, and good morning to all of you. I'm very pleased to report on another very strong quarter for the group, which is building to an excellent contribution to the year and our 3-year plan. Our results are supported by both an ongoing top line momentum and an attractive margin development. Across the organization, we are working on our 3 strategic levers of smart growth, productivity and resilience, with first signs of materializations into our numbers.

As you can see on Page A4, year-to-date, our business volume growth continues to be very strong at 8.5%. As previously, this growth is diversified from a segment perspective and within the segment across businesses and geographies, which gives us a lot of strength for the future. Our operating profit is now up by more than 10% year-to-date. The number FX adjusted would even be 13%. Here as well, we see positive developments in all our segments.

Our core net income growth is accelerating compared to the first half of the year. Year-to-date, it grows by 10.5% or actually 8% adjusted for the disposal gain of the Life JV with UniCredit in Italy that we did book in the second quarter, and as well as the anticipated tax effect of the disposal of our stake in Bajaj that we did book in the first quarter. Our core EPS adjusted for this exact same 2 effects is now up 10%, which is very strong and ahead of our 7% to 9% target range. Similarly, our core ROE is above 18% and well ahead of our target level as well. Our solvency ratio emerged at 209%, and our operating capital generation continues to be very strong, which gives us flexibility for current and for future capital deployment.

Given the excellent performance of the organization at the end of September, I'm very happy to indicate that we have adjusted our outlook upward yesterday night, and that we expect to end the full year at least at EUR 17 billion operating profit. Of course, the year is not over, and we can still see NatCat or market movements. But clearly, we are very confident with the overall outcome.

Let me move to Page A5, and let's have a look at our P&C business. Here, we have another excellent quarter, which is building on previously excellent quarters. We are achieving another level of -- another record level of operating profit, now 15% up versus last year, as you can see on the right-hand side of this slide.

Year-to-date, our total business volume is at plus 8%, which is excellent. This 8% growth is ahead of our assumed medium-term growth rate of 6% to 7%. Approximately half of the growth is volume and the rest is price. Compared to the first half of the year, the volume growth has been accelerated from both retail and commercial. Our internal top line growth for the third quarter is in line with what we have seen for the second quarter as is our rate change on renewal for the full book, which is now at around plus 5%.

We have achieved a very good level of combined ratio at the end of the third quarter at 91.6%, with both retail and commercial performing, as you can see. Also, you can see in our material, how broadly spread the performance remains.

In particular, I'm very happy with the development of our attritional loss ratio with more than 1 percentage point of progress year-to-date. This has been particularly driven by our retail business, with the benefit of the underwriting and pricing actions, which are earning through. Also, our constant focus on productivity continues to deliver with our expense ratio down by around 30 bps, just below 24%. And the third quarter was very mild from a natural catastrophe's perspective, but we booked no runoff overall. So we further increased our reserve confidence during the quarter.

Overall, our P&C business is doing excellently. We see volume growth, which reflects a mix of strong ongoing developments, especially in retail and targeted growth in commercial as we manage the cycle. Our profitability is not just a reflection of more benign natural catastrophes, but also very strong attritional improvement, relentless focus on productivity and significant prudence when it comes to the recognition of runoff.

Let me now move to Life Finance on Page A6, where you can see that we are fully on track to meet our targets there. The numbers are as well more impacted by FX and P&C. And you may remember that we have disposed the UniCredit JV, which is now showing up in the numbers as of the third quarter.

Our value of new business is up 4% FX adjusted, with our PVNBP up 5% at a very stable new business margin, which is as well above our 5% ambition level. So we see good developments across the businesses.

Our life new business can always be a bit lumpy. And last year, our third quarter was extremely strong, where we are benefiting from various promotions. You may remember that our U.S. life business was up 60% last year in the third quarter. And we also had some large ticket transactions, in particular at Allianz Leben last year in the third quarter.

So I think to get a good sense of the fundamental growth in new business of our Life & Health portfolio, this is actually really good to look at the 2 years development between the 9M 2025 and the 9M 2023, where we have been growing by 20%, which gives us an estimated annual growth rate of approximately 10% FX adjusted, which we also consider is the right level of appreciation if you just purely were normalizing the number between 9M '24 and 9M '25.

If you look in more details at the profile of our business development, you will see as an example that we continue to grow at 93% in our preferred line of business, that our health business in Germany continues to show exceptional momentum once again with year-to-date new business profit up 56%. Italy is also worth a special mention to highlight with a growth of 13%, excluding the UniCredit business with the vast majority of that business coming into united.

Let's move to the contractual service margin. And as you know, the net CSM development is a much better indicator when it comes to the real reflection of the future stock of profit to be earned by us. The net CSM year-on-year is at 5% or is at 8% FX adjusted. This is clearly well on track for our targets as is the normalized growth of the CSM, which is just under 4% at the end of the third quarter.

Our Life operating profit emerged at EUR 4.2 billion, growing 6% adjusted for FX. This puts us well on track against our targets. Overall, our Life business momentum is good. Our new business profitability is at a very attractive level, and our IFRS profitability is emerging as expected from a very diversified portfolio.

Let's move to Asset Management on Page A7. And here, you can see how structurally our business is doing well at navigating the market environment, delivering outstanding net flows, performance and profitability. We had our best third quarter ever in terms of net inflows at EUR 51 billion, which brings the annualized year-to-date growth rate to around 7%, which is a very impressive level. Net flows in the third quarter are positive, both at PIMCO and AGI across various strategies, platform and geographies.

Our asset management franchise continues to be supported by the performance we deliver to our clients with 92% of our third-party assets under management outperforming their benchmarks on a trailing 3-year basis at the end of the third quarter. If you look further in our material, you will see that our third quarter revenues are up 9% FX adjusted. The revenues are supported by the higher average asset under management, the continued resilience in fee margins at both our asset managers together with performance fees in solid territory.

Overall, this leads to revenues at EUR 6.2 billion at 9M, which translates into EUR 2.4 billion of operating profit for the segment. This is supported by the continued focus of both our asset managers on productivity, which is fueled by cost discipline, the operating leverage as we grow our revenues, overall resulting in a cost/income ratio improving 60 bps year-to-date, now below 61%.

So overall, on Asset Management, we see an attractive diversified franchise with growth momentum and profitability.

Let me move to Page A8, where you can see the development of our solvency ratio, which is characterized by a continued very strong operating capital generation, which is fueled by the excellent performance of our P&C business in particular. This capital generation continues to support our attractive payout, both dividends and share buyback with some of our recent -- together with some of our recent capital deployment like the investment into Viridium or the partnership with the Royal Automobile Association in South Australia. As part of our Capital Market Day commitment, we are focusing on the implementation of our capital management framework, and we are confident to achieve our full year objective of more than 20% in terms of operating capital generation.

Our sensitivities are almost unchanged at a low level and continue to offer confidence of the resilience of our profile. So overall, we are in a very good position, both in absolute level, sensitivities and our ability to generate solvency through our business portfolio. While we benefit from some positive one-offs in our operating capital generation this year, there are fundamentally a lot of positive elements to be appreciated there this year so far.

Let's move to Page A9. And Page A9 is focusing on the special event we had this year. As you can see, we are celebrating the 25-year partnership between PIMCO and Allianz following the completion of our first investment into PIMCO back in 2000. We thought it's very worthwhile to do a zoom on this. And clearly, it has been an exceptional partnership we are very proud of, which has generated considerable value.

Let's move to next page to have a look at that at some metrics. PIMCO has, for instance, grown its assets under management sevenfold, its operating profit ninefold, the latter now making up nearly 20% of Allianz Group operating profit. PIMCO is as well adding value through its strong management of almost 50% of the group's assets. PIMCO's franchise as a leading active fixed income manager has been underpinned by consistently strong investment performance.

Here again, at the end of the third quarter, for example, 97% of our assets under management were outperforming on a 3-year basis. As I have already mentioned, PIMCO has seen outstanding flows this year and continues to capture a high market share of the flows seen by the industry into active fixed income strategies together as well with the support of some of the more recent initiative, as an example, the active ETF product that I also already mentioned in the second quarter.

We continue to look for ways to further increase the synergies between PIMCO and the wider Allianz Group as we leverage the benefits of an integrated asset management and insurance group. The relationship is very symbiotic alongside PIMCO being a manager of our general account assets, Allianz insurance businesses can seek new strategies for PIMCO and help expand distribution as well. PIMCO as well is supporting and benefiting from our third-party capital optimization vehicles like Sconset that we have deployed for Allianz Life in the U.S.

Beyond all of this and what may be less identified in the case of PIMCO is how innovative this business is. The success of PIMCO plays as well in its ability to constantly look across the business at new and better ways of acting or investing. You have many examples of that actually also in the presentation of Christian Stracke in the Capital Market Day presentation.

So looking ahead and as we outlined at the Capital Market Day last year, we are very positive about PIMCO's future as a leading active manager with skills in both the public fixed income markets and across a broad range of alternative strategies, which are a first part of its business. The focus is there mainly on asset-based finance strategies that support the real economy, as an example, the investment in data centers.

So after 25 years of success, we clearly look forward to many more years of working together, sizing growth opportunities and delivering excellent performance to our clients.

Let me wrap up on Page A11. So clearly, we have an excellent year so far where our delivery momentum continues across all our segments. Here, I want to take a small pause to say a big thank you to all our employees for their work and engagement in delivering such results. Together, we are working on executing the Capital Market Day levers, including the focus on higher capital generation and the strengthening of the resilience. As part of that, both the fundamentals and the diversity of our business continue to give us confidence even if the environment can be volatile or uncertain.

With all of this in mind and given the performance achieved at the end of the third quarter, we have confirmed yesterday in our ad hoc EUR 17 billion to EUR 17.5 billion range for the outlook. This is subject to the traditional caveats, but clearly, we are very confident. With this, I will be very happy to take your questions, and I hand over back to you, Frank.

Thank you, Claire-Marie. We are now very much looking forward to taking your questions. But before we start our Q&A session, let me, as usual, remind you of the housekeeping items. We will answer your questions in English. But if you are more comfortable to ask your questions in German, please feel free to do so, and we will repeat it back in English for everyone else on the call to understand. [Operator Instructions]

The first question of the day comes from Michael Flämig, Börsen-Zeitung.

Mrs. Coste-Lepoutre, Mr. Stoffel, I have 2 questions, please. You said it's an excellent year for Allianz. Mrs. Coste-Lepoutre, indeed, we are experiencing an extraordinary success story in the property and casualty insurance. What risk do you see for the current level -- high level of profitability?

And the second one, the share buyback ended some weeks ago. You said there is more room for capital management. When we -- when will you decide about a new share buyback program?

Well, thank you very much for your questions. Maybe let me start with the second one. So we have clearly highlighted in the Capital Market Day what is our total payout approach, which is made of 60% level of dividend and then minimum 15% additional payout, which can be under the shape or form of share buyback, obviously. That 15%, we want to give us flexibility, obviously, and we want to return back to our shareholders over a 3-year period of time. So that's our total payout approach. This is unchanged at this point in time. And we just finished -- we did just conclude our share buyback that we had announced together with our full year numbers. So it's definitely too early to discuss another one at this point in time.

Then I think your second question was around P&C and basically, what are the drivers for the strong performance in P&C, if I am right, right? It was not in particular about rates?

That's right. And what are the risks there in the future?

Yes. So a very good question. I think like -- so what we see in P&C is, first of all, from my perspective, so we need to distinguish between retail and commercial. And maybe let me start with retail. I think clearly is a very strong driver for the performance in retail is the fact that we have been working very strongly on -- I mean, on addressing the inflationary effect on one end, which has led to us taking quite early initiatives, which have fueled both the underwriting, the rate development, but as well, simply the overall pricing action.

So that's one driver of it. Clearly, we see that the way we have been able to do that is translating itself in particular into our attritional loss ratio. So that's why I'm always very carefully looking at that dimension. But that's only one part of the story, I believe.

The second part of the story is that across the organization, there is a lot of focus on generating good growth and engaging both with our clients, but also working on higher retention and cross-sell, so basically working on the overall growth triathlon that we have been mentioning in the Capital Market Day, for which we see good early signs in some of the geographies like Germany, like France, like Latin America, like Australia or Switzerland. So we see across our portfolio that this focus on those actions are starting to come into actions, and I expect more of them to continue as we progress into our plan.

The second dimension, which is very important as well for retail, is the fact that we did not go only with price increase, we have been working a lot on productivity and in particular, around claims, right? So there has been a lot of actions to optimize our processes, also leveraging AI, but also leveraging one of the company we have in-house solved to really secure that we are paying less for the spare parts and so on and so forth. So a lot of actions as well to minimize the pain associated to the inflationary trends and to basically enter that back into our pricing also to fuel the growth.

So I think those will be some drivers on the current performance on the retail. Obviously, we had also good support or very good support from the mild NatCat environment. But as you have seen in our numbers, we have offset that almost entirely by a lower level of run-off. So clearly, that's not one of the driver of the overperformance.

Maybe moving to commercial, which is a different dynamic. So commercial, as you know, first of all, our book is very different compared to our competitors. Our commercial business is very diversified. We have the large corporate and specialty business there, but we also have Allianz Trade. We also have -- sorry, Allianz Partners and our mid-corp business. So we see very good dynamic into our mid-corp business, which is fueled by the Allianz commercial initiative with also still good stability of rates. So I think for the future makes us confident in terms of focus.

Then Allianz Trade continues its excellent trajectory. And on partners as well as part of our platform play, we continue to see very good development both in terms of growth and margin development. So that's also very supportive of the dynamic. Obviously, there is market softening for the large corporate and specialty business that we are maneuvering with, and we are cautious about that as well for the future.

So now if we step back and you were asking about the overall dynamic, we are confident on the momentum we are on, and we will be also managing cautiously as it's planned for and as it was anticipated in the Capital Market Day when it comes to the cycle effect on the commercial side.

The next question of today comes from Jean-Philippe Lacour, AFP.

Yes, hello to Munich. Bonjour, Madame Coste-Lepoutre. Maybe can you again explain when Allianz sales performance has been supported by underlying improvements, can you explain what does that mean first of all, on the premiums policy, did they raise or did they remain stable? And on the exposure on the other hand, exposure to certain risks. So can you maybe elaborate on this?

And one question I can maybe ask again is we have to understand when -- I mean, when the things are tough and there is a lot of claims, so we can understand that maybe the insurer has to write the premiums and then the things are going very well this year. So the profits are high. So how do you return this either to shareholders, we understand it. And on the premiums policy maybe for the clients. So that will be my 2 questions.

Yes. Thank you very much, and bonjour. So maybe like starting on your second question, which is -- so I think -- maybe let's take the example, let's illustrate the example with the case of Germany. If you look at -- in retail, right, if you look at our price position in Germany retail, we are competitive in the German market. And this is also very clear when you look at the growth trajectory of our retail business in Germany actually.

And then if you look at the overperformance of the German business currently in the third quarter, you have a couple of drivers there. The main driver is the fact that we have a very -- I mean, very significantly improved natural catastrophe experience, by 7 percentage point of combined ratio. So that's a massive effect, right? Obviously, there was no negative weather this quarter or actually this year on the German business. Does not mean that natural catastrophes are not going to materialize themselves either in the fourth quarter or going forward, right? So that should be part of what we are ready to cover our clients for.

Secondly, there is an improvement, which is coming from the very, very strong focus of the German colleagues on productivity. So we have a better expense ratio, but we also have a lot of productivity, which is coming as an example, from the processing of the claims, from also the way we are managing the cost of the spare parts and so on and so forth, as I have already mentioned. And then basically, the fundamental effect of the actions which are needed, and I will come back to that in a minute in terms of having the offset of the pricing effect into the numbers is coming in the better attritional loss ratio, which has been improving year-on-year, but exactly as expected and as needed as well to meet the cost of capital that we have for our business.

Now if you look at the inflation we see in our dedicated markets, it's a very different type of inflation compared to the headline inflation. So the inflation continues to be high. So typically, in motor, as an example, the inflation is still in the high single-digit level for -- in Germany, but actually across Continental Europe. So we need to reflect that as required in our pricing, but we try to dampen that effect via all the actions I have been mentioning so that we minimize the effect or the replication of that effect into our clients.

So I think that's the way to think about the overall dynamic there. The topic of affordability for us, rest assured is a fundamental one, and we are very focused on this and working as extensively as we can as an organization on that aspect. No, go ahead. I was going to your first question. So please go.

Sorry. No, no, go on.

No, no. Go ahead. I was going to your first question. So please go.

Please, the first question on the underlying improvement, yes. Can you maybe explain for [Foreign Language] what you mean with that?

Yes. I think so the underlying improvement I was mentioning is exactly -- what I was referring to is the fact that when we look at our loss ratio, so loss ratio is the total level of losses we are paying against the premium we receive. We are tranching that loss ratio into different components. So that's becoming a bit technical, but we have what we call the attritional, which is a pure type of both frequency of severity of normal losses which are happening, and then we have what is related to the very exceptional losses and what is related to the natural catastrophes.

So when you look at the pure technical development of the business, you need to look at what are the standard losses making. And that's a very important aspect in particular in retail because that's the way we are driving the portfolios. And here, what we see now is that with all the actions that have been taken, we see the improvement of this fundamental piece of our loss ratio. So that's what I call the fundamental improvement, and that's a very important aspect for us in terms of overall steering.

I have a question on New Caledonia. There are news to saying about the claim you had with others. And generally, are you still active in this market? Or did you retire from New Caledonia?

So I think on New Caledonia, the key point on New Caledonia is what is the overall legal frame and environment into which we can operate or not when we are insuring. So I think it's very important for us when we are underwriting a contract with our clients, that we have clarity on how typically the state will react in a certain environment. So the issue we had with New Caledonia is the fact that while we were thinking there will be the state intervening in terms of riots, that did not materialize itself at all. So then you are in a different type of environment compared to the environment against which you were providing the insurance coverage. So that's part of the conversation if you want for us to decide this or no, in general, to be ensuring our clients.

Next question will come from Tami Holderried from Handelsblatt.

Allianz was recently victim to cyber attacks in the U.S. in the summer and more recently in the U.K. Maybe you could comment on if you're planning on changing your cybersecurity efforts as a consequence? And if you're expecting, I don't know, financial impact from these attacks?

So thank you very much for your question. So we have a very strong cybersecurity setup in place. We have always had. So I cannot share with your numbers, but you will be astonished if you were to know how many cyber attacks we are withstanding every day and basically coping with. So we have a very strong setup. Obviously, we always are revisiting our cyber prevention setup because this is a risk that is constantly evolving, and so we have to be on top of it as much as we can constantly, right?

So maybe if you allow me on both the U.K. and the AZ Life attacks, those are very specific attacks on well-known or well-reported cyber attacks that went into specific systems. So the Oracle e-business suite for the U.K. and third-party cloud-based CRM system at AZ Life. Both events are absolutely isolated and did not and have nothing to do with the broader Allianz Group. So you need really to look at those 2 as independent event entirely separated.

So that's the way to look at it. Maybe on the U.K. one, which is the most recent one, it has been -- it's an incident where we have obviously taken all the actions that are needed, where we have also reported to both the authorities and the investigation set up the matter very, very quickly. But the incident only affects Allianz U.K. and represents less than 0.1% of our total customer in the U.K. So it's a very, very small base. There is no operational impact. And obviously, the business did entirely continue as normal.

As a result of that event, we have 80 current clients and 670 past customers. And obviously, we have notified them and we are engaging with them in case of questions. And as always, we are very sorry for what happened to them, and we are available to support them as required. But overall, clearly, completely isolated, completely separated, very small and as well, we are reactive to be ready to cope against those situations in general.

Our next question comes from Ben Dyson.

I've got a couple of questions, if I may. What was just on the -- you mentioned earlier that the benefit from lower natural catastrophes that was offset by lower contributions from runoff. I was just wondering if you could say a bit more about why there was lower contribution from runoff. And if it was -- if that meant that you've been strengthening reserves in some areas. And if so, where -- what that was for?

And then the second question I had was around the collapse of First Brands and Tricolor in the U.S., whether -- I just wanted to ask whether Allianz had in the exposure either on the investment side or on the underwriting side, for example, through Allianz trade to those collapses.

Thanks a lot for your question. So on your question on NatCat and the runoff, so indeed, we have increased confidence in our reserve level as part of this offset.

And then on your question on First Brands. So we -- as you know -- I mean as a matter of policy and also for trust and confidence of our clients, we never comment on individual exposures on a single-name basis. What I can just mention to you is that in the overall context of Allianz Trade, first of all, you have seen, again the excellent numbers of Allianz Trade.

Allianz Trade is very good at maneuvering the type of environment we are into. And obviously, the automobile sector has been under quite some scrutiny in the current environment, given the tariffs in particular and also the various effects on the supply chain. So Allianz Trade is always very good at looking at early signs and acting proactively when it comes to this type of exposure. So that suggests the overall approach and the way that the Allianz Trade credit has performed as a business.

Thank you, Ben. A question from [ Maximilian Voltz from Plato ] has reached us via e-mail. I would just read it out for the benefit of everybody. The question about the business as a whole. In Germany, we are seeing many insurers increasing their share of European business at the expense of German business because the German market is saturated. How is this affecting you? Is the share of German business in your European business declining? And what is your strategy?

So I think clearly, I was mentioning excellent momentum in our P&C portfolio. So Core Continental Europe, you can see that we benefit from a very strong level of growth across the portfolio, including for the German business that is performing extremely well, and has done a lot of work to secure and to leverage, I will say, the growth [indiscernible] that we see translated in sales into practice as we speak. So clearly Allianz France is seeing a very nice and positive development. We also see very nice and positive developments on our Allianz Direct business. So Allianz Direct has seen an internal growth of 14% into the quarter and actually 7% is volume into that business. So we are comprehensively on a good trajectory, I would say, in the overall setup.

I see in the line, a follow-up question from Tami Holderried from Handelsblatt. Tami, do you have a follow-up question?

Yes. Sorry. Ms. Coste-Lepoutre, you mentioned the Viridium deal that just went through this summer. On that, do you plan on leveraging the Viridium IT platform and transferring life insurance policies from Allianz to Viridium in European markets? Maybe even without telling them, but maybe just using the IT platform and having Viridium manage some growth portfolios?

So I think -- for Viridium, so for Viridium, maybe just overall, let me let recap a bit. So Viridium is an investment for us. First of all, I like this investment because it comes with good expectations when it comes to return, right? So that's a good investment on a stand-alone basis. The second aspect of the Viridium investment is the fact that it's part of our play between the asset management and the life insurance business, so basically offering good opportunities as well for PIMCO and AGI in terms of assets under management. And the last piece is indeed related to the fact that we believe, as a company and as an organization also together with other insurers, that we need to have a high-quality back book operator, a life back book operator available in Europe, and we believe we can support as part of that setup in doing so.

And you are right that for some of our portfolios, there could be opportunities for us to be ourselves a client of Viridium, not in Germany because today, if you look at our unit cost, given the size of Leben, there is no interest whatsoever to go into that direction, but that can be interesting for some of -- some other European markets where together maybe with other insurers, we would also be interested in doing so. So that required to -- that will require to optimize indeed the IT system of Viridium, which is today a German market system.

So you need to enhance the features of the system to make it working for other markets. So that's part of the strategic initiative that Viridium is looking at to balance investment into a new platform and the market opportunity. So I cannot speak for Viridium, but certainly that's the work they are doing at this stage.

And I guess you cannot give more detail on what countries you're looking at specifically, right?

No, not really, yes. But I think you could identify that fairly easily. As an example, if you were to look at our Capital Markets Day material, you will see some insights.

Thank you, Tami. We have another follow-up question from Ben Dyson from S&P.

Okay. Thanks for taking my followup question. I just had a quick question on reinsurance. So almost with particularly property catastrophe prices coming down. I was just wondering if there's anything that you're going to change about your reinsurance buying strategy at January 1 this year.

Thanks a lot. So indeed, we see the softening cycle on the reinsurance side, so which for us is a positive, as you mentioned, right, because we are a net buyer of reinsurance, so that's a good thing for us. I mean, at this point in time, we are really happy with our reinsurance program. You may remember that we actually had to adjust a bit our insurance program when the market -- when the reinsurance market did go into hardening, so we had to increase some of our retention and so and so forth, but now those retentions have not moved. So if you want the economic value -- the implicit economic value of the retention is down and up for us.

So that's -- so we like overall the program. What we may do is that if the conditions are really good and if we see appetite from some of some -- I mean, from the reinsurance market for certain type of more optimistic coverage, which gives us maybe high level of risk return profile like trading, as an example, volatility against more certainty in particular at a lower return period, there we need -- we may adjust our reinsurance program. But overall, short answer would be positive for us, and we are not planning adjustments to our program.

This appears to be the last question for today. Thank you very much for your active participation during this call. Just as usual, for your calendars, we will report our financial results for the full year on February 26, and we look forward to continuing our exchange then.

This concludes today's media call on our 3Q and 9 months' financial results. Have a great remaining day. Thank you, and goodbye.

Ladies and gentlemen, welcome to the Allianz conference call on the Alliance Group financial results for the second quarter of 2025. For your information, this conference call is being streamed live on allianz.com and YouTube. A recording will be made available shortly after the call.

At this time, I would like to turn the call over to your host today, Oliver Bate, Chief Executive Officer of Allianz SE. Please go ahead, Oliver.

Thank you, Andrew. I'm not sure what host means probably I pay the bill, but I don't know why. But I'm very happy to talk to you today. Thanks for your interest on this beautiful afternoon in Munich. I would like to do an introduction into the discussion and then Claire-Marie will go with you through all of your questions and a lot of the details that you may be interested in.

Let me just start. Initially, even though this is the analyst call about what we are going to talk about, that is the delivery of the strategy that we have discussed at the Capital Markets Day in December, and that's exactly what is happening now. As a reminder, while we report in 3 segments: P&C, Life, Asset Management. Reality, we run from a customer perspective, 2 businesses. We run the protection in the retirement business and those are we are trying to drive further at this point in time in terms of value creation through 3 most important levers, there are many others behind.

But the most important one, our 3, driving smart growth going forward. As you know, historically, Allianz has worked very hard on bringing the brand forward, customer satisfaction forward productivity, but it's now time to translate the strength of the foundations into growing market share. The second one is further reinforcing productivity. You can probably spend hours on the impact of AI on -- that the one thing we know for sure in our industry. We now have the opportunity to really process unstructured data in a much more productive way than any time before. And we're going to leverage that, not just in administration or call centers, everything is -- everyone talks about, but also how do we serve customers better, and you can measure that in terms of expense ratio for sure, which we've been improving for a long time again in the first 6 months, but also other items as you're going to see.

And the further one and given this -- how do I say this properly, interesting political and economic environment, we need to further strengthen resilience because that's what customers want, and that's many of our shareholders want that too. What is the core message is Allianz has been, for a long time, a world-class product organization. We are exceptional at the products we design and sell and service. What we can do better is to help serve customers across products. And you will see that in lower -- in the form of lower lapses over time and in the form of higher cross-selling, some of that to come.

Now on Page A5, let's please move there. Just 2 examples from the first 6 months, one, focus is on internal or growth in the P&C segment. The other one is on productivity, again, highlighting it through the expense ratio, we can take other items as well. On the first one, it's very important. We've shown 8% growth, and that's really important, of which 5% is pricing and 3% is volume. And the biggest contributors to the volume have been during the first 6 months. And by the way, they often change over quarters. They may change year-by-year.

But this time, it has been Allianz Partners. So our platform business is keeping on growing very strongly. It meets very important demands in our economy. AGC&S, it's Brazil is growing leaps and bounds after we have completely reformed the platform. And certainly, last but not least, Germany, which -- where all our investments in improving performance are really paying off.

Now you can take subcategories and say, yes, yes, yes, that sounds great. But what happens in retail, what happens at partners, specifically what's happening in commercial lines, and you see that the commercial lines number, let me just explain, we had very significant growth in the Health side of Alliance Partners that we account in the commercial lines segment. So the 6% growth number that you see there is without partners, and that's at a very solid 6%. partners, I mentioned it's 9% and retail lines is 8%. So across the segments, we see very, very, very good results.

On the productivity side, the same picture as we've had the last 7 years, and you see from '22, but we can go back to 2019, where we started with the journey in terms of seeing it. Remember, we are coming from 28.6% expense ratio in 2018. Now this year, you are seeing for the first 6 months, 24%, that's 4.6% lower and every year, 30 to 50 -- 30 to 40, sorry, basis points improvement, and we do not intend to let go. Sometimes per OE or region, some of these numbers may change because of a change in the product mix, the change in the distribution mix. In an aggregate level, we do not expect this number to change over the coming years. It's certainly not for the strategic cycle that we've talked about.

Now let me take your attention to Page A6, just an update on what we're doing on the portfolio. For the last 10 years, we've systematically said, we refrain from big acquisition, we focus on bolt-on and things that bring us new capability, maybe new distribution access or a new business model invention. So let me actually guide you through them and I start on the right-hand side with Sanlam, as announced before, we have stepped up our participation in the joint venture with Sanlam to 49%. We always said we want to do that. We want to be present, but we want to be present in Africa with a partner whose destiny and origination is Africa. So we are much better placed than where we were before. I think we are now -- at least 3x the size of our next competitor in order to be able to exploit the opportunity. And remember, the JV covers all countries outside of South Africa, the home market of Sanlam, yes. So that is important to say. I'll talk about India in a second.

Let me turn to other investments that you could consider to be more traditional. In Australia, we went into a strategic partnership with the Royal Automobile Association of South Australia. It is very good for us because it helps us to diversify also from a net cap perspective. So in terms of net capital consumption, it's also pretty good. And then in Allianz Direct, we have done a number of very targeted small acquisitions in order to build on the scale of the platform.

Remember, Allianz Direct is one of the very few businesses that exist in our industry that operates across countries with exactly the same operating and IT platform. It's not like they look similar they are identical. And now we need to integrate these portfolios to build the scale on the platform. You see that some of these acquisitions will only come into the numbers later this year or early next year.

Now more unconventional, you may say are what we've done on Sconset Re. This is a continuation of the work we've done in '21 where we hived off EUR 36 billion in reserves. Now we have created an open or so-called open book or flow reinsurance structure in the United States in order to be able to not just address in-force books, but also new business that makes us competitive in products and segments that we were not competitive in before because of Solvency II on our capital model having different cost of capital. And we continue to work on similar solution like Sconset Re in order to optimize the usage of capital in the United States.

Remember, because of the RBC model, actually compared to Solvency II, the U.S. is not very capital efficient because we cannot use the value of the new business as an offset to capital requirements, so we need to continue to work on capital efficiency while growing the franchise. The other one is Viridium. We have led a consortium that has taken over the company. We're very happy to having just closed this one, having received regulatory approval a while ago, and we want to combine our expertise in terms of running life insurance books with the expertise on the investment side, we are also the leader in asset management service provider to Viridium, so we expect a significant boost on our ability to grow both PIMCO and AGI out of this partnership. And by the way, Allianz Investment Management is the partner for Viridium in terms of asset allocation.

So that's just a little bit of a view. Let me then hit to the most important strategic development of the quarter We've just announced our partnership in India with Reliance group. Many of you may know Reliance group really well. It's not just the biggest petrochemical and chemical company in India is also the biggest retailer in India. And it's also the biggest mobile phone company. Just to give you some numbers that are quite staggering. If you think about JioPhone, they have 494 million -- so almost 500 million subscribers. They have -- and that's very interesting. In the retail side, 356 million regular customers in Reliance Retail and just JioMart, which is sort of the Amazon equivalent does 600,000 deliveries a day.

By the way, last year, Reliance Retail recorded 1.26 billion sales transactions in their retail network. So it's a giant partner that we're starting our journey with. Now a couple of you will say, so why are you starting with reinsurance, given the numbers you just mentioned as a very simple answer. We do not have any competition issues with our current partner Bajaj. Therefore, there is no issue with noncompete. That's why we're starting now, and we're launching with the renewal season that is in April of 2026. But as soon as we have fully exited our partnership with Bajaj, which is happening in a very amicable way, we are going to launch in commercial lines, in P&C, retail, in health and subsequently in all lines of insurance and by the way, also insurance services as a partnership.

I'm also proud to say that in difference to what we had before, we have a 50-50 relationship, but we are going to have management control and that is the first apparently in the universe of Reliance. So we are very proud about that. Now you -- some of you will ask, so why did you then change is, again, a very simple explanation, while we founded the insurance company in 2001 with Bajaj, we contributed 100% of the capital that ever went into Allianz Bajaj, we brought the people. We brought the IT systems at the time. We grew it together, but we could only own and control 26% of the capital.

And we could not agree with our long-term partner Bajaj to a very simple fact that Allianz would want to run the insurance business. We are not in the investment business for insurance. We are in the operating business. And as Bajaj -- the Bajaj family eventually decided that they would not ever relinquish management control to us. We have had to decide to find a new partner. We are extremely proud to have partnered with the best partner that we can ever imagine India, that's the Reliance group and the Ambani family. We are very, very proud and dignified by them partnering with us. And I gave you some numbers, the potential is gigantic.

So that's what we have done in the first 6 months of this year in terms of working on the portfolio, strengthening growth and there is more to come, the investors over the next couple of months, following the same strategy that we've had for a decade now.

Now let me turn your attention to Page A7, just to give you an overview. For us, it's very important to continuously deliver. And there may be a quarter where some of you feel well, this is a little bit light there? And why is this part of the portfolio not perfect. Just look at the growth profile, the financials delivered and the balance sheet strength, Property-Casualty internal growth that is always remember, without M&A and FX, 8% up over the first 6 months. New business value growth in Life is 9%. Asset Management AUM growth is a little lower, given what we have discussed, annualized at 4%, but already in July -- already July, i.e., already in the first month of the third quarter, we had $21 billion of net flows into PIMCO. So the growth continues extremely strongly.

A lot of the FX -- translation FX are really noise clamory. We'll talk about it because the really relevant numbers that dividends coming out of the U.S. are hedged forward and therefore, that is something that we need to discuss.

In terms of financials, operating profit is at 54% of full year midpoint. The core EPS is 8% and there we have been taking out both the tax we had to pay, but also the gains on UniCredit and the core return on equity is at an annualized 18%, which is an outstanding number, particularly relative to what our long-term average used to be. Capital generation, I'm very proud of the finance team and our OEs is significantly improving. We were heavily criticized in the past for operating capital generation. It stands at plus 13% for the first 6 months. Solvency remains strong despite all of the volatility. And obviously, there's a connection between point 1 and 2. And of course, our rating have been confirmed, and we have very good outlooks on the rating.

So the overall picture, while every now and then something may move in a crazy world. I'd like to also mention one thing that I find very important. I've seen some comments around sort of we had lower nat cat, but we also had prior year development. No, I've been here 18 years. I never understand these questions. We do not need high runoff, and we certainly use every opportunity to be extremely prudent in setting our reserves, if I may say that.

Now with that, I hand over to Claire-Marie to give you some more color on the details in all the segments around growth, profitability and whatever you want to know. Thank you.

Thank you very much, Oliver, and good afternoon to everyone. So looking at Page B3. Here, you can see, as mentioned by Oliver already that the group has delivered excellent results in the first half of the year and in the second quarter as well on a stand-alone basis. This is clearly positioning us very well for the full year targets, but as well towards our Capital Markets Day ambitions, also, as mentioned by Oliver.

First, what you see on this page is that we have a strong level of growth that is coming across our 3 segments. And we continue to see that growth stemming from the 3 segments as we have seen previously. So we have a strong consistency here despite some FX effects that we have also seen in the quarter. So we grew at a total business volume of 8% at constant FX. As you can see on the page as well, it would have been double-digit growth at 10%.

Our operating profit in the second quarter is even higher than the record level of operating profit we have achieved in the first quarter. So overall, our first half operating profit is at EUR 8.6 billion, which is up 9%, clearly an excellent level, which is fully on track against our guidance of EUR 16 billion plus/minus EUR 1 billion for the full year 2025. Here as well, as I have been mentioning for the growth, our 3 businesses are contributing to the positive development of our operating profit with a stronger support from P&C, as you can see on the page as well.

We see as well an excellent development of our core net income, which did benefit from the sale of UniCredit Vita JV in the second quarter. But if I adjust for this gain on sale and for the famous Bajaj-related tax provisions that we have booked in the first quarter, our core net income is up 6% and our core EPS is approximately at 8% growth, which is the midpoint of our 7% to 9% EPS growth rate that we have been mentioning during the Capital Markets Day.

As mentioned by Oliver as well, we continue to deliver an excellent level of IFRS ROE, which for the second quarter on a stand-alone basis is above 19% on a core basis. And I think even more fundamentally, I would say, beyond the P&L item, our resilience remains strong in the environment today that is quite challenged overall. Our Solvency II ratio emerged up at 205 -- 209%, sorry, with an excellent capital generation of around 13 percentage points in the first half of the year. So overall, an excellent set of numbers from growth to profitability and financial strength. Clearly, this is making us very happy as you have heard as well from Oliver clearly in his introduction.

So moving to next page and having a look at the P&C business before. Here, we see a strong level of growth and an excellent level of profitability in both retail and commercial. In the second quarter, we achieved an even better level of combined ratio compared to the first quarter, and we have delivered an even higher level of operating profit, which was at a record level already in the first quarter. This is bringing our first half operating profit to EUR 4.5 billion, which is up 12% versus last year. This is the outcome of, first, a higher volume level, which we are earning through at an increased level of margin with some offsets from FX effects in the investment results.

First, we see a good top line momentum that is continuing in the second quarter. This results in an internal growth rate of 8% for the half year. The growth was driven by both price 4% and volume 5% in the second quarter on a stand-alone basis. The volume effect was higher compared to the first quarter with very good volume growth from commercial lines, as you have seen as well, in particular from partners. And as mentioned already by Oliver, we see plenty of good example in the quarter of our platform play.

In addition to partners, we have direct, which has been growing by more than 20% on an internal growth basis in the first half, with more to come, I would say, in the second half of the year as we are integrating FRIDAY and iptiQ, which are 2 acquisitions you may remember, we did previously.

Our pricing trends continue to be robust in general with clearly quite some differences and nuances between geographies and line of business. But the average renewal rate at 6M is at plus 5%. The pricing continues to be strongest in retail lines, where we are at plus 8%. We are close to 10% in motor retail and mid- to high single digits in all other retail lines. In commercial, the rate momentum continues to trend downwards and now stands at plus 1% across our portfolio, where MidCorp remains resilient, and we see some softening continuing in the large corporate space at AGCS and Allianz Trade as an example.

Our underwriting profitability is excellent with our combined ratio at 91.5%. This is fueled by 3 main dimensions. The first one is that we have an excellent attritional performance as we are earning through our pricing and our underwriting actions. We have had a relatively benign nat cat experience, but this has been counterbalanced by a conservative level of reserve setting, as already mentioned by Oliver as well. And we continue to focus on our productivity with our expense ratio 40 bps lower than last year at 24%. By segment, you can see as well on this page that we have strong improvement on our retail business, while the commercial profitability remains very good at 91%.

Overall, it was an excellent first half for the P&C business. Our operating profit is 12% ahead of the midpoint of our guidance run rate. We have good underlying volume growth. We have an excellent underwriting profitability and the positive developments are very broad-based, both from a line of business perspective, but as well from a geographical angle.

Let's now move to Life, and let's have a look on Page B5. Well here, we continue to see a double-digit new business growth at an attractive new business margin of 9.6% in our preferred line of business, which is very important from -- also from a resilience perspective. Our operating profit is up 5% versus last year, which is exactly in line with our outlook and also with our Capital Markets Day expectations.

What I find very interesting when you look a bit further into the details of our portfolio is that our Life businesses outside of our 2 largest entities, Germany and basically Allianz Leben and AZ Life contributes just over 60% of the operating profit and increases their contribution 11% year-on-year. So we have a high quality, and we have a very well-diversified portfolio on the Life and Health side. This is as well what we see in terms of new business growth for the half year, which is really broadly spread with double-digit growth in Germany, in Italy, in Asia or CEE as an example.

As always, we do have the second quarter on a stand-alone basis, which is a bit lower than the first quarter in terms of growth. We always have some seasonality in our growth development in Life. We should also expect to have a bit of a lower growth in the third quarter as well. And on the operating profit side, the second quarter was a bit impacted by FX and as well some weaker investment results, which are partly reflecting the market volatility we have experienced during this period.

We are particularly pleased with the underlying CSM development in the first half of the year. Here, 2 points to mention. First, our CSM growth adjusted for FX effect is almost 4%, which clearly demonstrates our low level of noneconomic variances in the current environment. And secondly, our normalized CSM growth is around 3%, which is clearly a strong level of growth relative to the 5% annual expectations we do have for normalized CSM growth.

So in Life and Health, we see a strong market appetite for our products, which is continuing and be fueled by the secular trends we have discussed in the Capital Markets Day, the quality of the Allianz brand and the trust in our resilience. This clearly allows us to build sustainable value that we are going to earn in the future as we are going to earn the CSM going forward.

Let's move to B6, and let's look at our Asset Management segment, where here as well, we are delivering very good results in a very volatile quarter. First, when we look at our results, you need to keep in mind that more than 70% of our third-party assets under management are U.S. dollar denominated, meaning that it's very important to look at the underlying to judge the performance. And from all 3 segments, you need to note as well that Asset Management is the most impacted by the U.S. dollar volatility. Corrected for FX effect, our asset under management growth is around 4% with net inflows at EUR 42 billion, which means an organic growth rate of around 4% annualized. This is clearly very strong for a pure active manager, in particular, in the volatile market we have experienced in the first half of the year.

The inflows we have experienced mainly emerged from PIMCO. And here are some colors I'd like to give. First of all, PIMCO continues to see an excellent traction in its active ETF proposition, which is now sitting at EUR 40 billion of assets under management, and we have seen EUR 10 billion year-to-date of net flows into that proposition. Beyond the fixed income strategies, we have seen as well the credit and the private alternative strategies as being the ones which have attracted most inflows this year.

And into July, as mentioned by Oliver, we continue to see more than $20 billion of inflows, where clearly, I think the offering from PIMCO continues to be supported by a strong outperformance in terms of Alpha for our customers of our strategies, which is being delivered over time. So really structurally in a 5-year, 3-year, 1-year approach, you consistently see that outperformance. And in the challenged environment we are experiencing currently, this is also a huge opportunity for PIMCO to create more value for our customer.

Clearly, our profitability in the Asset Management segment is very resilient with an operating profit, which is up 5% in the context of negative FX effect and lower performance fees. Excluding performance fees and FX adjusted, our operating profit is up 7%, which demonstrates the strength of the underlying in a volatile environment. At both our asset managers, our third-party asset under management margin remains very stable, as you can see as well on this page, in a competitive environment and our focus on productivity is unchanged as the development of our cost-income ratio clearly highlights as well on the page as we are emerging at 61.3%.

While we may continue to see the translation effects from the U.S. dollar into our numbers in future quarters, our strong track record on managing productivity, efficiency and profitability provides resilience into our numbers. We are confident on continued net inflows and our ability to create value for our customers and shareholders as well on the asset management side.

Let's move to Page B7, and let's have a look at the development of our solvency ratio. We remain strongly capitalized with our sensitivities broadly unchanged, as you can see also on this page. Some elements maybe to highlight when it comes to the development of our solvency ratio since the beginning of the year. We have an excellent organic capital development at 13 percentage points year-to-date. As a reminder, for the full year 2024, we were at around 20 percentage points, and we expect to achieve more than 20 percentage points for 2025 with our medium-term objective to improve the run rate of our operating capital generation to 24 to 25 percentage points in 2027.

As an organization, we have been very, very focused on this metric, and we see some of the early benefits of this in the improved generation year-to-date. We as well had in the first quarter, some positive variances in particular from Life, which I don't think are to be fully extrapolated into the second half of the year. Our operating capital generation is partially offset by the cost of the 2025 buyback program and the normal dividend accrual, as you can see here, with minus 11 percentage points. Then we have a small negative market impact, and we have a positive contribution from the management actions we have taken, mainly from the reinsurance transaction at AZ Life and the disposal of the UniCredit Vita JV.

Those results reiterate our confidence on the strength and resilience of our capital position. At this stage in the year, we feel even more confident in our ability to improve our capital generation as we advance the initiatives outlined at the Capital Markets Day.

Let me conclude on Page B8. Clearly, our results are excellent. We see continued business growth stemming from all 3 segments and a record level of profitability. This positions us very well for the second half of the year and allows us to reiterate our outlook of EUR 16 billion plus/minus EUR 1 billion operating profit for 2025. More fundamentally, this has well positioned us very well for the delivery of our Capital Markets Day ambitions.

As mentioned by Oliver, as an organization, we are focused on working on the initiatives along the 3 levers: driving smart growth, reinforcing productivity, and strengthening resilience. And I will say the energy and the creativity also in cross-sharing the initiatives we have experienced during the meetings we had with the Board of Management of each and every operating entities together with Oliver in May is very much comforting in our ability to deliver against our ambitions.

With that, I thank you all very much for your attention. And I hand over back to you, Andrew, for questions.

Great. Thanks, Claire-Marie. Okay. So we're ready to take your questions. [Operator Instructions]

So with that, it looks like the first question is from Andrew Sinclair from Bank of America.

First for me was just looking at the undiscounted attritional, which is a really, really good figure. What scope do you see for further improvement from here? I think it 70.9% for the half year. I think Q2 stand-alone was about 70.3%. You mentioned there's been some conservative booking. Does that include conservative booking of the attritional? Or should we think about this as a pretty good level, where can we go from here?

And then second was just on AGC&S. The rate changes minus 0.9% for Q1, minus 2.6% for H1. By my math, I think that means Q2 is down about negative 4.5%. But you have still got internal growth in AGC&S. Just really wondered if you can give us a little bit of color in terms of where you feel on rate adequacy for different lines. Are there any new areas where you're concerned and where you're happiest to push more for volume?

So thanks a lot, Andrew. So let me start maybe with the attritional loss ratio. So indeed, I think the undiscounted attritional loss ratio in the second quarter was very good at 70.3%. The main driver for the improvement was the retail business. However, I think the commercial business contributed as well. What we see clearly in the 70.3% is the earnings of the pricing and the underwriting action that is structurally coming through. What we see as well is that indeed, the undiscounted attritional loss ratio first quarter peak was a bit higher because indeed, as I mentioned to you at that point in time is that you are always a bit more conservative at the beginning of the year and then you recognize more of the benefits as the year is coming through, but also in balance of the overall performance.

At this point in time, I would still consider that you should look at the half year, right, which is at 70.9%, which is good and which is also slightly ahead of our target for the year, which I have guided towards, which was 71% to 71.5%, which for me gives you a good reference still. So as things stand for and as we are earning the benefit of our actions, I'm confident we may emerge a bit better on that dimension or to put it differently, we may emerge also a bit better on our overall combined ratio that I had guided towards 93%, maybe a bit better than that overall. So I think that's what you can anticipate a bit given the strength of the underlying actions we see.

And remember, Andrew, there is always a bit of possible noise in the attritional loss ratio because that's coming from retail plus commercial plus many different line of business and so on and so forth. So that's why I think looking at it overall is also giving you a good indication, I believe.

I think then you were asking what are the development on the -- what are the price development we are seeing in the context of the commercial business, right? So I think, first of all, and you know that very well, Andrew, but I think it's important to have in mind that for us, the commercial business is made of really different buckets, right? We have the Partners business, we have the Trade business, we have the MidCorp business. We have the reinsurance business from Allianz Re, and we have AGCS that is focusing on the large corporate only.

And we are focused at the level of -- I mean, across the book to grow in a very profitable manner. So we are focusing extremely tightly on technical excellence of our underwriting. This is also the case for AGCS. So even if we see some year-on-year rate reduction because clearly, the market is softening, I will say, across geographies and across line of business to be a bit nuanced, as I always mentioned, right? I think the areas where we see that we are mostly impacted by rate decrease will be cyber will be property, will be aviation, steel will be -- so I think it's quite broad-based. But it does not mean that the actual price against the technical price is not above 100%, which is very important to have in mind because you can be fairly priced even if the price is going down.

So in many of the line of business and geographies, we are still in a status where we are fairly priced, but the price is going down. So we are grabbing some good businesses in the case of AGCS, where we are strong. like in the construction or in the -- still in property and so on and so forth. So there are really a lot of pockets where we can tap and grow nicely, as you may remember as well, also because our market share offers opportunities for growth in the case of AGCS. And also clearly, we have a good new commercial dynamic in the environment of AGCS also with the arrival of the new CFO -- CEO, who is activating some part of the organization as well.

Okay. And obviously, we've got a lot of Andrew's around today. It's a very unfashionable name, but here we have another Andrew. So Andrew Baker from Goldman Sachs.

So I guess the first one, obviously, P&C, the internal growth still looks really strong. If we look at the insurance revenue, it grew 3.8% in Q2 alone. I appreciate some of this was FX. So are you able to give us what the FX impact was there? And I guess, any view on if we assume constant FX from here, how you would expect the insurance revenue line to develop would be really helpful maybe in '25 and '26?

And then similarly, unfortunately, on the FX volatility, just on the P&C operating investment result. So again, FX impacts, Argentina had some impact. I think previously, you guided to EUR 2.8 billion or so for the year. Is that still a good number? Or should we relook at that just given some of these volatile items?

So on the P&C investment results. Indeed, you are absolutely right. We have seen a bit of -- I mean, a reduced level of operating investment results in the second quarter with some elements actually related to FX in the broad sense, right, mainly related to some hyperinflation countries. An example of that will be the fact that we had less return from the inflation-linked bonds, as an example, coming from Argentina and so on and so forth.

But I would say at this point in time, and with the way I continue -- I mean, I think you need to think about it is that our outlook was at EUR 2.8 billion for the overall investment result for the year, which basically was implying EUR 200 million less compared to last year in the P&C segment overall. So if you look at the half year, we are exactly EUR 100 million below what we were in the -- at 6M last year 2024, which is absolutely consistent with the assumption we have taken. So we will really keep our guidance as we have provided it in the -- I mean, when we have set the outlook. Then you were asking...

Revenue growth.

Revenues. Yes. Okay. So on the -- so basically, on the fact that we -- yes...

Sorry, Andrew, your question was how do we think about the revenue growth? The volume growth was high, but the revenue growth you noted was lower.

Precisely. Just how do you think about that with the FX impacts at all?

So I think, indeed, we are a bit lower. We are at 5.4% in the first half versus -- what, I mean, versus our Capital Market Day commitment, which is like 6% to 7%. I think that's a fair point. You have two elements you need to have in mind. Andrew, the first one is that indeed, we have the FX effect. And secondly, we had this transfer of some health business, I mean, the German health business and the -- so the UBR business, right, and the health-related business or life -- health-related business in Austria that was also transferred to the Life segment.

So yes, you're correct for this later effect, then our growth is at 5.9%, which is towards the low end of this 6% to 7% commitment. And I think that's the way you need to think about it basically because this year-on-year effect related to that transfer will neutralize itself over time, 2026, 2027.

[Audio Gap]

Our next question is from Michael Huttner of Berenberg.

I have two questions. One is hopefully for Oliver, well, Claire-Marie. Have your competitors or has gone to sleep, not just you, but we're seeing amazing combined ratios and very strong outlooks on pricing above loss cost in retail pretty much across the board. And is this -- what's happening? Have the consumers kind of said, no, we'll pay more? I don't quite get it. And then the other one is on the -- just a really silly question, maybe I put two together. The cost of the AZ life hacking and the cost of French fires, the more recent ones. That's it.

Yes. Thank you. As usual, very nicely phrased, smart questions. I'll deal with the U.S. is an unfortunate event and the key thing is really to protect our customers and to protect the business. That's the most important thing. At this point in time, from what we understand, it will not have a material impact at the group level. This is really important to understand. The key thing is to actually thank our people because at AZ Life, our employees are working 24/7 now to call our clients, our distributors and reassure them that Allianz is safe.

Also, just to put it into perspective, the key thing is while there was a data leak of large numbers, there was no financial data released. So no policy content, no credit card numbers and things like that. So it's mostly contact numbers. And that is very important to know. But let me repeat because it's very important. At this point in time, we do not expect a material impact at group level out of this event. So that's for the first one.

And the other one is in terms of pricing versus volume. It's very fair what you're saying, and I'm very concerned personally and many of us are about the issue of affordability of insurance for consumers. It's not just in auto, but it's also in home insurance. It's in health insurance. So it is not something to laugh about. The only way to really address this is twofold.

The first one is to strengthen the quality of products and services to a point that customers feel that they are getting true value from us for what they pay. That's been a journey that you know we have been on for a long, long time. We will, in the fall, show you our updated Net Promoter Score numbers, and they're again improving massively in terms of loyalty leadership. So that's important. And you see that also what happens on the claims side.

The other one is to try to pull every lever for our clients to make our products more affordable. So yes, shareholders should be happy about the productivity gains, but also customers because part of that, we are reinvesting into the business. And the third one is often goes unnoticed. The businesses that we are building as service offerings that complement our insurance offering, particularly offered by Allianz Partners and [ SOFE ] have 2 components. The first one is to improve service quality and therefore, value for products. But the second one is also to help to reduce the cost of risk.

To give you a practical example, and we don't have the time for details today is when we route a claim, a casco claim in Germany through [ SOFE ] and by the way, also in other countries, but for Germany, I have the number on the top of my head, the casco claims outside of deductibles about EUR 6,000, EUR 6,500. We save about EUR 1,000 out of that. And that allows us to significantly reduce the price paid for the consumer. We're offering a significant discount. And that role, whether that's a car, by the way, today or a home tomorrow or even health care will have over the next 10 years, a much larger share of our think and our value proposition for consumers. So it's a very good question. But so far, we are able to fend our pricing, but we need to keep on adding value to consumers. Otherwise, it will become very tough.

Next question is from Fahad Changazi of Kepler Cheuvreux.

Just on the P&C discounts, previously it was guided to 2%. I mean where are we seeing this end up for the year? And I suppose what are you assuming for Turkish interest rates, which might impact it? Second thing on the expense ratio, they're running better than the 30 bps capital markets guidance. Should we still be sticking with 30 bps? Is there something to do with business mix, for example, writing more reinsurance in the medium term, for 30 bps improvement is the right number to look at?

Yes. Maybe starting with your second question, yes, indeed, I mean, you always have a bit of a mix effect. So that's why our fundamental view is that you should be like taking into account more these 30 bps structurally year-on-year as being what we are aiming for. So that's really what you should be using. And then when it comes to the discounting in the first quarter, the discounting impact, you remember was relatively high. We were at 3.4% because we had some usual seasonality that we always see, but we also had some impact from hyperinflation Argentina.

In the second quarter, the discounting benefit is at 2.5%, which is very much in line with our expectations. So all in all, given what we know already today about interest rate, I will see it very likely that we will end up the full year a bit higher than the 2%, which basically we were guiding for towards as part of our outlook. And we will raise land at 2.3% to 2.5%. But of course, it will always depend on what are the interest rates we are going to experience, but slightly higher compared to what we were considering at the beginning of the year.

Next question is from James Shuck of Citigroup.

So part of my question has been answered. I was interested in that difference between the internal growth in P&C versus the headline on the like-for-like. Presumably you mentioned you're at the bottom end of your range if you normalize for FX and other things. But presumably one of the missing pieces is also the ART's transaction. So I'm just thinking if I correct for that as well, presumably you're at the top end, but could you just clarify that. On the same topic, I just look at Germany P&C in particular, because the headline increased by 9.6%, but the like-for-like was 4.4%. I'm not aware of any disposals. So perhaps you can just help me understand why those 2 weren't aligned. That's my first question.

Secondly, on Allianz Partners, Obviously, you've got a plan towards EUR 600 million profit by the end of the plan. You've got the 95% combined ratio target, 96.7% at 1H. It's now your biggest P&C segment really behind Germany, particularly if I look through the fronting that happens in AGCS. So Oliver, I'm just keen to hear how you think about this business as it continues to grow and scale. What do you think about in terms of the capital stack? Are you going to open up to the third-party capital at some point? Does it make sense for Allianz to be 100% owner? And how do you think about MGAs within Allianz Partner as well?

Sorry, James, it was quite hard to -- that your line is not great. The first question, I think, was -- we're focusing back on revenue growth in P&C. Did you ask specifically about ART business as well or something?

Yes. Should I repeat it? Is the line better now?

Yes, I think that's the transfer between the health segment. If I understood it correctly, maybe you can explain that.

And I think that particularly Germany is most impacted by the transfer of the health business. It's Germany and Austria from memory that are the most impacted segments.

Yes. James, this is Oliver here. Thank you for your question. So we have in Germany, an accident business called UBR that comes always in with 100% combined and has also always distorted our combined ratio numbers for Germany. And it is part of the protection business. As we sort of clearly formulated the strategy, wherein have transferred that. So that explains all the difference that you are looking at. It's a super attractive business, not under P&C KPIs because don't see the value creation more properly. That is maybe the first one.

The second one was more around capital structure. It is a very good question. We continuously look at how do we access more efficient capital structure. So again, as I mentioned earlier, on the Life side, we need to continue with the likes of concept. We're using Viridium, and we want to, again, build it not just in Germany but across Europe that will offer the opportunity for our partners, but also for us and other markets to find more capital-efficient sources and then transform so-called spread business into fee income that comes with a lot less capital consumption and, by the way, higher valuations.

And the same thing we will do and have been doing in P&C. Now there's a couple of things happening. The first one is whatever people say, and it's a bit differentiated when you -- if you have had LA -- nat cat exposure or not, Reinsurance prices are coming down for those that have been not attached. And more importantly, capacity is growing significantly and conditions are happening. So there is now capital available where there was no capital available. I think we're one of the only ones in the world that actually had an aggregate cover. So that's the first thing to bear in mind, and we're working on that.

The second one is, indeed, we're not just looking at it for nat cat, but also for other businesses. For partners, that is not needed because they run an extremely capital-efficient set of products. Historically, the issue was a different one. It was, by and large, a services business is fairly low margin, a lot of operating leverage, and that is something that we are working on. If we, in partners, find a way to make it more capital efficient because they run a few businesses that are capital consumptive, we will certainly use them because we really like the 18% ROE that we have.

Yes, that's it. And again, Claire-Marie and team are working very hard on improving capital generation for Solvency II. This is already working in the first 6 months. You clearly see it in the numbers. So it's happening as we speak.

Next question is from Vinit Malhotra of Mediobanca.

I'll just ask one question. We heard this news about the early approval for restarting the AGI book in the U.S. And I'm just curious that you haven't really mentioned it today, Oliver. Maybe you did and I missed it, so apologies. But if you could just share some thoughts on that, it would be very kind and much appreciated.

Thank you, Vinit. It doesn't mean much short term. It's a big relief to me personally, Andreas Wimmer. We don't have to sign all these papers anymore. Second thing, we had some limitations in the sense of having to report on certain items from our U.S. entities that also has fallen away. So that's also a big relief to the colleagues at Allianz Life and at PIMCO. And other than that, it doesn't mean anything, right? It gives us more optionality as investment bankers would call it, but there's nothing in the cards or nothing changing as we speak. We are focusing really on further improving investment performance and productivity at AGI and growing as strong as we can. That's it. Nothing else in the cards at this point in time.

Next question is from William Hawkins of KBW.

This is a very high level one. So please forgive me. But Oliver, I wanted to ask you if you could delve a bit more into the opportunities you see emerging in Germany, please. You were recently quoted in the press reminding us about the fiscal pressure faced by demographics and the pay-as-you-go social security financing. And I guess I did want to ask at the macro level, how serious do you think that is for Germany, given that you're starting with an incredibly low debt to GDP, I recognize that it's relevant, but I don't know if it's as relevant given all the other fiscal pressures going on around the world.

But then more relevantly, I wanted to ask you about the commercial business opportunities that you're seeing in Germany from maybe the need for welfare reform and the -- what could be very large infrastructure spending going on in Germany. Just sort of to tie it together, is there much going on that will be incremental to our estimates? Or is this all just sort of part of the general noise of macro?

Thank you. I'll keep it very short. We can have coffee at some point to go into more detail as a complicated subject. But we think about it as an opportunity, why? First of all, the state is now becoming as overleveraged as other European countries. That is not so good if you think about it in terms of the question of [ GEP ] to GDP. But the nice thing for us is we'll have a spread that we can earn for our policyholders, and we run their investments very well.

Second, and you saw that the last 2 to 3 years, Allianz health insurance is growing leaps and bounds, and is doing extremely well. We are now the loyalty leader in health insurance in Germany. We are also very -- growing very strong in group health, which is a super strong growing business. It's supplemental because post-COVID employers, who are still struggling to attract talented people are using that to retain their key employees. So it's a huge growth area for us.

And with the steepening of the curve, believe it or not, life insurance is going to come back, right? Because people always compare that to investing in [ Vidia ]. That's a brilliant idea. Much more brilliant is to look at the trillions we have in non- anything yielding bank accounts in this country, where I think one of the worst in the world. So that's the right thing and that cannot stay if people want to have decent retirement income.

Now on top of that, and then I'll stop, -- we have a huge amount of unfunded pension liabilities in companies in Germany of any size in difference to many other countries. Why is that? It's not for a lack of offers from the industry is because the financing of these liabilities through external party extremely expensive because of misregulation. You have to pay 30% more in Germany to fund your corporate pension than, for example, in the U.K. or in the U.S. So we need regulatory reform if and when they come, which I can only hope for, we have two things. One, we have a huge business opportunity, and we can supply a lot more capital for the rebuild of our infrastructure. That's my last comment. It will only materialize if we have decent political leadership. Let's hope and pray they get something done. Thank you.

Our next question is from Iain Pearce of Exane BNP.

Just one from me on capital generation. So in the capital generation side, I think you flagged a positive one-off from Life. If you could just give us a bit of detail around the quantum of that one-off and what it relates to, that would be useful. And then also just following that, I think even without that one-off, you would have been running comfortably ahead of the 20% guidance, probably closer to the 27%, 24% to 25% guidance. And your comments certainly imply that things are continuing to improve in terms of the levels of capital generation and the optimization going on within the business. So just wondering why we should still be sticking with 20% is the right number for this year?

Yes. So I think, Iain, what we see in the plus 13 percentage points of operating capital generation at this point in time, I would say it's approximately 2 percentage points of positive variances, if you want to put it this way. There is one which is related the fact that we had some positive effects that came through, in particular, on the variances on the Life side. So that's one element to it. It's almost 1 percentage point.

And the second effect is that we have benefited from very, very -- I mean, excellent performance on the P&C side, which contributed as well to higher level of operating capital generation against our yearly guidance, if you want. And that represents also as well almost 1 percentage point. So if you correct for those 2 effects, normalized, you come back to this 5.5%, I would say, operating capital generation per quarter approximately. So that's why I think we see improvement, but we are in this order of magnitude I was more mentioning.

In the underlying, that's really what you can also perceive from the development is that as an organization, we are clearly working extremely actively on the toolbox, I presented as part of the Capital Markets Day. And there is a lot of good energy of the business teams working with the finance teams to really look at all options to improve here, which is bearing fruit, and that's contributing to some of the positive development.

And so I would say at this point in time, we are more grabbing the low-hanging fruits in a way and the more heavy lifting type of levers will come later on. As an example, what I was mentioning, the shifting part of our business from the standard to internal model once we get regulatory approval and those type of things, that will more come later on. So that's why I think beyond those positive variances, I think the fundamental effect are still to come a bit later on as we have mentioned in the Capital Market Day.

The next question is from Andrew Crean, Autonomous.

A couple of questions. You've talked quite a lot about improving volumes through better persistency, better product density, lower lapses. Are there any data points from the first half that you could give us that show that you're moving along that line?

And secondly, Slide A6, you said, I think that there was more developments to come in the second half. Obviously, you can't say what those are. But is it possible to just look at the types of areas that you're looking to do bolt-ons, whether it's to do with developing markets or different distribution systems. Some sense as to what is your thinking when you're looking at portfolio optimization.

Thank you. I'll take the first one, Andrew. It is not yet there the way I wanted, just to say clearly, neither this thing. But remember, Allianz is a very, very big ocean liner, right? So from the time we prepared all the technology and the tools to the time that we drive it. And let me explain to you why sort of changing and excelling the course will take some time. The first one is given the insensitivity that people worry about the most, those people -- our wonderful colleagues that are managing Allianz, they have still to deliver on profitability, right, which is the key thing for us to do, and you can very quickly lose margin. So we've been very adamant, particularly in Commercial lines to do that. And it's still hard for people to balance and to do the end, not just the or.

The second component in terms of that, these things always come with a delay effect. So as we drive that, the first time you're going to see it accounting-wise, in my opinion is in the second or third quarter of '26, because some of the measures just -- a lot of the premium that we write today have been written, a lot of the renewals have been written by the time we end the first quarter. So there will be delay just from the fact of how the re-underwriting cycle works. I'm talking to P&C at the moment. So it's going to take some time, but we'll provide you with an update on how we do over time, trust me, because we really need to get this thing right over time. By the way, both levers are very important.

And to give you an example, what we are currently doing, we are completely resetting the incentives for our distribution partners, everything that does not require to cancel or renegotiate the overall commission systems in order to make sure that both retention and cross-selling are making it. We have, as I said, 50% of clients that haven't had a contact with us for a long time. And that is not because we're idiot, it's because we have distribution systems that are excellent, as I said initially, at selling individual products that are less excellent in driving that.

In fact, when you are an expert on selling life business in Allianz, you have 0 incentive, factually, historically to work on cross-selling. And that's not a good idea. And that is what we are and have been changing and that will bear fruit because we have more demand inbound, Andrew, than we can support. So it's not a matter of conceptualizing, it's just operationalizing it every day.

Now the second question you got, Claire-Marie?

Yes. I will answer it. So I think -- I mean, no big news, I would say, on that Slide A6 when it comes to our M&A focus, right? So we are, as an organization, constantly screening and looking at what makes sense against what are our M&A targets. Clearly, we are focusing on a bolt-on strategy when it comes to M&A, as Oliver was mentioning. In particular, I will say on the P&C side, looking at elements which are either allowing us to be in the top 3 in our markets because for us to be able to implement the sort of technical excellence system, if I may put it this way, for our operating entities, we need to have a certain scale. That's very important.

And the second dimension, I will say, on P&C is definitely as well further continuing to build our platform play. So it may be under the shape or form of smaller portfolios as we have seen for Allianz Direct or adding, as an example, to resolve infrastructure to be able to deliver a better ecosystem to support our technical excellence. So those are the type of examples of things we are looking at. We are as well in terms of geographical focus, definitely very interested in Southeast Asia. And our Indian development is an example of that, but also what we were -- when we are looking at Singapore or other places, similarly, both on the Life and P&C, that's the type of perspective we are looking at.

And then there is definitely the play when it comes to providing support to our life and asset management convergence. So it can be, as an example, also helping our asset management to invest into teams or basically to buy certain teams to accelerate our asset management capabilities as an example, together with some elements around the capital optimization type of approach or typically what we have done with the Viridium consortium, which is very much going into that logic. So I think no fundamental change, but we continue to be, as an organization, extremely focused and active at looking at what makes sense to enhance our overall portfolio.

So we have 1 follow-up question from Michael. Michael, your line is live again. So it's Michael Huttner from Berenberg.

I had three actually. But one is the total figure for FX headwind, if you have that either for Q2 or H1? The second is Viridium numbers, how much do you own? How much have you invested? Because they've changed, haven't they since Hannover sold their stake. And then I didn't see any Reliance numbers. I'm really sorry, I'm probably lazy, but can you give us an idea of -- in terms of maybe solvency strain or anything like that?

Just to be clear -- it was FX headwind 1H, we can give you that. Viridium, you wanted the amount we invested on our shareholding roughly, right? And then the third one -- sorry, related to that, you want the [ S2 ] impact, I think, which we put in the analyst presentation.

Yes. And I'm sorry, I haven't read that yet.

And then what was -- you have one other question?

Yes. I did have one. It's the corporate and other, which was very low. And I have read the comment, but I was a bit puzzled by it.

Yes. So the FX headwind for the quarter was in the operating profit was around EUR 160 million. It was mainly related to the FX effect I have been mentioning on the P&C side, on the investment side. We have as well and that you have identified, I assume, on the non-op side, on the fair value through P&L, some negative effect that came from the valuation of the assets. Basically, that's a negative EUR 260 million approximately. And then...

Viridium, I'm sorry, Michael, you wanted the rough investment level?

Yes, the investments and how much it is, I guess.

Roughly EUR 700 million.

It's roughly EUR 700 million and we're in the equity. So it's about 20% of the equity if that helps. And I think we've said it's just around point of solvency impact in the second half. I think the final question was corporate and other. Is that right?

Yes, please. Yes.

And just like to clarify, right, on the FX headwind, right, that's for the entire first half. That's not for the second quarter stand-alone, just to be precise. And then the corporate, you were asking why this is better than expected, right, overall. So first of all, there is always a bit of seasonality in the corporate segment. So that we see in particular because we have a lower level of admin expenses in the second quarter. Yes, there is always that seasonality effect. And usually, we have a sort of catch-up in the last quarter of the year that is coming through.

And the second element. So I think we have another element, which is associated with the seasonality related to the investment income, which was relatively high in the second quarter, and that's mainly related to some inflation-linked bonds and also to the dividend payment pattern we are getting into the corporate segment. Additionally, we had also a better contribution from Allianz Technology into the corporate segment.

That's more related to the fact that we have established also with the help of the new finance team there, like a more structured way of capturing the revenues on Allianz Technology side. So that's also coming as a positive effect into this quarter. And lastly, as you know, always, we tend to be a bit conservative in the outlook for the corporate segment. So that's also a reason why we are also better from that angle.

Thanks, Michael. Thanks for that. Great. Well, that concludes. We have no more questions in the queue. So thank you very much, everyone, for your participation. With that, I wish you all a nice rest of summer, and we'll speak to you at Q3. Thank you.

Good morning, everyone, and welcome to Allianz's 2Q and 6 Months 2025 Media Conference Call. Thank you for joining us today. My name is Frank Stoffel. I'm Head of Financial Communications and Valuation Relations, and I'm here at our headquarters in Munich with our Chief Executive Officer, Oliver Bate; our Chief Financial Officer, Claire-Marie Coste-Lepoutre; and our Group Head of Communications, Lauren Day.

Today's conference call is scheduled for 60 minutes. And as usual, we will answer your questions following our presentations. With this, it is my pleasure to hand over to our CEO, Oliver Bate.

Yes. Good morning, everyone. Thank you for dialing in and being with us this morning. We had the pleasure not only to welcome the sum back to Munich, but also report some very strong numbers. I will refer to the presentation that you hopefully were able to access by going through the page numbers, and I would like to turn your attention to Page A4 in the deck where we talk about the perspective that Claire-Marie and myself will offer on the second quarter and more importantly, on the 6 months of the year.

Again, a record quarter in terms of earnings for the second quarter and for 6 months. We are very proud of that. And we will try to explain to you over the next couple of minutes to what is driving that. I will not spend too much time on repeating on Page A4 what we tried to communicate at the Capital Markets Day last December. We are running 2 world-class businesses. We'll still report 3 product segments, but in essence, we do 2 things. We protect people's most valuable assets, and we help them to prepare for retirement and then we have a number of products that help with that.

The more important thing is what are we doing now in order to accelerate the value creation in Allianz. And these 3 components driving smart and smarter growth going forward. That's very important, having built the foundation over the last decade and beyond on the fundamentals for that, reinforcing productivity further. We have a very strong track record now, particularly in property, casualty, but we're driving that across the enterprise also in Asset Management and Life and further strengthening resilience in very, very difficult times. The key idea behind that is to continue to transform Allianz as an enterprise from a really world-class provider of outstanding products to our consumers, again, to becoming even more customer-driven and going beyond the individual product solution, and we'll talk a little bit more about that.

On Page A5, let me highlight a few points around the topic of smart growth and on productivity, just the top, the Claire-Marie will give you more detail. The first one is just looking at the 6 months growth in Property and Casualty and we have highlighted the volumes effect. So what's price and what is volume, 8% growth. Out of that, the 5% is pricing and 3% is volume. And when you look at the various components, whether that's retail versus commercial or our platform businesses, in particular, they're all doing really well.

We are earning the benefits of all the work we've put into productivity and excellence in the retail lines, but also commercial lines are doing well. And particularly well our platform businesses, Allianz Partners, as we show that, but also what you don't see on the page, Allianz Direct is growing 22% in the first 6 months of the year, out of which is 12%. So all cylinders -- if you want to call it that way, traditional businesses, which are not really traditional anymore in our new platforms are growing very well.

The second thing that's the right-hand side of Page A5, looks at the continuous productivity delivery, which we need in order to reinvest into growing further. We are reinvesting in new technology, new products, new services. And we can only do that because we continuously harvest further productivity gains, and that's before any effect coming from the future technology that is NI and others. And again, in the first 6 months of '25, we have reduced relative to the first 6 months of '24, our expense ratio and that's just an illustration of another 40 basis points. And that journey is continuing as we speak.

Let me turn to your attention to a more strategic topic if you think about partnerships and M&A. I know there's always a lot of interest and excitement around the topic of partnerships and M&A. So Page A6 gives you an overview of what we've done in the first 6 months and what we're working on. By the way, everyone talks about Allianz does a lot of M&A. We do a lot of stuff. In fact, we have done more divestments in terms of capital usage than we've done investments. Recently, it doesn't mean we want to shrink, but we focus on the things that really make sense.

Sconset Re in the U.S. is something we discussed that is another step on the way to make our U.S. Life business more efficient. We have worked on scaling our Direct business with a number of small but very interesting acquisitions, Eurofil, iptiQ, FRIDAY, and the Luko portfolios, which we are integrating now on a larger scale, a strategic partnership with the Royal Automotive Association in the South of Australia. So we are building our important well doing platform as we speak. We have increased our stake in the joint venture in Sanlam as planned and announced in the past to 49% to build a strong partnership with Sanlam. We're now, I think, 3 to 4x the size in Africa of our next competitor.

We have closed the Viridium consortium transaction now successfully with a number of very strong partners building what we hope will be the leading life runoff platform, not just in Germany but over the years also in other markets of Europe. And last, but certainly not least, we've just announced a new partnership in India. We'll probably talk about it. We have sold and that you know in the process of selling our participation in the legacy joint ventures with Bajaj Allianz and have just announced their new partnership with Reliance under the brand of Jio, which is their financial services and digital product branch, and we'll talk about that. Meaning that after 25 or 24 years of very successful presence in India, however, without the ability to really run the companies, we are now in the position with the strongest corporate in India to build a business where we have an eye-to-eye view and the ability to operate this business rather than be seeing as an investor.

Now Page A7 gives you another view, and that is how resilient we are. There's a lot of always debate over the years, the blah, blah, blah, are you too complicated? What does diversification really mean? We have been saying for a long time now that we really believe that it works. And you see that again in the number, whether that's in growth momentum across Property-Casualty, Life and Health and Asset Management, whether you see that in the financials on operating profit, core EPS or return on capital. And remember, for a long time, we had ROEs that were single digit in Allianz.

Now we're really reaching an exceptionally strong level of returns on capital, but also the resilience of the balance sheet, whether that's Solvency II cash generation, which has significantly improved over prior year's performance. Solvency being very stable and having a very strong financial rating set. So that's really what I wanted to say. There is nothing exciting other than we continue to do really well in a very tough environment. You see how difficult it is particularly for the industrial sector to deal with the political noise. We have been able to decouple from that and we'll continue to do so.

And with that, I hand over to Claire-Marie, who's going to give you a few more insights into what are the financial and nonfinancial drivers of this excellent quarter and very strong performance in the first 6 months. Thank you for your attention. Claire-Marie, please.

Thank you very much, Oliver, and good morning as well from my side. Let's move to Page B3, where you can see the -- that overall, the group has delivered excellent results in the first half of the year and the second quarter as well. Clearly, this is positioning us very well for the delivery of our full year targets. And I will say even more importantly, towards our Capital Market Day ambition.

First, what we see on this page is that we continue to see a strong growth across our 3 segments as we have previously experienced, and this despite some FX effect. We grew our total business volume by 8%. And actually at constant FX, it would have been double digit at 10%. Our operating profit in the second quarter is even higher than the record level we have achieved in the first quarter. So overall, our first half operating profit is at EUR 8.6 billion, which is up 9%, an excellent level, which is fully on track for our guidance of EUR 16 billion plus/minus EUR 1 billion for the full year 2025. And here as well, and I believe it's very important, you can see that our 3 businesses are contributing to this positive development.

We see as well an excellent development of our core net income, which benefited as well from the sale of the JV with UniCredit in Italy, so the UniCredit Vita JV for our Life business in the second quarter. But even if I adjust for this gain on sale and the [ Baden-related ] tax provision that we have booked in the first quarter, you may remember this one, our core net income is up 6%, and our core EPS is up approximately 8%, which is at the midpoint of our 7% to 9% EPS growth rate that we have mentioned during the Capital Market Day.

As mentioned by Oliver, we continue to deliver an excellent level of IFRS ROE. And for the quarter, our core IFRS ROE was above 19% Beyond the P&L item, our resilience remains strong, and our Solvency II ratio emerged at 209%. What we see as well is that we have an excellent capital generation of around 30 percentage points in the first half of the year. So overall, we have an excellent set of numbers from growth to profitability and financial strength. Clearly, that makes us very happy together with a nice we see currently in Munich for a change.

If we move to Page B4, and we have a look at our P&C segment. Here, you see a strong level of growth and an excellent level of profitability in both retail and commercial. In the second quarter, we achieved an even better level of combined ratio compared to the first quarter, and we delivered an even higher level of operating profit, which was already at a record level last quarter. This is bringing our first half operating profit to EUR 4.5 billion, which is up 12% versus last year. This is the outcome of higher volume at increased margin with some offset from FX effects in the investment results.

First, what we see on this page is a good top line momentum that is continuing in the second quarter. This results in an internal growth rate of 8% for the half year. The growth was driven by both price for 4% and volume for 5% in the second quarter on a stand-alone basis. The volume effect was higher compared to the first quarter with very good volume growth coming from commercial lines, in particular, from partners. And we see as well, I think, in this quarter numbers, a lot of good examples around our platform play. So beyond partners, we also see this very high growth that Oliver has already mentioned on our Direct business. And we expect to continue building on that one as our direct entity is going to grab the benefits from the integration of FRIDAY and iptiQ that we have closed recently.

Our pricing trends continue to be robust in general with differences across geographies and line of business. Very clearly, this is a very nuanced world, but the average renewal rate at 6M amounts at plus 5%, which is slightly down compared to what we had at the end of the first quarter. Our underwriting profitability is excellent with the combined ratio at 91.5%. This is fueled by 3 main components. And the first one is an excellent attritional performance as we are very clearly and we see that across the portfolio, earning our pricing and underwriting actions structurally. We have a relatively benign NatCat experience in the first half, which is counterbalanced by a conservative level of reserve setting that we have taken in that first half as well. And we continue to focus on productivity with an expense ratio, which is 40 bps lower than the expense ratio last year at 24%.

By segment, we see strong improvement in our retail business, while commercial profitability remains very good, as you can see on this page as well. So overall, it's an excellent first half for the P&C business. Our operating profit is 12% ahead of the midpoint of our guidance run rate. We have good underlying volume growth, and we have an excellent underwriting profitability. The positive developments here are very broad-based, both from a line of business and from a geography perspective. So high level of diversification contributing to those excellent set of numbers.

Let's move to Life and Health on Page B5. And here, we continue to see double-digit new business growth at an attractive new business margin in our preferred line of business. Our operating profit is up 5% versus last year, which is exactly in line with our outlook and our Capital Market Day expectations. It is very interesting from my perspective to realize that our Life businesses outside of our 2 largest entities in Germany and the U.S. contributes just over 60% of the operating profit and increases their contribution 11% year-on-year. So we have a high-quality, well-diversified portfolio on the Life and Health side. And this is as well what you see in the new business growth for the half year, which is broadly spread with double-digit growth in Germany, in Italy, in Asia and CEE as an example.

We are as well particularly pleased with the underlying CSM development in the first half of the year. What we see here is that, first of all, our CSM growth adjusted for the negative FX effect is almost 4%, which demonstrates our low level of noneconomic variances in the current environment. And the second thing is that our normalized CSM growth is around 3%. This is clearly a strong level of growth relative to the 5% of annual expectations we do have here. So in Life and Health, the market appetite for our products continue to be fueled by the secular trends we have discussed in the Capital Market Day, the quality of the Allianz brand and the trust in our resilience. This allows us to build sustainable value to be earned in the future.

Let's move to Page B6. And let's look at the Asset Management segment, where here as well, we are delivering very good results in a very volatile quarter. First, when you look at our results, you need to keep in mind that more than 70% of our third-party assets under management are U.S. dollar-denominated, meaning that we need to understand the underlying drivers to judge the performance. And from all our segments, Asset Management is as well the most impacted by the U.S. dollar volatility. Corrected for FX, our asset under management growth is around 4%. What we have seen in the first half is net inflows of EUR 42 billion, which means an organic growth rate of around 4% annualized, which is very strong for a pure active manager, in particular, in the volatile market we have experienced in the first half of the year.

Those inflows mainly emerged from PIMCO and some colors I'd like to give here. So first of all, PIMCO continues to see an excellent traction in its active ETF proposition, which is now sitting at EUR 40 billion of assets under management with EUR 10 billion year-to-date net flows. Beyond the fixed income strategies, the credit and the private alternative strategies are the ones which have attractive most flows this year, so very also much in line with our Capital Market Day perspective. And into July, we have continued to see more than EUR 20 billion of inflows, where clearly the offering from PIMCO continues to be supported by a strong outperformance for our customers of our strategies consistently over time.

Clearly, our profitability in the Asset Management segment is very resilient with an operating profit, which is up 5% in the context of negative FX effect and lower performance fees. Excluding performance fees and FX adjusted, our operating profit is up 7%, which demonstrates the strength of the underlying in a volatile environment.

At both our asset managers, our third-party asset under management margin remains very stable in a competitive environment and our focus on productivity is clearly unchanged as the development of our cost-income ratio demonstrates. So while we may continue to see some translation effects from the U.S. dollar into our numbers in future quarters, our strong track record on managing productivity, efficiency and profitability provides resilience. Clearly, here, we are confident on continued net inflows and our ability to create value for our customers and shareholders as well.

Similarly, on Page B7, I'm very happy with the development of our solvency ratio. We remain strongly capitalized with our sensitivities broadly unchanged. Some elements I would like to highlight on the development of our solvency ratio since beginning of the year. First of all, we have an excellent organic capital development at 13 percentage points year-to-date. So as an organization, we have been much more focused on these metrics. And you can clearly see some of the early benefits of this focus in the improved generation year-to-date.

It's very nice to see more of the finance colleagues working with the business colleagues in order to improve that metric. So this is clearly paying off. Our OCG is also partially offset by the cost of the 2025 buyback program and as well the normal dividend accrual. Then we have a small negative market effect, and we have a positive contribution from the management actions we have taken, mainly from the reinsurance transactions at AZ Life and the disposal of UniCredit Vita. So those results reiterate our confidence on the strength and resilience of our capital position. At this stage in the year, we feel even more confident in our ability to improve our capital generation as we advance the initiatives we have outlined in the Capital Markets Day.

Let me conclude on Page B8. Our results are excellent. We see a continued business growth, which is emerging from all our 3 segments, and we have a record level of profitability. This positions us very well for the second half and allows us to reiterate our outlook of EUR 16 billion plus/minus EUR 1 billion operating profit for 2025. More fundamentally, this is as well positioning us very well for the delivery of our Capital Market Day ambitions.

As mentioned by Oliver, we are working on the initiatives along the 3 levers, driving smart growth, reinforcing productivity and strengthening resilience. And maybe as an anecdote, we have twice per year with Oliver sessions with the Board of Management of each of our operating entities. And the sessions we had in May, which are the strategic sessions, were particularly energizing in terms of ideas and cross-sharing of initiatives from one operating entity to the next, which is allowing us to have full confidence for the future. So I'm very much looking forward to that. And now I clearly want to thank as well all our employees for their contributions to those excellent set of numbers.

And I hand over back to you, Frank, for questions.

Thank you, Claire-Marie. And before we start our Q&A session, let me mention the usual housekeeping items. [Operator Instructions]

The first question comes from Alexander Huebner from Reuters.

Can you hear me?

Loud and clear.

Perfect. I'll limit myself to just 1 question. Claire-Marie, what would have to happen in the third quarter that you're confident enough to raise your outlook for the whole year? In recent years, we have heard it at this point of time that you will, for example, be at least in the upper half of your outlook. Can you elaborate a bit on that?

So thank you very much for your question. So clearly, this is too early for us to adjust our outlook at this point in time. Clearly, I mean, in the first half of the year, we have seen a lot of geopolitical instability, a lot of economic instability in the financial markets. And it's also from a NatCat perspective, too early to react very clearly. I mean, like the world is quite unpredictable, I think, from a rather perspective, and we need to reflect on that point as well. So I think what is clear from our end is that on the fundamentals, we are extremely confident, and we also plan for different type of economic scenarios to be ready. So I think our level of resilience is extremely strong, and that's the way we are thinking as a team, but it's too early for us to react at this point in time.

The next question comes from Herbert Fromme, Versicherungsmonitor.

The Munich Re has left some climate initiatives a couple of months ago. Does Allianz have similar plans?

So I think on the -- so we do not have similar plans. But more fundamentally, what is important for us is to deliver against the plan we have been mentioning we want to deliver against, right? So that's really what is driving us as an organization because we believe what we are doing is creating value and is ultimately creating value for all stakeholders, but including our shareholders very clearly. So that's the way we are approaching it. So including the KPIs we are reporting are information we are using for steering against the plans we want to deliver towards.

[Operator Instructions] The next question comes from Tom Sims from Reuters.

Could you elaborate just more on what might be coming from India and plans in India? And also maybe talk a little bit more about plans for AGI in the United States.

AGI, I can do briefly, no change. More flexibility, but as we speak, no change. On India, if you allow me, I take a little bit more time. Because we started in India in the year 2001 with our partners, Bajaj. We brought all the capital ever invested in Bajaj Insurance came from Allianz. All the people ever hired came from Allianz or the technology over deployed.

The problem was because of regulation, we could only take 26% of the company, and we were running them for a long time with our partners successfully. The issue was always we wanted to run this business rather than just invest and build it. And we couldn't agree with our partners when and how we could do that. So at some point, we had the discussion and said we need to separate ways because we want to be an operator in one of the most promising growth markets in the world in terms of insurance.

And we are lucky in 2 ways. One, we found a very amicable and for our shareholders, very attractive solution to exit this very long partnership. We're in the process of doing that, both financially and operationally, it's a very amicable separation, and it's very good for us. The second one is we have been lucky again because we found with Reliance, the most powerful institution, private institution in India and one of the most innovative that we believe in the world actually, just look what they have done to mobile phones. They have 700 million clients in India now at half of the population and on mobile phone, 70% market share.

So we are looking forward to building a comprehensive partnership around insurance and protection in India. We've just launched the first piece of it, reinsurance. People ask why reinsurance? Very simple because we have no noncompete because we haven't had a reinsurance partnership with Bajaj before. So there's also no confusion for business partners and clients. So that's chapter 1.

Now as we run the separation, just think about very operational things like taking the Allianz brand off of Allianz Bajaj. Offices that takes quite a little bit of time. We expect by the first quarter of next year to be able to launch -- maybe the second quarter, let's not be too overambitious, our new businesses. Next chapter is commercial lines, then retail property, casualty and then health insurance. And we always look at it not just at the insurance component, but also leveraging our platform businesses. So we will have work with partners. We will work with the new services that we've been developing over the last few years because that's what we both believe is needed.

So we are super excited, and we're building it up. Also, the government has been super supportive. We've received all necessary approvals that we needed for the exit from Bajaj. And now we're looking forward to getting the approvals for launching the new businesses. So all good for the moment. Let's keep fingers crossed too. We always need a little bit of luck as well.

Okay. The answer on the U.S. and AGI was just a little bit short. Is it -- what do you mean no change?

Exactly what I said, no change. The issue is we have now a lot less onerous things to do. So I don't have to sign certain papers anymore. By the way, we also had obligations for PIMCO and Allianz Life of America. They have gone away, and we have more freedom to think and what to do, but there's nothing planned at this point in time to do different from what we've done.

The next question comes from Ben Dyson, S&P Global Market Intelligence.

I just wanted to ask a little bit about Allianz Direct. Mr. Bate mentioned a top line figure there. I was wondering if you could say anything about the profitability of it. And also what the next plans are for Allianz Direct development, whether there's going to be more acquisitions because I know there have been quite a few. But yes, just how you're going to proceed from here on that particular business?

Yes. Claire-Marie can give you some numbers. We have had, as I said, a 20% top line growth. That's fair. We'll show you the numbers. The profitability is actually very good. We'll show them to you in a second. It's both price and volume. It's, however, always differentiated. We have the Netherlands. We have Germany, which is, by the way, now doing very well. We have Italy. These are the 3 engines for that. And yes, you're right, we have done a few acquisitions. We now need to carefully integrate them in order to make sure that we deliver the scale benefits to the bottom line, but we are very optimistic to deliver on that. Again, some numbers to come from Claire-Marie.

But just let me tell you what it is because a lot of people always are asking how does that work? We used to tell the story for 20 years. We're hedging sort of against a loss of market share and customer interest in what's supposed to be more expensive distribution channels, let's say, agents or broker. That is not the case anymore. What the purpose of Allianz Direct is to offer a self-service and therefore, more efficient and lower cost alternative for consumers that want to purchase and service themselves. So there is a rational decision for people to make, do I want to have the lowest possible price option by having very low cost because I service myself as a consumer, or do I want to use the service of our agents? And that is -- can be product specific. People can buy auto insurance online and they can get great advice on how to protect their home, their health or prepare for retirement.

So in Germany, for example, we call this Auto für Alle, car for everyone and all our channels, and particularly our agents have access to the same sets of products. So in fact, we are having seen beneficial synergies before the channel, and that was -- is totally different to the story that has always been told that Direct would cannibalize other channels. We do not see that. We have almost 0 to be precise, cannibalization between the channels, and therefore, we're going to double down.

And the second benefit we see, there was always the story around do you need to not have a different brand for your channel. The opposite is true. Consumers are increasingly flocking to us directly to our websites and front end and are deciding themselves where to buy. So we actually would be confusing consumers if we would brand it differently. It's a part of a comprehensive offer where you as a consumer decide what you want to do, how you want to do it and at what price versus value trade-off you're going to buy and get serviced.

Claire-Marie, some numbers on profitability?

Yes, sure. So on Direct, so we have seen an improvement as well of our combined ratio, which has moved from last year 6M, 98.5% to 93.5% combined ratio for the 6M this year. So clearly, what we see at Direct is, as mentioned by Oliver, right, is our strategy working in terms of increased growth and increased profitability in the setup as we are also gaining scale into the Direct platform.

So you mentioned as well that we have a number of smaller acquisitions that are ongoing, right, which are very important for the Direct platform, always as well with that logic of building scale here. So we have closed now for the for the third quarter, FRIDAY, which was an acquisition for both -- I mean, in France and Germany, which is now going to come into play in the second quarter. IptiQ is also -- has also closed on 1st of July and is also going to come into play in the third quarter.

So from those 2, we expect approximately 450,000 more policies to join our platform. So that's relevant, right? And we have signed as well another smaller deal Eurofil in France, which is going to be closed likely beginning of 2026, which is again going to contribute to the scale-up of Direct.

Our next question comes from Susanne Schier, Handelsblatt.

I have a question regarding the German Life business. The first quarter was relatively strong and -- but sales in the second quarter declined. So what are your expectations for the second half?

So thank you very much for your question. So in Life, we always have a bit of seasonality in the numbers from one quarter to the next. Usually, in the Life business, the first quarter is always stronger, and the fourth quarter is as well stronger compared to the second quarter and the third quarter, in particular, in Germany or in France. So it depends a bit from one market to the next. So that's clearly what you have seen in the second quarter for Allianz Leben.

And also, we had a bit of an amplification of this seasonality effect, if you want, as we had less large ticket contract in the second quarter. Those large tickets always tend to be a bit volatile. You never really know when you are going to sign large tickets. The fundamentals are even better compared to last year on the Leben business. So I expect the fundamentals to continue if you want. And then we will always see a bit of volatility coming from those large tickets.

We've got a follow-up question from Herbert Fromme from Versicherungsmonitor.

A couple of follow-ups. On Allianz Direct, could you give us a number of insured vehicles for the group, the Direct group? The second question, the U.S. trade policy. I couldn't listen to your first minute for technical reasons, but I'm sorry if you already mentioned that the U.S. trade policy with its various levels of punishing countries, does that affect Allianz in any way? Does it have a negative effect? And third, again, on the climate, you said you didn't plan to leave climate initiatives. Is there a pressure in the United States on your operations there to leave or to cancel climate initiatives as this pressure is felt by other financial institutions?

Yes. Thank you. Let me start with the U.S. trade policy because that's obviously a very, very astute question. We do not see that directly. It's more related to the sectors in the manufacturing sphere who have a global sort of footprint where tariff on spare parts or productions are much more volatile and have much more negative effects, sometimes more than people sort of show yet. Where we see it is obviously in the volatility in the financial markets. So we have, as Claire-Marie said, have taken a more conservative stance on how we do asset allocations. So over exposure to the U.S. is much less than in other places. It's just generally exposure of Allianz to volatile assets is a lot less.

Where we do see it is in a lot of the accounting noise, Mr. Fromme, when you look at revenues and others, but Claire-Marie said it, you're talking about EUR 160 million effect to a company that hopefully will have at least EUR 16 billion of operating profit. So even there, the numbers are not huge, but there's a lot of noise around it. If I may add, Claire-Marie said it already in an interview, we do hedge the one -- the numbers that are really important. That's the free cash flows that we intend to distribute as dividends. We hedge those free cash flows 100% for 12 months out and then to hedging efficiency, less for the -- a little less actually for the second year, I think it's about 70%. I don't know the number precisely. So we are trying to make sure that we, as much as economically useful, immunize ourselves against the volatility in the cash and the rest is noise.

Now however, as we all know, eventually trade conflicts reduce global growth. And therefore, it's very important for Allianz to continue to diversify across globally. Claire-Marie just mentioned, we have now the majority of our P&C premiums from outside of Europe. That's something people really do not know and don't expect. So it's important we keep on diversifying and doesn't mean doing stuff that's mediocre, but being very strong outside of the Eurozone. That's why we are doing very well even under pressure, at least for now. Keep your fingers crossed, please.

Yes. And on the climate side, let me add, I forgot. We do not have the pressure that other people feel. It also has something to do with the fact that we do not have members that you force into doing anything. The issue that the U.S. administration has, and that's not just on climate, if it becomes discriminator. So we have agreed in -- particularly in the asset owner lines that we share objectives, but we, for example, don't change capital allocation. We don't enforce the preference of certain investors. We have each of us independently common standards. And as Claire-Marie said, this is what we're following on. And nobody has anything against having your own targets.

And I think you then had a question on the number of policies, right, we are having for Direct. This is not an information. We do share individually operating entity by operating entity.

Good. Thank you very much. It looks as if this was the last question for today. For your calendars, we will report our financial results for the third quarter on November 14, and we very much look forward to continuing our exchange then. This concludes today's media call on our 2Q and 6 months financial results. Thank you very much, and goodbye.