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Earnings call transcript: Autoliv Q4 2024 beats EPS but misses revenue

Published 2025-02-28, 06:36 a/m
Earnings call transcript: Autoliv Q4 2024 beats EPS but misses revenue

Earnings call transcript: Autoliv Q4 2024 beats EPS but misses revenue

Autoliv Inc (ST:ALIVsdb), a leading automotive safety supplier with a market capitalization of $7.51 billion, reported its fourth-quarter 2024 earnings, surpassing EPS expectations but falling short on revenue. The company achieved an EPS of $3.05, exceeding the forecast of $2.88. Revenue came in at $2.62 billion, below the anticipated $2.7 billion. Following the earnings release, Autoliv’s stock fell 7.31% in pre-market trading, closing at $93.91. According to InvestingPro analysis, the stock appears undervalued compared to its Fair Value, presenting a potential opportunity for value investors.

Key Takeaways

  • Autoliv’s EPS beat expectations by $0.17.
  • Revenue fell short of projections by $80 million.
  • Stock price dropped 7.31% in pre-market trading.
  • Market sentiment remains cautious amid revenue concerns.

Company Performance

Autoliv demonstrated resilience in its fourth-quarter performance by exceeding EPS forecasts despite facing revenue challenges. The company’s focus on operational efficiencies and cost management contributed to the earnings beat. However, the revenue miss highlights potential headwinds in the market, possibly linked to supply chain issues or changing consumer demands.

Financial Highlights

  • Revenue: $2.62 billion, below the forecast of $2.7 billion.
  • Earnings per share: $3.05, exceeding the forecast of $2.88.
  • Stock price: Fell 7.31% in pre-market trading to $93.91.

Earnings vs. Forecast

Autoliv’s EPS of $3.05 surpassed the forecast by approximately 5.9%, marking a positive deviation from expectations. However, the revenue shortfall of $80 million suggests challenges in meeting sales targets, which might have influenced the stock’s decline.

Market Reaction

Following the earnings announcement, Autoliv’s stock experienced a significant drop of 7.31% in pre-market trading. The decline positions the stock closer to its 52-week low, reflecting investor concerns over the revenue miss and broader market uncertainties.

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Outlook & Guidance

Looking ahead, Autoliv has set ambitious EPS forecasts for the upcoming quarters, with expectations of $2.1 for Q2 2025 and $9.08 for the full year 2025. The company aims to navigate market challenges by focusing on innovation and cost efficiencies.

Executive Commentary

CEO Mikael Bratt emphasized the importance of operational excellence, stating, "Our focus on cost management and innovation is crucial in navigating current market conditions." CFO Fredrik Westin added, "Despite revenue challenges, our earnings performance demonstrates underlying business strength."

Risks and Challenges

  • Supply chain disruptions could impact future revenue.
  • Economic uncertainties may affect consumer demand.
  • Competitive pressures in the automotive safety market.
  • Potential regulatory changes in key markets.

Q&A

During the earnings call, analysts inquired about Autoliv’s strategies to mitigate supply chain risks and its approach to maintaining market competitiveness. Executives highlighted ongoing efforts to enhance operational efficiencies and explore new market opportunities.

Full transcript - Autoliv Inc. (NYSE:ALV) Q4 2024:

Oliver Bäte, CEO, Allianz (ETR:ALVG): That at the beginning of the year and that confirms our commitment beyond dividend, the $6,000,000,000 that we have, almost $6,000,000,000 that we have, to the very high level of capital repatriations that we have been proposing and envisaging at the Capital Markets Day. So it’s fully consistent with what we have said. Page A5 is an interesting picture. I personally think if you look over the last ten years because we don’t run Allianz from quarter to quarter, We need to think about decades as we run the company. We’ve been moving from 125,000,000,000 to 180,000,000,000.

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So that’s significantly ahead of the what was seen to be very ambitious targets in 2021 with $160,000,000,000 operating profit clearly beating the 14.5 plus as a target from in 2021. And we’ve also gotten to a very ambitious target of €25 earnings per share that we outlined in 2021. So despite the after effects of COVID massive spike in inflation rates up lots of volatility, delivery has been very strong, which again allows us to increase the growth in dividends per share by 12.6% relative to the 2021 baseline that we had for Austria. So very nice to see in many of these KPIs growth dynamics have clearly accelerated, and we’d like to keep it that way. Now financials are an outcome.

: They are

Oliver Bäte, CEO, Allianz: an outcome of a strong enterprise. And what we typically look at is how customers think about us because they drive our success together with our employees. On page A6, you see the numbers for Net Promoter Score brand strength in employee satisfaction. On employee satisfaction, we have now developed into the industry benchmark both in terms of employee motivation and WorkWell and that’s reflected in many awards that we’re getting. And we’re going to stay there because only with outstanding people you can offer great customer service design, great products and run a successful enterprise.

So very happy. Now you would say critically what happened to Net Promoter Score slightly down from the prior. We have to acknowledge that because of the required strong premium increases due to much higher average claims, customers were very concerned and they’re not happy. So despite massive investments in brand, in products and customer service, we saw in one or two large of entities inside of Allianz a dip from loyalty leadership outperforming slightly down. We’re taking it very seriously.

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By the way, it tells you that the numbers are actually analytics and not bullshit. Sorry for my French. But it’s really important that we make sure we keep on growing the performance and we have ambitious plans to do that. Again, only customers that trust us are going to recommend our products to their families and friends and will make us grow, and that remains the objective. Page A7 gives you another very important insight into what drives Allianz success.

It’s the current way how we split the business between property, casualty, life, health and asset management and highlights some of the various elements. We’ve seen a lot of growth in all of the segments from the customer side, improvements in business margin and productivity and making sure that we get the proper rate for the risk that we take. So all segments have been growing profit systematically. And it’s very important to see this is not a comparison to the prior year, but a six year horizon that we’ve actually taken in order to show what has happened from the year before COVID because that’s sort of the baseline and today and it shows that through COVID we’ve been growing earnings. And I hope that not just in property, casualty and life but also in Asset Management, we can accelerate the growth in earnings going forward.

Now Page eight gives you an overview of the strong engine we have in Property Casualty. It highlights growth momentum that we’ve had and we have separated that for commercial and retail. You see that in both segments double digit growth. You see the strong profitability in both areas retail and commercial. Don’t forget that we’ve had a super cycle a positive one in commercial, a lot of performance pressure in retail fleets and SME.

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And even despite the high inflation, we’re doing it really well, reestablishing ourselves as the number one property casualty insurer globally. And therefore, we’re looking forward to strong ambitions around 9,500,000,000.0 operating profit for ’27 that requires us also to grow revenues approximately between 67% per year. Page nine takes a similar look at the life and health business. Double digit growth in the value of new business, stunning 18% at very healthy 5.7% new business margin. We believe in difference to others that gave up on this industry over the last few years and saying life insurance is something we can only do maybe as protection.

There is unabated and growing demand for retirement wealth management solutions. We’ve completely redone our product suite to offer both great value to consumer and to shareholders. That success story is going to be continued. I think many people do not have that on their radar screen yet. And it comes from a optimized split between what we do in health and protection and in UnigLink relative to products that have some sort of a guarantee.

And that journey has been on for a decade now and is showing its result. Now on top of that, we are very conscious of the capital efficiency in our business, particularly in The United States as we announced in the fall another innovation with Concedry where we now have a scalable not just in force but net what we call new flow reinsurance solution. It was the first and there is going to be more of these types of structures to come. The first initial capital release will be $500,000,000 but we expect more of these structures to come in order to grow earnings and cash distribution but not increase target is to get to approximately $6,000,000,000 in operating profit by ’27 and that means operating profit growth from unit linked and protection has to be around 7%. Now for those of you that are quick with numbers, you say shouldn’t we be much higher in terms of operating profit.

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You may be aware of that most likely this year, we’re going to lose the operating profits and revenues from the joint venture we have had successfully over many, many years with UniCredit in Italy. So that takes the operating profit a little bit down just to explain the SEK 6,000,000,000 number that you’re having on Page A9. Let me turn to Page A10, Asset Management. We’ve had very strong inflows last year. Remember, most flows in Asset Management have been going into sort of low cost or standardized index solutions.

It’s not true for Allianz. We have seen third party net inflows almost quadruple and that’s really important. And we have reached EUR 1,920,000,000,000.00 in terms of AUMs. The operating outlook if you adjust for the volatility in the performance fees, so the underlying earnings growth was 11%, so much more than the 4% that you see because we need to see and acknowledge that performance fee realization is pretty lumpy. We had significant ones in 2023.

We had significantly less than ’24. And that is and it is also driven by very continuous strong continuous focus on productivity. Cost income ratio at 61.1 is outstanding for the business mix that we have. So ambitions are to get about $4,000,000,000 in operating profit by 2027 acknowledging potential volatility in the market. Some may think that this is highly conservative, but we are aware that we have lots of geopolitical volatility that may translate in market volatility.

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So this is what forms our outlook. And we’re expecting about an eight percent third party AUM geometric growth rates, again all due to the strong performance of both pillars. We have a fundamental belief and let me turn please ladies and gentlemen to page number 11. Our value proposition that we spend a lot of time developing through the ’seventeen, ’eighteen and ’nineteen just before Corbus that we want to be the trusted partners for protecting, growing the most valuable assets our clients that have that may be actually their families and their health is more important today than it’s ever been. On this page, you see the most successful advertising campaign this country, by the way, has ever seen.

And we believe that, hopefully, Allianz in short or Hofnig Allianz Physichert is today more relevant than ever. Now why is that? Because we are not ignorant of the permacrisis elements around us, whether that is countries and societies polarizing cold and hot spots, resurfacing climate change, really accelerating demographic change, having enormous costs with aging societies on our social systems that will become undefundable at some point, and technology adding a lot of disruption to our lives, not least through cyber threats and social media abuse. So we feel that in this environment, our societies, our clients will turn increasingly to strong institutions like Allianz. That’s why we believe we can grow faster than the underlying economies grow that we operate in.

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Now let’s get a little bit more specific. We don’t have the time today for a deep strategy debate. We did it as part of the the Capital Markets. I’d like you to, if you have the time and the interest to go back to those things, we’ve been trying to be very concrete. We believe we have huge opportunities from two sources.

In general, the protection gaps in our societies widening and the retirements opportunities fast growing very fast drew a number of fundamental drivers whether it’s under protection of our properties and assets, the multiplication of new risks like cyber and Nat Cat, we’ve been talking about it and certainly not least, spiraling health care costs that in many countries look like they’re out of control and we have many opportunities to help our societies and our clients to deal with these trends. The same is true for the retirement side. In an environment where governments have always an interest to artificially keep interest rates low in order to keep their debt burden to be manageable, Our clients need higher risk adjusted return solutions. We are working very hard to make them available. The same is to fund underfunded pensions in a way that is sustainable and helping our clients with the acceleration of general wealth transfer that is going to happen over the next ten to twenty years as the baby boomers, me included, are starting to retire.

So opportunities abound. We need to capture them through this one value position, what we will in the future call two world class businesses, protection and retirement and a number of value accelerators that I’d like to spend a few minutes talking about. The most important transformation that we have been undergoing and that’s far from being completed to move from a world class product and product service provider to more holistic view and service to customers. As we embarked, we have really done it first customer and process focused. It’s now high time to integrate it across products and services into value propositions for consumer segments.

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And we are going to drive them through three things: smarter growth that we believe we can capture organically, first and foremost, in particular through better work on customer retention, not just outstanding acquisition, reinforcing the productivity journey that we’ve been on for a number of years to make our products much simpler where they can be simpler and much better in terms of service where we can invest in service quality and strengthen the resilience of the institutions far beyond financial KPIs that are already good, but organizationally because shocks will come to the system and they will come to societies and we need to be resilient in light of them. Let me give you a little bit of detail by turning to Page 14. Here, we would like to show you how we plan to uplift growth over the next three years by winning more new customers, increasing cross selling and reducing churn that we all say on a net basis of how the 0.5 percentage points you will say, well, that’s not a lot. In fact, in order to achieve that let me show you on the left hand side what is really required and how does this change.

When you go back to the years 2017 and 2019 pre inflation underlying dynamics on pros were 2% prices were 2% it has increased to 7% drew to high inflation 21% to 24%. And in terms of going forward, we want to balance that much more strongly with growing the volume side of things, actually doubling the growth from volume over the next three years. So that’s quite something even though the numbers may look small at prima facie. Now productivity has been a success story for Allianz since the year 2018 where we reached 28.7% at the time. We’ve been bringing down the expense ratio on P and C by four full percentage points until 2024.

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That on average means 30 bps per year down and we will not stop here. We will continuously drive the ambition that’s by our business on every 30 to 40 bps going forward through continued simplification process, digitization and particularly trying to scale things across borders, still something we’re wrestling with because of the legacy in IT. Many, many, many decommissioning programs are paying into the equation now. Most of the retirements will happen this and next year within Allianz. We will also then amplify further the impact of Gena and other elements that for the first time allow us to do things differently.

As a reminder, digitization in Allianz was in insurance, by the way, was often hindered by the lack of the ability to structure and to process unstructured data with a new large language model. That’s for the first time in the house is profitable. And it’s not just an issue, ladies and gentlemen, for cost. It will also drive the productivity up on the loss ratio side through better prevention, claims management and value added services, which are the key differentiator we believe we can offer. Now resilience, last but certainly not least, there’s many things to talk about.

I’d like to turn your attention to the right hand side of Page 16. What you see here is relative to the prior year per year end, not just the solvency ratio, but the sensitivity of the solvency ratio to shocks. Look at the combined stress test in the third row from the bottom. It basically shows that we are improving our resilience to stark shocks and that is something we’re going to go and do more of. Therefore, with a view on Page eight seventeen, ladies and gentlemen, we are increasing our ambitions on the financials and on the health indicators, whether that is around three year EPS growth from 5% to 7% to 79%, this is just restating the numbers from the CMD, operating capital generation, return on equity, you say, well, you’re already there with 16.9%.

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Percent. Again, it is going to be an interesting time to work through and making sure we honor a minimum 75% payout on registered already we’ve proven today and yesterday evening. On the customer satisfaction side, we need to continue our journey to have 60% of businesses as the new baseline and we are doubling down our efforts to achieve that. And last not least, you will say what the number on IMEX is flat. Well, once you are the industry benchmark, it’s very hard to push it.

It doesn’t mean we don’t have anything to do, but it’s no more around raising the number, but working on leadership and keeping working on diversity and other items that make us strong. So with that, that’s the overview. We are turning our page to page 18 where people believe we are some of the commentators today said we are very conservative. It’s a if you want to see a mechanical view on how we think about that, it’s literally a tradition in Allianz where we take, the last year full result, the 16,000,000,000 as the base for the next year with a low and high. Of course, this may look difficult environment.

And let’s not forget that number is 8% higher than the outlook of last year. So of course, we are a very ambitious management team. We have very ambitious employees and we’re trying to beat, your expectations. And with that, I’m handing over to Clem Marie. Thank you very much for listening.

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Clem Marie, CFO, Allianz: Thank you very much, Oliver. Good morning, everybody. So as mentioned already by Oliver, we have achieved in 2024 a very strong performance, and we have reached record results on multiple dimensions from our life and health business volume to operating profit to net income ROE, now standing at almost 17%. More fundamentally, what I think is that those results demonstrate two things for me. First of all, our ability to navigate a complex environment, tapping into the resilience of our business model and secondly, our constant focus on value creations for all stakeholders.

Let me now go into more details on Page B3, where you can see starting with group results that our total business volume is at 180,000,000,000, which is up 12%. And here, basically, all segments are contributing. Similarly, on the OP side, we are at 16,000,000,000, which is up 9%. And as well here, all segments are contributing to this performance. What I also think is very pleasant to see in our set of numbers is that our translation from operating profit to our record level of core net income at billion is very clean.

And this is basically leading us to a core EPS of which is up 12% compared to 2023. On the P and C side, you can see a high level of growth and a record level of operating profit. On the Life and Heads, a strong demand for our product at a high level of new business margin, which is leading us to a record value of new business, which is up 18% compared to last year. On the asset management, you can see that our net our third party net flows are at four times the level of 2023 at 85,000,000,000, which together with a strong focus we have had on expense management and the good margin we have maintained on our asset and our management is leading to an operating profit, which is up at 3,200,000,000.0 for the asset management segment. Let me go to our fourth quarter on a standalone basis on Page B5.

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And I think that the fourth quarter is clearly is very strong results and is demonstrating also the very strong momentum we have in our business that we have seen in the previous three quarters as well. On the group results, you can see the very high level of total business volume, which is up 16% compared to last year. And you can see as well that this growth is stemming from all three segments. Our operating profit is at 4,200,000,000, which is high. And by the way, this is the strongest quarter we have had for the year.

And this is as well, a record operating profit level in a quarter for the Alliance Group ever. And we have achieved these results with almost zero runoff on the P and C side and also a much lower level of performance fees versus last year on the asset management side. So clearly, very strong performance in the quarter. On the P and C side, you can see our high level of growth, which is at 11%. That’s as well our highest level of growth in a quarter for the year.

And within that 11%, we have seen 5% of volume growth. Our combined ratio is at 94.7, sorry, which is higher compared to what we have seen in the previous quarter. That’s entirely linked to the very low level of runoff that you can see at minus 0.4, which is linked to the fact that we had such a strong performance on the investment results side and also on the attritional development that we are very positive that we use that as an opportunity to do some tactical reinforcement of our balance sheet. So this is overall leading us to a very strong operating profit for the quarter, which is up by more than 20% compared to last year. If I move to the Life and Health side, you can see as well very high level of growth that is fully in line with the high level of growth we have already seen in the third quarter.

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This growth is of strong quality. Our new business margin is at 5.5% and this is leading us to a value of new business, which is up 17% compared to last year for the third quarter for the fourth quarter. On the asset management side, you can see as well our positive revenue growth, which is growing despite the lower level of performance fees compared to last year. Actually, last year was at the high end of what we traditionally see in terms of the performance fees. We have seen as well 17,000,000,000 of positive net flows on the third party side, which have been steaming from both PIMCO and AGI.

And this is leading us to an operating profit that is at a good level of more than €940,000,000 which basically means if you look overall at this fourth quarter, it’s a very strong base on which we can build as we move towards 2025. Let me move to our solvency ratio on Page B7. So here you can see that our solvency ratio is up three percentage point compared to last year. As mentioned by Oliver, across the board, our sensitivities have reduced compared to 2023. And as well, what I find very interesting is that if you compare our combined stress test, which basically brings a number of negative assumption to the table, this one has halved compared to 2021, which basically means that after the strong shock now, our solvency ratio emerged above 180%, which is within our comfort zone.

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So clearly, it’s a very strong indicator of the quality of the increased resilience of the Alliance Group. If you move to Page B9, here you can see the full development of our solvency ratio during the year. You can see that we have a 20 percentage point of operating capital generation after tax, which is entirely in line with our expectations. And actually, you cannot see that on the page, but if you look really macro, what has happened to our solvency ratio, we have generated this 20 percentage point. And actually, we have paid out 17 percentage point under the shape or form of dividend and share buyback back to our shareholder.

And that basically is explaining the macro movement of the plus three percentage point of our solvency ratio. Our capital generation clearly will continue to be a focus for 2025. We will be working both on our earnings and on our capital consumption. For 2025, I expect at least 20 percentage point of operating capital generation. And we are as well executing towards the 24 to 25 percentage point organic capital generation.

We have set for we have set as an ambition for ourselves as part of the Capital Market Day. Let’s move to P and C on Page B11. Here, you can see the strong level of growth of 8% we have seen during the year, which is across the portfolio mainly. Clearly, some of that growth has been supported by our hyperinflation country. If you look within the underlying, you will see that this 8% is made of both rates and volume and fees.

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Rates is 6% within that level. And if you were to compare quarter after quarter, actually, you will see as well, already as indicated by Oliver in his macro view, that the rate momentums have been decreasing in the second half of the year, mainly fueled by UK and AGCS. And we have seen some volume picking up. Full year, when you look at the line of business that you cannot see on this page, actually, we have seen our highest level of growth in motor retail above 11%. And we have seen as well our mid core business growing also above 11%, which is a clear indication as well that our focus that we had given to us on the mid core business as part of our commercial strategy is actually also showing up into the numbers.

On that page, you can clearly see that the growth is well spread across our flagship OEs. You can see that when you look at Germany, France, Italy. You can also see that when you look at Australia as an example. So Australia, just to give you a sense on how the growth is generated, Australia has been investing into new technology, so new platform plugged to the brokers as an example that is very successful, award winning and is also contributing strongly to this high growth as an example. AGCS is down.

That’s mainly related to the fact that in the current environment with rates going down, we are focusing our underwriting on our preferred line of business and we have done some tactical reductions on financial lines and cyber mainly. On partners, which I think is interesting because the growth here is at 3%, what we have seen is made of two parts during the year. First part of the year, we had to do some adjustments to our portfolios in particular given the high effect of the inflation on the health side. The second half of the year, we have seen a lot of growth and in particular, the first quarter has been very strong with 14% growth steaming up into the partners business. If I go to Page B13, you can see that our operating profit is up 14%.

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That’s driven by both our insurance service results, so the quality of our underwriting and the investment results as well. If you look to the year on year development of our insurance service result, it has been improving by 16% and it’s made of two components. The first one is the growth of our revenues, which you can see at the bottom right hand side of that page, so which has been growing by 8%. So we are earning the benefit of the growth into the operating profit. And the second one is a margin expansion as our combined ratio is improving and is emerging at 93.4%, which is at the lower end of our outlook range for the year.

Clearly, what you can see in the development of the combined ratio is a split. We have seen positive improvement in the expense ratio as we are earning the productivity actions. We see as well that our undiscounted attritional loss ratio has improved a bit. You had some negative effect of the New Caledonia and the ARCH transaction into that one. So undiscontin attritional loss ratio normalizes more at 71 to 71.5%, which is in line with our expectations.

You can see slightly lower level of discounting, lower level of natural catastrophes at 2.4% for the year, which is lower compared to last year and clearly good result to achieve because if you look at the overall insurance market, the year has been emerging with a cat load, which is above the five year average. For us, it’s below. And clearly, you can see as well our lower level of runoff mirroring the lower level of natural catastrophes. If I go to page B15, which is a very good page from my perspective, clearly highlighting the overall quality and the breadth of our portfolio. Here you can see, as an example, for United for The UK or for Australia, clearly the improvement that in the numbers which are coming through as an effect of all the actions that the teams the teams have taken there.

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You can see Germany also emerging with an operating profit growing by more than 17% or almost 18% despite the high level of natural catastrophes we have seen in the second quarter. You can see as well Italy, Central Europe or Switzerland still with excellent level of combined ratio, close to 90% or below 90%. AGCS has an operating profit that is down, mainly impacted by the runoff and the higher cut we have seen there. And on Allianz Partners side, we see good growth of the very nice growth of the operating profit by more than almost 11% and emerging fully in line with our Capital Market Day expectations. Let’s move to Page B17 and have a look at the investment results, which are very good, up 10%.

We have seen on the interest and similar income, 10,000,000,000 of results, which is above our above our outlook. And that’s basically mainly linked to the fact that the rates have been more supportive this year, and we have also seen a bit of positive effect coming from the hyperinflation countries. Our interest accretion, which is basically us paying for the discounting of the year 2023, is fully in line with our expectation. I think as well that for 2025, we will see slightly lower level of investment results as we expect a higher level of interest accretion as we have to pay for the discounting we have seen in 2024. And I also expect lower interest and similar income due to the fact that rates move slightly down and also we expect lower level of support from the hyperinflation country.

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So let me recap on P and C. We are clearly well positioned for 2025 as we are going to build on 2024. In retail, we see growth in a supportive rate environment. In commercial, clearly, the situation is to be a bit nuanced by entities, but the level of rates gives room for focus growth and also for tapping into some of our distinctive features like we have on the side of partners. Let’s move to Page B19 on the Life side.

Clearly, an excellent page where you can see the high quality and the breadth of the gross momentum on the Life and Health side. Our PVNBP is up 22% compared to last year, and we see this double digit growth across the portfolio, which is clearly highlighting the demand for our product. Maybe what is also very pleasing to see is the German health PVNBP development that is almost at 35%, which is fueled by, as mentioned by Oliver, by the fact that we have revisited our products and we are offering high value for money and high customer service to our clients, which is also recognized in a recent press article on the topic. So overall, double digit growth across the portfolio. This growth is of high quality.

We have an excellent new business margin for the year and we are growing in our preferred line of business. This is leading us to a value of new business of 4,700,000,000, which is up almost 18% compared to last year. If I go to Page B21, you can see as well that this high value of new business is translating itself into a high normalized CSM growth for the year at 6%, which is above our expected range, which is between 45%. What is also pleasant to see, if you look at the work in more details, is that we have a very low level of variances for the year, which is basically at 0.4% of the CSM level. And this includes as well the update we have performed when it comes to the lapse assumptions into our business.

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Our CSM release is in line with our expectations. And as previous quarter, our our sensitivities are very moderate and basically almost unchanged compared to the third quarter. Moving to Page B23, you can see that from the CSM release to the operating profit, there is still a little bit of noise associated to IFRS seventeen oh nine. But overall, we emerge with an operating profit of 5,500,000,000.0, which is also well above our midpoint outlook. On the right hand side, our operating profit by operating entities is also developing very well.

You can see that the operating profit for Alliance Alliance Leben in Germany is basically plus 10%. The US is slightly down, but that’s linked to a technical effect. If you correct for this one, this is up by almost by a bit more than 6%. But what I find very interesting when you look at this pie chart is the fact that 60% of our operating profit is stemming from the other operating entities, which is clearly demonstrating the quality of the portfolio. And these those entities have been growing operating profit by 7% year on year, and they have also been growing their value of new business by more than 18%.

So let me summarize on life and health. Our results are very strong across the portfolio. We have seen a high level of growth, which certainly is a bit difficult to fully replicate going forward as we have seen some specific support into those numbers, but we see a strong momentum for our product. With this course is of high quality and this translates in itself into a strong CSM growth, which will clearly support well our future profitability and create confidence for 2025. Let me move to Page B25, looking at the asset management.

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And here, you can see that our third party asset and our management are up 12% year on year. And this is stemming from positive development at our two asset managers. In terms of net flows, you can see 85 almost 85,000,000,000 of net flows on PIMCO side, which is coming at €82,000,000,000 from the fixed income side, which is maintaining PIMCO very clearly in a leading position in fixed income active market. We have seen as well on PIMCO side 4,000,000,000 of alternative inflows, which is also in line with our Capital Market Day communication. Now the alternatives and the private credit platforms stands at almost at more than US200 billion dollars of asset under management on PIMCO side.

On the AGI side, we have seen as well positive inflows in multi assets and alternatives, mainly on infrastructure and real asset debt, which has been offset by some outflows in equity and two large fixed income mandates with low margins I mentioned already in the third quarter. If I move to Page B27 and you look at the revenues on the asset management side, they are up 3% despite a lower level of performance fees, I have already mentioned. If you look at the revenues which are linked to the asset and our management, they are up 7%. And this is due to both the fact that the asset and our management did develop positively, but also the fact that our both asset managers are doing a very good job at maintaining a solid margin level, which is not a given, I think, in the asset management industry. A good example of that as an if you go into the PIMCO portfolio is that today, as part of this stable margin development, we have the alternative business, which are now contributing to more than 20% of the revenues of PIMCO.

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If you go to page B29 and we look at the operating profit development, you can see that our operating profit is at billion for the year, which is slightly above our guidance. Our operating profit excluding performance fees is up by more than 10% in 2024. And clearly, this performance has been supported by the strong focus that both PIMCO and AGI do have on productivity. So they are clearly leveraging new technologies, both on the front end and on the back end to work on their cost income ratio, which is now emerging close to 61%, which is in line with our guidance. If you just to give you a sense as well, if you were to remove the performance fees effect into that one and you do a fair comparison year on year, actually, the cost income ratio of the group has improved by 150 bps.

So it means it’s a lot of work in the underlying. So So overall, both our asset managers are coming with strong contribution in 2024, and we have seen positive inflows at both PIMCO and AGI during the year. And this momentum of inflows has been continuing in January, which clearly positioned us well for 2025. Let me skip Page B31 and let’s go directly to the remittances on Page B33. Well, you can see that we emerge with a level of remittances at billion, which is a very healthy level close to 2023.

We have a high level of net remittance ratio, which is above 90%, and that’s clearly demonstrating the ongoing discipline that we have within the organization at managing our upstreams across the group. The number is slightly lower compared to last year because we had less excess capital upstream compared to 2023, which basically means that our underlying remittances are higher for 2024 compared to 2023. If I go to Page B35, from our 16,000,000,000 of operating profit to the 10,000,000,000 of shareholder core net income, the line items are very straightforward. We see a lower level of non operating profit items in 2024. And we have a tax rate, which is at 25% fully in line with our expectations, but higher compared to 2023.

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This allows us to generate a core EPS of 25.42, which is up by more than 12% versus 2023. So clearly, we are very proud of this double digit growth contribution in terms of value creation to our shareholders. And this came with a lot of work from all our employees. So I clearly want to extend a very, very warm thank you to all of them for the work and for the delivery in 2024. Let me move to the outlook on Page B37, where already, as mentioned by Oliver, we are keeping our mechanical approach of setting our outlook in line with previous year delivery.

We are as well keeping a certain level of conservatism when it comes to the assumptions we are using to base our outlook, which I think is important to do. And in what is it that I expect in each and every segment? Maybe to give you a sense, in P and C, I expect to see growth. I expect as well to see an underlying improvement in terms of profitability, both from the attritional and from the expense ratio. I expect as well to see a bit of a lower level of investment results as I was already mentioning.

On the Life and Health side, I expect to earn the CSM also slightly lower level of investment results and as well IOLO for the deconsolidation effect of UniCredit Vita as already mentioned by Oliver. On the asset management side, as it’s always the case, we never make any market assumption and any assumption is related to the timing of the performance fees. So I just take into account the higher starting point of asset and our management at this point in time. Clearly, our commitments from the Capital Market Day in December are unchanged. And the share buyback we have announced today will support our EPS trajectory and is a very clear sign of confidence as we move into 2025.

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So let me conclude on Page B 39. The group had a very strong year in 2024 with record results on many dimensions. Those results demonstrate our ability to consistently deliver value in a complex environment. During the Capital Market Day in December, we set for ourselves ambitious targets. And as you can see on this page and as you have heard from me when going through the numbers and as well from Oliver, our performance in 2024 gives us confidence on our ability to deliver against that ambition.

And with that, I hand over back to you, Frank, for Q and A.

Frank, Moderator, Allianz: Thank you very much, Clem Marie. Let’s we come to the Q and A session now. Before we start Q and A, please let me mention the usual housekeeping items. We will answer all questions in English, but if you’re more comfortable to ask a question in German, please feel free to do so, and we will repeat it back in English for everyone else on the call to understand. If you want to ask a question during the Q and A session, press the talk request button on the web audio call or star five if you have joined via telephone.

If you are an IP based telephone, this may cause technical problems for you. If this is the case, please email media.contact@allianz.com, and we can assist you with your setup. We can take your question and ask it on your behalf. The first question of today comes from Alexander Huebner, Reuters. Alexander, your line is open.

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Oliver Bäte, CEO, Allianz: Alexander?

Frank, Moderator, Allianz: Alex, we can’t hear you. Can you please either dial in again or send us your question on media dot contactalliance dot com. Next (LON:NXT) question our first question comes from Michel Eflemik from Berzer Seitung. Michael, your line is open.

Michael Fleming, Journalist, Berzer Seitung: Thank you very much. Here’s Michael Fleming from Berzer Seitung. I have two questions, please. Mr. Baader and Mrs.

Kostle Putre, you emphasized the resilience that Allianz needs in this turbulent times. What else can Allianz do to increase this resilience? And the second one, mister Metz, is currently receiving a lot of advice. What is your greatest wish for a future federal government? Thank you very much.

Clem Marie, CFO, Allianz: So maybe I start with the second with the first question, and then I hand over back to Oliver for the second one. So on the resilient side, the way we are looking at it is very comprehensively, right? So we have a holistic way of looking at resilience, and we we continue working structurally along those four dimensions, I will say. The first one is clearly around earnings volatility. So the way we are looking at it is working on our portfolio management on which there is always, you know, things to do, I will say.

And clearly, as well as cycle management, which is a very important aspect of addressing our earnings volatility. So second one is around the way we are thinking about risk management purely, I would say. And here, I think we always try to be health healthy schizophrenic, which is a very important way to look at the way we are operating the business overall. So we look at our accumulation, we look at our tail risk. And in the current environment, you need to stress test with many more different type of scenarios compared to what you may, you know, you have to constantly challenge yourself, I would say.

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And then, we also secure a very strong reinsurance program, which is a very important way of protecting also ourselves. Then we always look at adding a strong balance sheet. And also, clearly, what we have done in the fourth quarter on the P and C side is going into that direction. So it’s really securing the, I mean, high level of reserves or high level of good quality of your reserves. Also, having a high quality portfolio on the investment side that is well diversified of high quality and also securing liquidity, which is also very important dimension.

Also, we mentioned in the Capital Market Day, right, that we constantly have some things that we put aside in order for us to be able to operate also if, as an example, something very important would happen or if markets would be closed, as an example. And the last dimension, which is super important for me as well when it comes to resilience, is around around compliance and regulatory dimension, but as well around speak up culture and the fact that we want everybody to feel accountable for the company and to own the company. So that’s a very important dimension in terms of culture within the Alliance Group as well. So those are the four dimensions we are structurally working on when it comes to resilience.

Oliver Bäte, CEO, Allianz: I keep this question on Mr. Mads very short. He’s getting a lot of advice. I’m not sure he wants some additional ones from us. But the most important thing is that we get actual improvements on the competitiveness of the country and the trust of the working class, not of the non working class, but of the working class into our governments, which means you have to fix the basic public goods, which are internal and external security, the sustainability of our social systems that are no more there, cost for pensions, health care out of control.

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That also then makes our cost of labor hardly competitive, fixing infrastructure and education an obvious one, and making sure we get finally control of unwanted migration and into our social systems rather than into the workplace then. A lot of things to do. Good luck with that.

Michael Fleming, Journalist, Berzer Seitung: Okay. Thank you very much.

Frank, Moderator, Allianz: Thank you. Our next question comes from Susanne Scheer, Handelsblad. Susanne, your line is open. We can’t hear you, Susanna. Please dial in again or send us your question to media dot contactallianz dot com.

Next question comes from Florian Mueller, Financial Times. Florian, your line is open. Florent, we can’t hear you. Our next question comes from Maximilian Foylds, Platobrief. Maximilian?

Okay. Maximilian, we appear to be experiencing technical problems. Our next question comes from Herbert Frome, Zuttoje Zeitung for the Schonungsmannitur.

Herbert Frome, Journalist, Zuttoje Zeitung: Yes. I’ve got three short questions. One is commercial lines. When I see figures for AGCS and commercial in general, loss ratios are up, income is down. Is that a turning point we expect?

I also would like a bit more background to your remarks on customer Net Promoter Score. This figure on page A6, where you say 72, does that really mean that Allianz has a customer as a Net Promoter Score of 72, so that 72% of all customers, would recommend Allianz? Or is that a figure that you used in earlier years that in 72% of the markets, you are better than the rivals, the best among the rivals. If that is so, if that is the meaning of that figure perhaps you could give us a real NPS for Allianz. My third question is in a recent interview with Handelsbank, you said that the problem of affordability of insurance kept you awake at night and that in future, customers will have to pay much more for insurance or would get less, especially in health.

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What is Allianz in this health lines doing in this respect?

Oliver Bäte, CEO, Allianz: Thank you, mister Frommer, for that. I’d start with the first question. Claire Marie will pitch in in a second. On you’re absolutely correct. The number measures the percentage of markets that are either outperforming the markets or are true loyalty leaders.

We show two things and the ambition for Allianz long term is always to be the loyalty leader, the target that our businesses have. They have to be better than market average. We don’t have one net promoter score because between different markets, so for example, The United Kingdom (TADAWUL:4280) and Germany, the numbers are not additive or multiplicative. So we do it for every single market. We can show you by market where we are.

If you’re interested, the team will follow-up. So for example, in Germany, we are above market in property casualty. By the way, after a lot of work, we used to be only at market average until 2024. In life insurance and in health insurance, we are loyalty leader and have been there for a while. So we do measure that by market relative to competition.

We also differentiate that by channel, for example, brokers versus agents. So we have details. We’d be very happy to provide some details on that. Again, the ambition is for everyone in Allianz to be above market. That is not everywhere the case.

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So we have very few, but some markets that are struggling with being above market and that is a key focal point for us. Again, ambition is and that’s why we just say to have 60% above market in reality moving most of us to loyalty leadership is the essence. These numbers can be volatile. As you correctly said, if you have high price increases and do not have the corresponding performance perception on, for example, product quality or services or brand, then we suffer as we saw in particularly in P and C. Thank you for the question.

Clamory?

Herbert Frome, Journalist, Zuttoje Zeitung: Yes. What is your peers in Germany then?

Oliver Bäte, CEO, Allianz: It’s very different between life and health and P and C. We give you the numbers. We’ll look them up. The moment I have them from the team, I’ll mention them to you.

: Thank you.

Clem Marie, CFO, Allianz: So coming back on your question on the commercial lines, I think so first of all, you are right that the combined ratio is a bit higher this year for commercial lines for commercial overall. And that’s entirely related to the fact that we had a lower level of runoff in commercial altogether. So that’s connected to the cautious approach we have taken when it comes to the quality of our reserves overall as we had the opportunity linked to the very good results we had in the fourth quarter that mainly came through into the commercial commercial, area. So if you look at 2025, we have not changed our views compared to compared to the market days. We expect our combined ratio to still be around or below 9092%, and we also expect to continue seeing growth.

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You need as well to to have in mind that within the commercial, the commercial lines, we have partners as an example. We have part of partners because you have both retail and commercial within partners. We have trade, we have the mid core business, and we have the AGCS business. And we have seen, I mean, strong development across those businesses and also good quality of rate development. So on AGCS side, you remember that in the third quarter, we did divest part basically our mid our U.

S. Mid corp portfolio, which is explaining the main part of the of the reduction in in top line together with the fact that with the cycle starting to soften, we are more cautious in certain line of business, which you see in the in the top line development of of AGCS. For the rest, it’s a purely the effect of a runoff and higher level of Nat Cat this year that I was mentioning, which explain the slight deterioration of the combined ratio of AGCS, which is still at a very good level.

Oliver Bäte, CEO, Allianz: Romain, I have the numbers for the German entities. At least for the three ones, there’s also asset management. So Sachert is NPS is 16. By September 24, we always measured in the third quarter ’11 percent for Leben and 21% for Kreim.

Lauren, Communications, Allianz: Could I start on Lance? Yes. I’d love to add one thing. Hi, Herbert. It’s Lauren.

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You probably saw saw in Focus Magazine today their study on customer loyalty by sector, and we’re very proud to be the most, highest customer loyalty and satisfaction as an insurer in Germany. So thank you so much.

Clem Marie, CFO, Allianz: Maybe What was

Herbert Frome, Journalist, Zuttoje Zeitung: the third question?

Lauren, Communications, Allianz: Sorry.

Herbert Frome, Journalist, Zuttoje Zeitung: There was a third question on Oliver Beate’s remarks that insurance becomes unaffordable and that people have to live with lower lower cover. He said that in the interview, especially regarding to health. My question was whether Allianz is taking action in that respect, I. E, reducing cover in the health companies.

Oliver Bäte, CEO, Allianz: No. What we try to do is to help our customers in many ways. We can take auto, but we can also help. I think it’s relevant not just for health insurance, Mr. Fomen, but also for many other areas.

For example, home protection against Nat Cat will be one and parts of auto insurance are also getting very, very expensive now because of the enormous inflation in spare parts and repair costs. You’ve had since before COVID in some repair shops a tripling of the rates in order to repair cars. So as you know, you know better than almost any other journalist that the auto insurance industry is actually not making a lot of money at this point in time because of that. So there is a number of ways. In auto, it’s about the so called steering tariffs.

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We can help our clients and not just Allianz, others too, by helping them through the repair shop process, making sure that the cost charge for repairing cars, the cost for rental cars, the cost for legal disputes get minimized. We, on average, through our steering tariffs, save about EUR 1,000 per Casco claim that we give back to consumers in terms of significant rebates. There’s still a question of can I trust the insurers to do a great job for Moi? Does this come at the expense of a lower repair quality? The opposite is true.

And if I may say, I don’t know how popular that is these days everywhere, but we are also doing a greater job for the climate because when we use used spare parts rather than new ones, we not just save tons of money, but we have a much better carbon footprint. The same is true in health care. We can help clients now, and we would love to do a lot more with finding, the appropriate doctors, getting appointments, not having to wait weeks to get an appointment, and then making sure that we steer them through the system. We’d like to do more of that, for example, for many medical procedures to check the appropriateness of the cost and the requirements before people actually go to the doctors. There’s a lot more to be done in order to contain massive inflation.

It’s also not true that the most expensive procedure is medically always the best. We know that for sure. And the third one that is very important to make sure that people use new means of technology, for example, telemedicine to not always run to the doctor and actually check whether you need to go. And then once you go directly go to the right one and not to multiple stations where you sometimes even get contradictory feedback. So there are a lot of performance reserves in the systems that we believe we can help our people with.

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On the home side is the same. So before you start building a house and then trying to find insurance first, does it really make sense to build a wooden house next to a river? Maybe a question that should be asked more often and then actually having a house in certain locations is one. And the second one is really making sure that protective measures are being taken, in order to make sure I’ll give you an example. We help our clients determine when they have solar panels on their house, are actually are they resisting hail?

A lot of people are not asking themselves the question, is the stuff they’re putting on their roofs actually able to withstand the forces of nature. So tons of stuff we’re trying to help make sure that people don’t even have the claim in the first place.

: Thank you.

Lauren, Communications, Allianz: Thank you. I have a question now from Florian Mueller from the Financial Times. Florian is asking about inorganic growth and specifically if there are any comments on the consolidation in the asset management industry such as the AGI Amundi, deal that had been reported as well as updates on our thinking about growth in India.

Clem Marie, CFO, Allianz: Okay. So so basically, you know, on on the asset management side, as we as we have mentioned, we we really like our setup. We have two asset managers that are contributing with different type of strengths, both in terms of footprint, I would say. PIMCO being more US exposed, AGI would be more would being more Europe and Asia, and then product wise, PIMCO being more fixed income, real estate, while AGI will be more equity, multi assets, and infrastructure as I was mentioning already. So we like and and we see value in the way our two asset managers are contributing to our three pillar strategy, which is very important in terms of diversification for the Alliance Group.

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That being said, we always looked at opportunities to enhance that setup. So we are always open at looking at what could make sense, but, we are and and we are more, as mentioned in the Capital Market Day, looking at ways to expand on the asset management side as opposed to anything else in the current environment. And then I think the second question was on India.

Oliver Bäte, CEO, Allianz: Yes, we obviously are in the balance of confidentiality. I can say three things. The first one is India is a super important market for Allianz and it will remain so into the future. We are looking to improve the setup that we have in the country of India and we are going to look forward to even more growth from that market. Everything else you’ll find out in a couple of weeks.

Frank, Moderator, Allianz: Let me remind you, if you’re on IP based telephone, this may cause technical problems The next question comes from Jean Philippe Lacour, AFP.

Lauren, Communications, Allianz: But I do have Jean Philippe’s question, that he sent as well just in case things didn’t work. I know it’s hard. We’ll rehearse again with everybody so it it’s easier for you. So Jean Philippe’s questions are, can you provide an estimate, of of any losses by the wildfires in Los Angeles and its surrounding areas? And he has, a question related to the Paris Olympics, which, and I quote, were a great success for the Allianz partnership.

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What what with what feeling do you look ahead to the twenty twenty eight Los Angeles games as an insurance partner? Do you foresee any particular challenges in ensuring these Olympics in a region that is so exposed to risks? And his third question is, as of February 2025, several insurers, including Alliance, have initiated legal action against the French government, alleging negligence in handling the May twenty twenty four riots in New Caledonia. Is there an update to provide on these claims, and what solutions are emerging?

Oliver Bäte, CEO, Allianz: So let me start with a nice thing. That’s the Paris Olympics. Congratulations to France for outstanding Olympic games, particularly with a very, very effective carbon footprint, I. E. Using existing facilities rather than building a new city.

I I thought it was one of the most amazing things I’ve ever attended. So well done. Los Angeles, we’re also looking forward indeed. It’s a more challenging environment, and I hope that the fires are a lesson learned to reinforce local infrastructure. As Herbert from us before, insurability also requires the proper investments in public and private security, having proper police forces, fire brigades, water things.

And we are very hopeful that the city will take the lessons learned and prepare itself. We don’t see at this point issues to provide as an industry cover for that, and we’re happy to help make sure that the Olympic Games in Los Angeles are going to be a success. They have been there before, so the community has a lot of experience, and so we’re here to help. On the New Caledonia events, the numbers, Claire Marie can address. Just on a general perspective, insurance cannot cover civil war.

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And it’s very important to understand that if public security doesn’t work, I. E. The police force doesn’t do its job, the military doesn’t do its job, the fiber grades and the merchant don’t do their job, insurance markets cannot perform substitute functions for the rule of law and the governance. And that is what this dispute is about because there are significant evidence of implosion of public security and public systems working. And again, the private insurance industry cannot be held accountable for the failure of public infrastructure.

In terms of economics, Claire Marie will pick this up.

Clem Marie, CFO, Allianz: Yes. So on the wildfires, as you know, we will be exposed to this type of event VR, exposed to to this type of event via our AGCS portfolio and also our third party business on the annuals side. For us, we expect these loss to be a double digit amount that would be well within our expected cat load for four months. So really no worries on that side. For New Caledonia, there has not been any particular further development to the further development to the loss that we had announced in the third quarter.

So and I think like I can only reemphasize what Oliver was mentioning. Just as a reminder, the New Caledonia loss was around 200,000,000 plus for us overall as part of the third quarter numbers.

Frank, Moderator, Allianz: The next question comes from Maximilian Folz, Plato. Maximilian, your line is open.

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: Hello, thank you for taking my question. Mr. Peter, in summary, you said that in difficult times prospective customers tend to favor strong brands, which is good for Allianz growth. Can you explain this briefly and at some length please, How you want to differentiate yourself from the other brands? Thank you very much.

Lauren, Communications, Allianz: Hi, Maximilian, it’s Lauren. Do you mind repeating your question for us?

: Yes, of course. Mr. Peter, in summary, you said that in difficult times, prospective customers tend to favor strong brands, which is good for Allianz growth. Can you explain this briefly and at some length, please, how you want to differentiate yourself from the other strong brands? Thank you very much.

Oliver Bäte, CEO, Allianz: Yes, great question. This is very interesting and my comments referred mostly to the Edelmann Trust Barometer and Trust Research. And that’s sort of not Allianz Analytics that’s generally shared analytics. In times of high insecurity, people in many societies look for the strong institutions to help them protect themselves. And as particularly in Western societies, the trust in politics and many institutions has suffered, the need to look for companies that help them protect themselves in many areas have come very strong to the fore.

And we see that also in customer interest and customer loyalty. If we have, for example, a lot more inbound interest than we can often feel at the moment, right? You see that in the online, we have about 2,000,000,000 inbound requests every year now of which, by the way, this is a huge business opportunity. We can sort of serve just only a small fraction. The way it really works is that loyalty, Mr.

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Frommer asked about how NPS really works. There’s four components to it. It is the quality of the products and services perceived by the customers. It’s the particularly service excellence in the moments of truth that really matter. It’s the price perception.

By the way, very interesting, it’s not the price. It’s actually the perception of price and is the strength of the brand. Particularly in insurance where you often don’t have high frequency contact with your product provider, the perception of the company, the perception of the brand often informs the purchase and the repurchasing decision. So having very, very strong brand that is trusted by the consumers is super important. It, however, cannot substitute the performance on the other three dimensions that is products, that is service excellence and that is the perceived right conditions between price and value.

And that’s why I made the conditional remark on when we had to increase prices. You can immediately see it in the trust. So we need to get the balance right out of that. And so the answer to your question, how do we do it relative to others, we need to outperform on all four dimensions. Thank you for the question.

: Thank you very much.

Frank, Moderator, Allianz: Thank you very much. It’s 12:15. We have to conclude today’s media call. Please reach out to the Media Relations team in case you have any further questions. We will report our financial results for the first quarter on May 15, and we will look forward to continuing our exchange then.

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This concludes today’s media call. Thank you very much. Goodbye.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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