Autoliv, Inc. Price & Performance (ALV)

It's a great day for Allianz. It's lots of talk talk about briefly is about what has happened in the last quarter of 'twenty four. And then probably you have tons of questions on what this means for the future. Because that's what supposedly we're talking about. So I'll try to be fairly quick since one, we already had the data out for a while. You've been thoroughly reading them, I assume, and we had the press call already. So let me start on Page A four with this summary Somebody this morning said, Bert, are you not getting bored by continuously reporting record numbers? No, we are not bored by reporting record numbers. We're actually very excited by reporting record numbers because it's quite hard to get there. Dollars 180,000,000,000, 11% more revenues, EUR 9% more operating profit, EUR 10% more core net income, 12% more dividend per share are also really cool numbers. Many of them double digit. Core return on equity close to 17%, which is really where we want to be. On top of the 1,500,000,000.0 share buyback we've done in 2024, we announced yesterday 2,000,000,000 because we have such a strong generation of earnings and cash Let me hit that upfront before we have lots of questions.

I had some very funny readings today. What does this $8,000,000,000 mean? Ladies and gentlemen, we have tons of liquidity that we need at the holding that doesn't mean we have tons of excess capital. We will have a very strong discipline in getting excess capital out to you when and if it's there. So we remain very disciplined because we are strongly incentivized to do that and we are striving a very careful balance between resilience, I. E. Having very strong risk adjusted solvency, we'll talk about that too, and the ability to earn outstanding returns on invested capital. Let's quickly move forward. Page five. Are interested what is the long term performance of a company. So that's provides an interesting view over the last ten years. Remember, we just celebrated our one hundred and thirty fifth anniversary this month by actually two weeks ago, and we're very proud that over the last ten years, our performance has consistently improved when you see in terms of growth rates, whether that's on revenues and profits, and we aim to continue that. Also in 2021, I still remember like yesterday when we asked is the plan given COVID not a bit ambitious in terms of €160,000,000,000 revenues or more than 14,500,000,000.0 in operating profit or €25 earnings per share, we have met all those targets even though that was not easy all of the time.

As a consequence, also dividend per share is growing now from 21% to today on a compound rate of 12.6%. EUR15.4, a very important number because many of our shareholders are also pensioners that need strong dividends and reliable dividends to support their retirement, and we're very proud to support that. Now Great finances at the outcome of a strong enter enterprise. There are very, very strong limits in my opinion to financial engineering. Therefore, highly satisfied customers and highly motivated people are at the core of a corporate success. Page eight six tries to demonstrate that very clearly interestingly enough, we had a slight dip last year and customer satisfaction because of the very strong price increases we had to take to protect our shareholders' margins, particularly in property casualty So despite very strong investments in the brand, you see the brand performance continuously improving also last year in our products, in and service qualities. Customer feedback was very strong and we need to work on them. Only outstanding products and also price value perception protects us and protects our margins. So that's an interesting reminder particularly on what we would call loyalty leadership. You see there the three data points.

So a little bit of a plateauing, so we're going to give us an extra push to bring loyalty leadership to 60% plus and you will see that in the targets. On employee and motivation, we have now achieved benchmark status in our industry. We're very proud of that. And with that, I hand over. Just on branding, because a lot of people says why is brand important for those that are not experts on it. Net Promoter Score in terms of the willingness and ability to recommend Allianz, one of the most important thing is brand. And in terms of purchasing decisions, ladies in general, don't forget a product that is low involvement like auto insurance in the mind of many consumers the power of the brand is the only thing they see for purchasing decision. If you are a a SENEC, you'll say, I don't care anything else than full price. If you ever had a bad claims experience, you think again. And therefore the brand as it stands for and the trust in the brand remains super important and in my personal opinion will massively increase in importance going forward. Now in terms of performance all segments have contributed strongly over the last few years, not just the last year.

Again, the reason why I show this, the story is consistent over time and we look forward to that also over the next thirty six months for our plan. Tons of data to support the performance, whether that's consistent internal growth, whether that's consistent expense ratio improvement, and making sure we get effective price increases into the motor portfolio, which has been under most pressure on retail. Life and health is the same, the value of growth in new business has been extremely strong. The new business margin used to be below 3% just seven or eight years ago. It's now trending above five clearly with further optimized business mix. And we had very strong third party net flows, particularly relative to industry last year, we have continuously improved our costincome ratio. So all operating items we keep on improving and I'd like to remind on asset management that we are one of the few places that have very strong third party AUM margins which speaks to the quality of the business and not just to the scale. Now let me move on to the segments. Property Casualty, historically, we're still reporting in the the three segments today. Growth momentum, strong profitability, balance between commercial and retail, and very strong ambitions for 2027, euros 9,500,000,000.0 approximately in operating profit that equates has a component of it that is about 6% to 7% revenue growth just to give you a benchmark, that's about double of what we had historically.

The same it has true for life and health. We're one of the few strong life insurers really left that are growing the business very strongly. Getting it to very strong value growth. Why? Because over the last ten years and beyond, we have been optimizing our product mix, the capital consumption and we keep on innovating. Skonset you saw in the fall and just as a reiteration, it's not a one off. We want to continue to scale these solutions not just for in force but also for new business flows. So by 2027, we want to have about SEK 6,000,000,000 in operating profit. That means we need and want to grow operating from unit linked and health and protection most strongly than the rest of the portfolio. Again, the question will certainly come, why €6,000,000,000 Why not more given where you are? Please keep in mind this year we're going to discontinue the joint venture with UniCredit so that we'll have a sort of downward effect at the beginning of the cycle. As a management performance, very strong flows, 85,000,000,000 third party net flows last year. If you buy way, look at profitability, again, we had some questions, isn't 4% up relative to prior, not a little bit too little? '23, we had very significant performance fees and deck come lumpy.

They don't come sort of distributed over quarters. This year, we had less performance fee. Let's see how '25 goes. It's not something we can time. But my personal expectation is that operating profit needs to grow more than that when we've seen given the level of inflows and given where yield curves are at the moment. And we expect an average of about 8% in third party AUM grows over the next three year cycle. So very strong outlook despite the We personally believe that's a 12%, ladies and gentlemen, We have huge opportunities into where we are going to sort of concentrate on the protection side that's basically P and C plus Health and Protection. These are underwriting businesses that deserve very, very strong multiples because they grow and they have very strong performance and are very capital efficient and the retirement business that we've made a lot more capital efficient on the right hand side. Again, I will not talk about it. It's very important that the yield curves as we see them today as we're coming out of a very, very a number of years in terms of vehicle forms will support very strong earnings for us going forward.

There's three specific things we want to do. Page 13 gives you a little bit of an overview of what we're trying to do, drive growth a lot more smartly than in the past. Let me talk about that Keep on reinforcing productivity. We have a strong record. New technologies are enabling us to do a lot more We are at a very important point in our trajectory from old legacy systems in the core insurance side and to bring our verticalized IT into force over the next three to four years and strengthening our Allianz against shocks further. That's not just about financial, it's also organizational [indiscernible] and supporting our drive from being outstanding product producers and product sellers to become ever more customer driven in what we do. I'll talk about that. Page 18 gives you a little bit of a smell on the gross triathlon. It has three components. Reducing churn is the most important, increasing cross selling and winning new customer customers. Why do I talk about reducing churn as the most important one? We have we win almost 10,000,000 clients every year, but lose almost as many up to nine every year. That means we have a big washing machine and we can do a lot better by retaining the clients that we acquire That translates into a volume growth ambition that's about two times what we have historically been done.

It's also the most efficient way to grow. And it's the most important answer is ladies and gentlemen, we are not looking to large M and A. We're not looking for large M and A to help us grow because it is much more expensive than working on our organic customer base. Now productivity, just as a reminder, we are the only house that has been consistently driving our productivity since 2018, four full percentage points consistent improvements in expense ratio. We're going to translate that impact on transferred into the Life and Health segment. It's a very important area to focus on in order to drive more value there. And it's not predictive [indiscernible] To come from our digital platforms like SolvT in order to bring prevention, claims management and other value added services in. To help us bring loss ratio down in a way that takes advantage of our scale. Now resilience, a very important number everyone always looks at. What's the solvency ratio, la la la la. It's the solvency ratio after stress that matters. And we have been continuously working on improving them. So if you take the third row from the bottom, the so called comprised combined stress gives you indication, it's just an ASR as the modeled indication that we are trying to improve resilience against multiple shocks and we are trying to do that across metrics.

It's not just Solvency II, it's rating migration and a few other items, plus net cat stress as the reinsurance markets now are soft [indiscernible] more capacity will be very clever around where we take risks and we take them where we get paid for them properly. Therefore, up I hand over to Clementi in respect. We're not changing the numbers that we have communicated at the cap Capital Market Days, we're just confirming now that we have ample opportunity to deliver on them. So we're very confident despite the sometimes horrific political environment, we can do that. Moving EPS growth up 7% to 9% capital generation on solvency to 24% to 25% ROE north of 17% payout ratio of 75%. Again, the technicians will ask how do you calculate that? Clamari will be delighted to tell you how we calculate that. And on customer satisfaction, we have more than 60% loyalty leaders We have to be firm and up the ante now. It hasn't been easy to be fair in a high inflation environment. By the way also with regards to life crediting rates, and as being now a benchmark on IMIX, which is our indicator for employee motivation on a benchmark basis, we have lots of things to do.

But it's not about the number, it's now about continuing the journey. So I thank you very much for this listening to my very condensed summary of a spectacular year for Allianz Allianz thank you for being our supporters in this journey to all the shareholders and all that supporting us. And certainly thanks to our people. Claire Marie? Thank you very much, Oliver. So good morning, good afternoon, everyone. Achieved in 2024 a very strong performance. We have reached record results on multiple dimensions from our Life and Health top line to our operating profit also in various segments, net income and our ROE as well, now standing almost at 17%. More fundamentally, those results clearly demonstrate two things. One, our ability to navigate a complex environment as we are and secondly, our constant focus on value creation for all stakeholders. If I go into more details on Page B3, you can see our top line is at SEK 180,000,000,000. Which is up 12%. And here, all segments are contributing. Similarly, on the operating profit side, as well all segments contributing to the growth, which is 9% compared to last year, and we are emerging at €16,000,000,000 What's clearly very pleasant to see as well in our numbers in the translate from operating profit to net income is that it's very clean.

And this is leading us to a core EPS, which is up 12% compared to last year and is as well with €25.42 well within our midpoint despite the accounting change between IFRS four to IFRS seventeen and nine, which means the underlying is even stronger compared to what we had thought about in the Capital Market Day in 2021. On the P and C side, you can see high level of growth, record operating profit, and I'm going to go into more details in a minute. On the Life Annals as well, very strong demand for our product at a high level of new business margin, which is leading to a record value of new business, which is up 18% compared to last year. On the asset management side, our third party net flows are at 85,000,000,000 for the year, which is four times the level of 2023. Which together with a strong focus we had on profitability both on the expense side and the focus on the good margin level on asset under management, which is partially offset by the lower level of performance fees, as Olivier already mentioned, is leading to an operating profit, which is up to €3,200,000,000 If we move to the fourth quarter on a standalone basis on Page B5, Here, you can clearly see that the quarter is continuing with a very strong momentum that we have seen already in the previous three quarters.

If I start with the group view, our total business volume is very high. Growing at 16% across our three segments. Our operating profit is high as well at SEK4.2 billion, which is our strongest quarter for the year. And is as well our record operating profit level in a single quarter for the Alliance Group ever.

And we have achieved this level of operating profit in a quarter as we had almost no runoff on the P and C side and a much lower level of performance fees versus last year on the asset management side. So clearly, very strong performance, excellent performance in the fourth quarter. If we look at the P and C segment on a standalone basis, you can see a high level of growth at 11%. That level of growth is the highest level of growth we have seen in the year in the quarter. And within that 11%, we have 5% of volume growth. Our combined ratio is at 94.7 That's clearly higher compared to the combined ratio level we have seen in the previous quarter. And that's entirely linked to the very low level of runoff that we have seen in the fourth quarter on a stand alone basis. And here, you need to see and we will come to a minute to that one that our investment results have been particularly high in the fourth quarter. And we also have seen positive developments in our attritional and in our expense ratio. Which basically gave us an opportunity to do tactical strengthening of our balance sheet.

So this situation is leading us to an operating profit that is up 20 by more than 20% compared to last year. And emerging at €1,900,000,000 which is very strong. On the Life and Health side, you can see very high level of growth which is in the continuation of the third quarter. And that growth has actually been emerging across the portfolio. This is a growth of high quality with a new business margin at 5.5% and this is leading to a value of new business which is up 17% compared to last year. On the asset management side, our our revenue growth is positive despite the lower level of year was Razor on the high end. We have seen EUR 17,000,000,000 of net flows in the quarter stemming from our BOSS asset managers and we have a very, very good cost income ratio for the [indiscernible] [indiscernible] is a very strong base towards 2025 on which we can build on as we move into the New Year. Let's move to Page B7. Let's have a look at the solvency ratio development. So our solvency ratio is up three percentage points. As Oliver already mentioned, we have a reduced level of sensitivities overall.

And in addition to the point that Oliver already made on the combined stress test, what you can also see if you revisit with a bit of a longer time period and you look against 2021, the combined stress test has halved its effect compared to that point in time. Which basically now means that aftershock, we are above 180% solvency ratio which is within our comfort zone. So clearly demonstrating the progress we have made in terms of resilience of our solvency ratio during that If you move to Page B9, you can see that for the full year, we have produced 20 percentage point of operating capital generation, which is fully in line with our expectations. And the fourth quarter on a standalone basis has also produced a strong level of operating capital generation. Fully in line with our expectations and similar to the one we have seen in the third quarter. In addition, in the fourth quarter, we have seen positive effect coming from the model changes, and we have two effects that are contributing to a partial offset of that effect. First of all, we had a market impact which I think is a bit higher compared to what what some of you may have anticipated that's linked to the fact that we have seen a bit of decoupling on the inside between The U. S. And the Europe yield curve.

And secondly, we had a twist in the European yield curve that you cannot anticipate because our stress is with a parallel shift and not with the twist obviously. And the second effect is the fact that we have a higher dividend accrual to reflect our performance that contributed also to the development of the solvency ratio.

So clearly, capital generation is a focus for us. And in 2025, we'll be continuously working on our earnings, on our capital consumption as well. We expect at least 20 percentage point as a 20 percentage point of of operating capital generation in 2025. And we will continue to execute towards 24% to 25 percentage point operating capital generation ambition we have given to us as part of the Capital Market Day in December. Let's move to P and C on Page B11. On this page, which I think is very nice and really demonstrates the quality of the growth across the portfolio, You can first of all see the strong level of growth, which is at 8%. Has been supported as well by some hyperin [indiscernible] Within the 8% growth, we have seen 6% of rate effects, the RIS fees volume and fees. And if you were to compare the rate change on renewal quarter after quarter you will see that our rate momentum has been decreasing in the second half of the year. In particular linked to The United Kingdom and AGCS. And we have seen also volume pickup during that period. From a line of business perspective, if you look at the full year, we see that Motor Retail has been growing above 11% for the full year.

And also on the mid cap side, we have seen a growth which is above 11%. And that's very much reflective, I think, of the commercial strategy we have started So on the page per se, you can see that the growth is very well spread among our flagship OEs. You can see that on Germany, France, Italy, Australia as an example. You can see as well that AGCS is an exceptional has seen a decrease mainly related to the fact that we have lower volume in ART so ILUM3IS transfer. And we also have been selective in our under writing, so focusing on our preferred line of business and also being careful on financial lines and cyber in particular given where the rates are there. On partners as well, you see a 33% growth. Clearly, on partners, the growth has been split into two parts of the year. First part of the year, we had to do some remediation into the portfolio in particular on the health side to address the inflationary effect. And in the second half of the year, we have seen very strong level of growth in the portfolio of partners, in particular, the fourth quarter has seen 14% growth If we go to Page 13, here you can see that our operating profit is up 14% That's driven by both the insurance service results and the investment result.

And if you look at the walk, and If you look at the work, you can see in particular that so you can see those two emergence from those two effects. We emerge at SEK 7,900,000,000.0 of operating profit which is ahead of our midpoint outlook. If you look at the year on year development of our operating insurance service results, it's plus 16%, and this is made of both growth of our revenues, which has been 8% year on year and then the margin expansion. So our combined ratio is emerging at 93.4%, which is at the lower end of our outlook range. And you can clearly see in the split, right, the expected improvement in the expense ratio of our undisconted attritional loss ratio has also improved By the way, if you correct a bit the development of our undisconted transaction, then you get to an [indiscernible] which is exactly what we expected to see and is also in line I think, with what I would use as a reference for 2025 onwards. What you can see as well clearly we had lower level of nat cat compared to our expected cat load of 3%, which is also a stronger outcome and demonstrates the strength of our underwriting because we are below our five year average, while the rest of the insurance market is above the five year average.

So it's very much I think, resonating with the view I provided at the Capital Market Day was the volatility of our own loss ratio is much lower compared to the rest of the market. Clearly, lower level of runoff for the reason I already mentioned If we go to Page GB15, which is a very good page, that's clearly highlighting the overall quality and breadth of our portfolio. You can see as an example the output of the work that has been done by the team in The UK or in Australia to address inflation and also to enhance our positioning in the You can see Germany that is emerging with almost 18% improvement of OpEx [indiscernible] You can see Italy, Central Europe or Switzerland with level of combined ratio. AGCS is down in operating profits. That's due to runoff and higher level of Nat Cat. And partners is actually emerging with 11% growth in operating profit, which is fully in line with our Capital Market Day look at our investment results, you can see that you can see that they are up 10%. Our interest and similar income emerged for the year at €5,000,000,000 which is approximately €400,000,000 above our guidance for from last year.

And that's linked to two mainly. The first one is that we have seen higher short term short rates in 2024 compared to what we were anticipating. And we also had some positive contribution from our hyperinflation countries, in particular in the first quarter into that number. Which basically means that it has created room in the fourth quarter on the underwriting side, which is reflected in the very low level of runoff that you have seen in the fourth quarter already. Our interest accretion is at minus €1,200,000,000 which is fully in line with what we were anticipating at the beginning of the year. For 2025, IX interest accretion, basically paying for the discounting we have seen this year And also, I expect slightly lower level of interest and similar income for the reason I just mentioned. So let me recap on P and C. We are clearly well positioned for 2025. As we build on 2024. In retail, we expect growth in a supportive rate environment. And in common commercial, the situation is for us to be nuanced by entities but the level of rates clearly gives room for focused growth. And also for us to tap into some of our distinctive entities like partners as an example.

If I move to Life, on Page B19, clearly XLN page, you can see the high level of quality and breadth of our growth momentum Our PVNBP is up 22% and that double digit growth is across the portfolio. It's clearly highlighting the demand for our product What is also super pleasing to see as an example is the German Health business that is growing almost at 35% compared to last year, which is clearly the output of adding work structurally on the products and having products that are offering better fit and also higher service quality compared to many competitors on the market. So this growth, as I mentioned, is of high quality We have an excellent level of new business margin. And we are growing in our preferred line of business at 94%. Our value of new business is at €4,700,000,000 which is up 18% compared to last year. Also, I think worth while to note is the fact that we have seen positive net flows in our Life and Health portfolio since the first quarter of this year. Moving to Page B21. You can see that the high level of value of new business is translating itself into a high level of normalized CSM growth, which is above 6% and which is also above our expected range of 4% to 5%.

Very pleasant as well to see is a very low level of variances we have had this year, which is around 0.4% of our CSM. And that includes the update of the last assumptions in the third quarter. And by the way, also our non economic variance were positive in the fourth quarter on a standalone basis. Our CSM release is fully in line with expectations. And our sensitivities remain at a low level. If I move to Page B23, basically from the CSM release to the operating profit, there is still a bit of noise between the line items as we are still fine tuning the effect of or like the effect of IFRS seventeen and nine. Overall, our operating profit is at €5,500,000,000 which is well above our midpoint outlook. On the right hand side, you can see the good development of our operating Our German Life entity is up NOK by 10%. The U. S. Is slightly down on this page, but actually that's linked to a technical effect. If you correct for that, that one, the underlying operating profit is up by more than 6%. What also is very nice on this pie chart is that you clearly see that beyond our two flagship operating entities, the rest of the portfolio represents 60% of operating profit has been growing by 7% year on year with also a very strong growth of value of new business of more than 18%.

So clearly, this is a very well diversified portfolio. Portfolio. So to summarize on Life and Health, our results are very strong across the portfolio. We have seen a high level of growth. Certainly, I believe that these high level of growth will be five. But we see strong momentum for our product across the portfolio, as I have already mentioned. And these high quality growth is translating into a strong CSM growth, which clearly will support well our future profitability. And create confidence for 2025. If I move to Asset Management on Page B25, here our third party asset and our management are up 12% year on year with positive development at both PIMCO and AGI. On the PIMCO side, we have seen more than EUR 84,000,000,000 of positive inflows EUR 82,000,000,000 went into fixed income, which basically means that PIMCO is clearly maintaining its leading position on active fixed income. And we have also seen on PIMCO side EUR 4,000,000,000 of inflows into [indiscernible] Which is in line with what we have communicated as well in the Capital Market Day. Now basically our alternative and private credit forms represents more than Allianz billion dollars of asset under management on PIPCO side.

HGI as well has seen positive inflows in multi assets and alternatives, in particular in infrastructure and real asset debt. Which has been offset by the outflows we have seen in equity and as well the two large fixed income mandates that came with a very low level of margin that I have already mentioned in the third quarter. If I move to Page 29, you can see sorry B27, you can see that our revenues are up 3% for the year despite a lower level of performance fees. Our revenues, which are linked to the asset under management, are up 7% and that's basically the output of two effects First of all, the fact that we have seen positive developments in our asset under management and also that we have had solid margin level at both of our asset managers, which I think is very important to see. A good example of that would be that as part of the stable margin development on PIMCO side as an example, our alternate the contribution of the alternatives is now more than 20% of the revenues, as I was already mentioning for PIMCO. If I go to Page B29, you can see that operating profit is at €3,200,000,000 which is slightly above our guidance for the year.

Our operating profit excluding performance fees is up by more than 10% in 2024 And by the way, for the fourth quarter on a stand alone basis, it's up by more than 20%. Clearly, this supported by the strong focus of both PIMCO and HGI on productivity. Which is clearly shown in the development of our cost income ratio which is despite the level of performance fees actually. If you correct for this performance fees effect, the underlying improvement in the cost income ratio is is 150 bps, which is a lot and clearly demonstrates really addressing the productivity aspect thoroughly. They are leveraging new tech So overall, both asset managers have had strong contribution in 2024. We have seen as well positive inflows at the two of them and this momentum has been continuing in January. And will position us well for 2025. Page B31, I'm going to skip and let's move to remittances on Page B33.

Well, you can see that our remittances are at €8,100,000,000 for the year, which is a healthy level that is quite close to 2023. This corresponds to a net remittance ratio, which is above 90%, which is also ahead of what we have mentioned at the Capital Market Day, which was 85%, that's clearly for me demonstrating the ongoing discipline that we have in place within the group in terms of management of the upstreams, In 2024, we have had €420,000,000 less excess capital up stream compared to 2023, which basically means that the underlying remittances are up 6% compared to 2023. Let's move to Page B35. And here from the €16,000,000,000 of operating profit to the €10,000,000,000 of shareholder core net income. The line items are very straight forward, I would say. We have a lower level of non operating profit items in 2024 and our tax rate is at 25%, which is fully in line with what we expected to see. So this brings us to core EPS of €25.42 which is up by more than 12% compared to 2023. And as mentioned, that's fully in line with our Capital Market Day twenty twenty one, and this despite the accounting change.

So clearly, a very strong delivery on that side as well. Let me move to our outlook on Page 37. And here we are clearly 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 assumption setting in the underlying. Let me explain to you a bit what I expect to see in the various segments. On the P and C side, I expect to see growth, growth in with what we have communicated in the Capital Market Day. I expect to see an underlying improvement in of investment results as I have mentioned before. On the Life and Health side, I expect to earn the CSM also slightly lower level of investment results. As we will have to pay for the interest accretion in part in particular coming from the protection business. And as well, I allow for the deconsolidation effect of Uniqredit Vita, as already mentioned by Oliver. And on the asset management side, I do not take any market assumptions or any assumptions related to the timing of the performance fees? And I just allow for the slight increase of the asset under management, which is supporting I just allow for the increase of the asset management, which is supporting the slight increase in the overall operating profit outlook.

So clearly, our commitment from the Capital Markets We and share buyback we have announced today is supporting our EPS trajectory and will as well I mean, and he's as well very much in line with what we communicated already in terms of capital overall capital management policy. Let me conclude on Page B39, where clearly 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 And during the Capital Market Day in December, we have 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, our performance in 2024 gives us confidence in our ability to deliver this ambition. And with that, I hand over back to you, Andrew, for questions. Great. Thank you, Clari Marie.

Just some housekeeping point on questions. I mentioned earlier that we had some problems receiving questions if you're dialing in IP phones. So I strongly recommend to use the old fashioned approach. If you are using a normal phone, it's star five. If you want to try on the web version, there's a talk request button on the top right hand corner. We are going to do our usual rule restrict yourself please to two questions. And then if we have time, we will go for some follow ups. Great. So with that, I think the first question is from Andrew Baker of Bank of America. Go ahead, Andrew.

It's Andrew Baker, Goldman Sachs. Thank you. Goldman Sachs. That's okay. A lot of Andrews.

First one, are you able to just help me try and link the 2025 guidance to your three year plan? So if I look at your obviously the 7% to 9% EPS CAGR, including operating profit CAGR of assumption of 6%.

Yet the midpoint of the 25% operating profit guidance is flat versus 24%. So and even really even the up end of the '25 guidance is 6% growth versus 24. So do I read this as '25 guidance is relative [indiscernible] Or is the three year plan more back end loaded? And if it is the latter, you just help me understand sort of what the drivers are that leads to this back end nature of the plan? And then secondly, are you just able to quantify the benefit in the 2024 P and C investment result from the hyperinflation countries? And what should we expect this to look like in 2025 versus 2024?

So sorry, thanks a lot for questions. So [indiscernible] Thanks a lot for your question. So maybe let me start with the second one on the hyperinflation effect. So clearly, what we have seen in the fourth quarter, we had high level of impair inflation effect and we had also a strong contribution from the U. S. Dollar that has been strengthening in the that has been contributing positively in the valuation and other results. So you can take from that one that it's around €100,000,000 to €150,000,000 And basically, we have not taken any assumptions when it comes to the effect of the hyperinflation country. Into our guidance at this point in time. So you can I mean, we we consider that you can use a steady state guidance we have given now that would be a fair reflection of what you should expect from that perspective, if that makes sense, right? So that's basically what we have done now.

First question was on the [indiscernible] So clearly, I mean, we are not changing our guidance against the CMD, and we do not expect [indiscernible] back end loaded. So as I've mentioned, we taken certain set of assumptions, which are fairly conservative in the environment, but also I think the current environment is a [indiscernible] Our current outlook. Okay. Thanks, Andrew. The next question is from another Andrew.

This is Andrew Sinclair from the Corretto [indiscernible] Thank you very much. I mean, sorry, just before I ask questions, I do find your policy of giving next year's guidance just as a midpoint in the previous year slightly unhelpful. I can have genuine guidance or nothing actually might even be more helpful. Maybe that's just a moment.

But anyway, on to my two questions.

First, P and C, a bit of a regular theme for me. What color can you give us on how strength of reserves evolved during the year? I guess lower PYD today building a bit more conservatism in the reserves. But it'd be really helpful if that's a way to quantify that from the outside, whether that be reserve triangles or whatever. But is there any conservatism building. And second was just on the personal lines. We've had, I guess, some important renewals in markets like Germany. Switzerland. Just really what have you seen your level of competitiveness for versus peers? Has that given you an opportunity to take some market share and has been disciplined pricing that you've seen? Thanks very much.

Thanks a lot. So on the lower level of PYD for the fourth quarter, clearly you should not be reading anything into this one. We are very confident with the quality of our results. As you have seen during the Capital Market Day, we have shared with you the consistency of the emergence of positive runoff that we have seen year after year. So I would expect to continue to see that one to continue going forward. So And then on your second question.

Any any measure that you can give us really just of that additional strength that you're doing. You're right. We've had lots of PYD over the years, but hard to tell if you're building or releasing strength in the reserves. Would be useful to have some sort of metrics on the outside.

So I think, and what I was alluding for is that we have strengthened the quality of our reserves during 2024. And then maybe if you want to get a guidance when it comes to what we expect to see going forward, I would expect to continue to see positive positive runoff in the 2% to 3% percentage point year on year. And then on the renewals, on the important mark happy actually we are very happy with the quality of the renewals. We have seen in January. So as an example, if we take on the German motor, side, we have been growing our number of policies We have also achieved the highest level of retention ever into our motor book as an example. So we have been clearly gaining market share and it's also like supportive in some of our other markets clearly. [indiscernible] Next question, is from Michael Hutner of Berenberg. Go ahead, Michael.

Yes, congratulations on lovely results. [indiscernible] if I think about your profits, so to me the guidance is at the the profit growth is not 8% whatever, but it's a [indiscernible] the $2,000,000,000 is just 1.5 kind of indication that the profitability is kind of ramping ahead. But your CFO, Bob Fries, I think, used to say, well, if I have a source of losses, I a turnaround. So I was looking for potential turnarounds. You have virtually none left. The only one I could find and is only in Q4 is Partner. The Partner business, where the combined ratio was 99%, that's a big business with not great profitability. So you kind of talked about it a little bit, but maybe you can see say how quickly or what worldwide was so not so great and how quickly you can improve it? And the other question is in is really just simple numbers. And there are lots of simple numbers. I'll ask three and I hope it's not a pain. So dollar sensitivity of earnings had been massive used to report it two years ago. The second is the inflow the inflows in January. I think you might have said it but I missed it.

And the third is the LAY tie costs. Thank you.

I start with the I start with the LA wildfires. Which for us will be double digit double digit loss well within our our expected cat load for a month or for a quarter and if you want. So we are exposed to the LA LA wildfire our AGCS business and our third party business on the IL-three side.

For the inflows in January, so we have seen low level of double digit inflows at both PIMCO and AGI in January, which clearly position us well for the quarter. Can I interrupt double digit in AGI? No, no, it's total. It's basically low, yes, exactly, total. Total for both PIMCO and AGI, low double digit. Billion number of inflows, yes. And on partners, we have seen so indeed the level of combined ratio has been deteriorating itself a bit.

We had a bit of movements in the combined ratio of partners during the year. But we have two effects you need to have in mind is that first of all, we had some mix effects that came through. And I believe when you look forward the 97% is not a bad anchoring point for that business. But you need to look at the performance of partners with both the combined ratio and also the fee business So because we have a lot of services that is embedded into the partner business, which is coming then into the operating profit. So that's why you see this very high growth in operating profit at plus 11% for the year, which is the outcome of both both effects into the performance of partners.

So Michael, did you have another you had a was it a dollar sensitivity question? I didn't quite hear it.

Yes. You used to give it for 10% change in dollars 500,000,000 or something.

It doesn't change.

I think it's unchanged, but we exactly [indiscernible] Okay. Super. Thank you.

Great. Thanks, Michael. Next question is from William, William Hardcastle from UBS. Go ahead, William.

Thank you.

First one is on P and C growth. Top line is still really strong and you've been really clear there on guidance for the division overall. Is there any possibility you can help us thinking about 2025 expectations on growth and margins disaggregated for both motor, versus non motor. Qualitatively, obviously? And then how does that stack up relative to AGCS expectations? Second one is just thinking about any many major DVA [indiscernible] whether it be price coverage, terms and conditions, all very similar year over year.

Thanks.

Okay.

Maybe I start indeed, I think like for for P and C, as you rightfully say, right, I expect growth development in terms of top line really in line with what we have communicated in the Cap Within that retail, we also expect I mean, quite in line with what Oliver has mentioned or Klaus Peter did mention. So 3% to 4% percentage point of percentage volume effect, which is meaning like we we built up on the traditional 1% to 2% volume effect by sorry, we add up one percentage point to two percentage point volume effect as we are tapping into our growth strategy. And I think when I was just mentioning on the renewal we have seen on the German side as an example is confirming that you and we also expect to see something like 4% to 5% price effect into the growth on on the retail side. So and then a bit higher on Motor, as opposed to Non Motor because we expect motor to contribute more significantly compared to non motor in the improvement of the margin on the overall retail side, yes?

And then for Commercial, you clearly have two new ends between Meat Corp AGCS, trade or partners. For AGCS, as mentioned, right? We expect a lower level of growth, but still some growth as we are cautious in terms of some line of business when it comes to the rate adequacy at this point in time as well. But we still see space for focus growth in the AGCS book as well. On the reinsurance renewal?

Yes, sorry. On the reinsurance renewal, so we have renewed our so we have changed slightly some of the features of our range structure, but it's broadly unchanged compared to what what we had in place before. And we have seen despite the fact that we had some of our cover or some of our reinsurance protection that was I mean that was a bit impacted by some losses. We were able to renew at slightly lower price compared to previous year. So good outcome of the reinsurance renewal. Period for us. Great. Thanks, Will. Next question is from James, James Shuck. Of Citi. Go ahead James.

Thank you and good afternoon. My first question is around the performance fees in Asset Management. Please. It's around €400,000,000 across the year. If I take into account the AUM, it's probably the lowest level of performance fees in history, at least far back as my model goes. So just keen to know whether the performance of PIMCO in particular is starting to fade somewhat. That's my first question. Secondly, Oliver, I'm keen to just understand where AGCS is at this point in terms of kind of strategic crossroads. What are you kind of thinking about in terms of how you start to scale up this business, develop new distribution platforms, potentially introduce third party capital. Those sorts of things. And if you're able, just to quick final one. Could you update on what the inflation reserve was at the end of twenty twenty four, please? I'll start thank you for the question. I'll start with AG CNS.

We have invested a lot of time, energy and money to upgrade the capabilities, but also in parallel to make sure we integrated more properly with the large core business and mid core business into the various countries, particularly in Europe that been at the core of what we've been doing. We continuously, for example, roll out a consistent go to market strategy, the same applying the same risk and underwriting and pricing and making sure we have a consistent risk appetite so we don't find ourselves writing something in midcorp and then in AGC and S at the same time without the other one knowing about it. So it's unfortunately a lot of and continues to be a lot of grinding. On top of that, this year is delivery year in The United Kingdom for the new what we call Allianz Allianz Master platform delivery on commercial lines, U. K. Is the first market to have to deliver. So that's very important to us for the next few years. Remember, most in our industry don't even have a consistent blood five to make that happen and then rolling that out to the rest of Europe over the next few years.

So it's lots of work in progress. On top now, as reinsurance prices and in some areas Claire Marie talked about financial Allianz, cyber rates have been continuously trending down. We're taking capacity out because we're here to write profits rather than volume and that will continue as we speak. The good news is that Allianz is not dependent in its performance on what happens in large commercial given the footprint within property casualty and also beyond makes us very confident to not having to depend on it.

The second thing to bear in mind, we are trying to also use our reinsurance platform, Allianz three, a lot more effectively in terms of playing wholesale markets. So where we are not seeing a lot of value in primary, there may be value in excess of loss and particularly in reinsurance and that we tap them through ALI and three. So there's a lot more to Yes. And that's it. And then we are waiting for our new CEO to arrive. April 1. So we are very happy about that. Thomas Lilillond will come and join us finally from AIG and we're very happy to have him. And because we need to fill the shoes of the team there particularly Clem Marie now having a different job. So that's that's as a short update. So commercial lines is important for us. We continue to build it out. But as the cycle turns more soft, we going to be highly disciplined in terms of how we ride it. It also helps obviously that retail has been performing strongly and is going to see further improvements to balance that. That is obviously not true for many of our competitors who have been betting on wholesale markets for the last few years.

That's it, Camarillo. Any additions on the detailed questions?

Yes, I take the one on performance fees. So basically, James, if you look at performance fees historically as a percentage of revenues, you can see that performance fees on average have been trading between 5% to 10% of our operating revenues year on year. And the average is around 7%. And actually 2024 is just slightly below the 7%. So it's at 6.9% or some [indiscernible] observed historically. So it's more last year was even above this 10%. That I was referring to. So for 2025, I will not give an outlook because you know that performance fees are can be lumpy. We never know when they materialize. Can be on a quarter, can be on a year. So you don't know But if you want to get the guidance, I think you can use this 7% revenue of operating revenue as a guidance for performance fees for next year.

Great. Thank you, James. We can stay in reserve as well if possible. [indiscernible] Yes. Sorry, I missed that one. Okay. Yes. No. So basically, our inflation reserve is broadly unchanged compared to to what we had introduced previously. As I mentioned, also last time, I think during the Capital Market Day, the niche of the inflation reserve has changed, right, because initially, it was built more for short tail line of business and now because the inflation has emerged into the into the books or into the triangles, it has been more translated into long tail line of business where we expect that the inflation is going to take longer to materialize. And so as such, we have kept these this, I mean, this establishment of the Okay. Thank you very much. Thanks, James. Next question is from Vineet.

Vineet Malhotra from Mediobanca. Go ahead, Vineet.

Yes, good afternoon. Thank you so much. So one question on Life, clearly and one on PIMCO. On Life, Clemery, just just curious, the 6% normalized CSM growth Unless you would say that there was some one off I mean, it was a driver, of course, along with experience variance of the beat in the quarter. And still your guidance is 4% to 5% growth. Could you just Just elaborate a little bit about why guidance has not been moving up even though we are seeing this kind of better number outside that guidance range. In full year 2024. Second question on PIMCO. I mean, there was some news including in the Wall Street Journal about how PIMCO had found a Unicorn startup and it listed and it it was a large stake and it made tons of money. In think it was in December, but I mean, just even if you can't comment on the specific case, but that's an alternative investment, which worked very well Should we not have seen it in performance fees or should we have seen it in the regular fees? So I'm just curious how these situations are reported in Pinco's case? Thank you.

Yes. So first of all, on the point on the normalized CSM growth, right? So it's I mean, last year, the guidance was 4% to 5%. So now I mentioned that my normalized CSM growth is expected to be around 5%. And you have one effect which is related to the fact that I mean, we have seen really good volumes that came into the numbers in 2024, and I don't think all those volumes can replicate themselves. In 2025 and also because you will see some of the some of the effect of UniCredit VITA GV that is going to come through and also some of those one offs I don't want to give as part of the outlook will be one dimension. So a bit lower value of new business coming into the CSM, good for my perspective, be quite logical. The second effect is that our in force return will be slightly lower in 2025 as basically the risk free rate are going down. So that's also the second effect that is explaining why. I don't think you can use a 6% normalized CSM growth as being the fair guidance for 2025. And on your second question, so you are I mean, you are right there with this comment that was done in the Wall Street Journal and you are fully right that I cannot comment on it.

It's clearly related to various type of investments. It has been going in it's going into different portfolios, if that will be the case. So that's really related to the agreements that are between PIMCO and and the investors into those funds. So even if that will be the case, I would not be in a position to comment on those. So on your margin question, clearly, we would expect that this will materialize itself depending on the agreement, more under the shape or form of performance fees at some point in time. But please understand that I mean, we don't know all the details into the funds and I can clearly not comment on that side.

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

Go ahead, William.

Hi, everyone. Thank you. Oliver, coming back to your opening remarks about earning outstanding returns on invested capital, we've already covered a lot of things, but across the whole business, where do you think you're getting the best marginal returns on capital that you're deploying in 2025? I mean, I like Slide 14 about the smart growth, but that's kind of quite high level.

You just tell us from everything we've talked about the one or two things where you feel most bullish that would be great, please. And then secondly, Camry maybe, when you're hedging your financials, can you just remind us your prioritization in terms of managing down volatility? The metrics across IFRS solvency, earnings or capital or whatever. And are you finding that there are any particular kind of trade offs you're having to accept that you accept volatility in one area because you're trying to solve for something else? I'm not asking for a technical point. I'm just trying to remind myself when you're managing volatility, what the priorities are?

Thank you. Will, let me answer a little bit highest area of attention for the team now has to be on managing customer retention. So the and the effects are across loss ratio [indiscernible] depending how you run the numbers, whether you include partners or not, because you have a lot of one off purchases of charter insurance. And I'll lead you to core retail business acquiring between 8,500,000.0 and 9,500,000.0, 10,000,000 clients every year and losing about eight to nine. So we have enormous churn in the system that's fairly expensive. So just to give you a number, If we are a top quartile customer acquisition machine in Europe, in the core where the core of P and C Retail is. If we were a strong on retention as we are on acquisition, the net growth of the company [indiscernible] It literally doubles. And this is there's many levers attached to it. We need to change the way we incentivize distributors which we're already doing. We need to change the way we underwrite and price in some areas. Because we do a lot of let's open the house and get everybody in and then pick and choose. To how do we think about how we manage certain customer interactions in an same even though we have very different lifetime values for clients.

So that's you'd ask me where is the most value added spend of management attention on capital, it's there. Cross selling, by the way, successful. We have on the one hand a very polarized world in Allianz. We have many clients have three, four, five, six up to 10 products I have and then we have 50% of clients of Allianz Allianz only one. By the way, even those that have huge and give us huge NPS promoter scores like on life corporate and individual pensions where we are not very It sounds a bit odd, so it's not what is the marginal on property insurance in France, that would be the wrong way to look at it. Sorry for that question. So this is where all the attention goes. The prerequisite for that is by the way, well that we really know what drives these things. So having done a the analytics in place and we've worked a number of years now and now we do know.

Yes. And maybe on your questions on hedging. So basically, on the maybe on the operating profit side, when it comes to currency risk, we are not hedging. But on the investment side, our currency risk is very limited because we because we have is very limited as we have like the currency hedging, which are basically playing a role there. So that's the way we are thinking about hedging our financial volatility. Also on the investment side, so basically as I was just mentioning, so on the fixed income, we do hedge for our current C risk in particular, Thank you. Okay. Thanks, William.

Next question is from Hi. Good afternoon, everyone. A couple of questions for me. The first one is just on the, I guess, the reserving in the fourth quarter in P and C. Just interested in kind of where you had to add to reserves in the fourth quarter If cash will see kind of how big, who I'm just trying to put two things together from your earlier comments around the in place reserve. It sounds like that went to match kind of longer tail liabilities and then you had strengthened the fourth quarter a little bit more on top. So just interested in whether it's Casualty or something else. Whether my understanding is right on the kind of €1,800,000,000 The second question is just around, I guess, the there was some interesting M and A spec that came up today about [indiscernible] any views on that as well? Thank you.

Let me hit the question because it looks like people are asking whether we had under reserving somewhere that we needed to cover. Right? So let me just hit that from a CEO perspective. That's total nonsense. We obviously cautious at looking inflation on U. S. Liability. We would always try to make sure we are properly reserved. But there's nothing that we needed to cover as a problem, just to be very clear. Right? So as Claire Marie tried to politely say, we have been extremely prudent in setting our reserves. So if you say that the average long term run off that Allianz has shown over the last few years in property casualty, let's say, is between 34%. And you now have only 1% and you assume we don't have big negative runoff, Then you can make up your mind around how much reserve strengthening you have been seeing, which we think will make our balance sheet a lot more resilient. Is that helpful? Okay. And the second one, yes, yes. And the second point is on I think you're referring to Viradium It's a very interesting business model very successful in Germany. As you know, Allianz is managing the question of how to efficiently capitalize live resource very successfully as you've seen with Project Lucian 21 and partners to look at it.

We like the business model very much. Let's see what Maybe I can just add on the reserve, right, because you were at asking and I think Olivier was very clear. But just in case, after [indiscernible] to Arch, right? Our U. S. Casualty reserves are very small as part of the overall spectrum of reserves of the Alliance Group So it's below 3% in terms of reserves.

That's very good one.

Thank you. So it's a great year to make sure we have powder dry for the future. Thank you. Thanks Cameron.

Actually going to take a question that I've been emailed because clearly we have problems today with people using the web function. So this question is from Raya Shah. From Deutsche Bank. She has two questions. How should we think about cash remissances in 2025?

When thinking about 85% guidance? 93% that was reported in 2024, Within this, what are your expectations for excess upstreaming or exceptional remittances? That's the first question. Second question Oliver mentioned in his introduction that growth won't come from large scale M and A. How about bolt ons and away from Asia perhaps?

Could there be opportunities or gaps? In Europe or The U. S? Those are her two questions.

Let me hit the first one. Thank you very much for the questions and apologies for the functionality. We'll fix it immediately. Of the web's tools. One, on we have for the last ten years only done bolt on. The biggest ever we did relative to currently whatever 127,000,000,000 market cap was the acquisition in Poland and there were lots of questions about that. In the larger scheme of things of Allianz Allianz actually tiny. And we continue to focus on that even more [indiscernible] Why? Because the opportunity to grow organic market share is significantly higher today, particularly in P and C and in life as it been years prior. Why. The massive increases in in in branding, in customer service, in so supporting and maintaining distribution and it is leading more and more of our competitors that have marginal national positions to give up. You can now read every day how people are selling portfolios in Germany and other parts of Re Europe and how consolidation is happening. We believe that organic opportunities in the markets where we have a very strong position is going to accelerate rather than decelerate. And there's a second reason that is more technical or cyclical.

We have had a lot of competitors in retail, particularly on motor that have held back with price increases. And now relative to us have to catch up massively, which will drive as we have prepared properly more clients into our direction. Some indication you already see in us not just having a 10 better combined ratio in German Motor than most of the people including the market leader, but we are also for the first time in a long time acquiring and retaining more customers. So we really believe there is more room for organic growth, not just both on M and A. And I think it's important for you to see that you see that also in life insurance. When you look at the growth that AZ Life has had, where they have been consistently growing market share on the top of very strong performance. So we also need to force our management and ourselves to really look at the most efficient way to grow that is organically acquiring customers not just increasing prices.

And then we go into the remittance question. So clearly, as I mentioned already, our underlying recurring remittances have been growing. In 2024 by approximately 6% compared to 2023. And I would expect to see our underlying remittances to continue growing basically in line with the with the underlying growth, with the projected growth of the earnings. In addition to this one, so in 2024, we have seen a bit less of excess cash remittances compared to 2023, but I continue to expect this approximately €1,000,000,000 of excess cash to come year on year more or less, but it's obviously lumpy. So you never really know exactly when it's coming. So if I I mean, to give you a guidance, I would expect something like €8,500,000,000 of net remittances for 2025 and then above SEK 9,000,000,000 of remittances for 2026 and 2027. For us to meet our commitment of an above €27,000,000,000 of total cash remittances over the period. Great. Thanks for those questions, Rhea. Go back to the phone lines and Farhad, Farhad Jangazi from Kepler.

You want to go ahead?

Thank you very much for taking my question. Can I just take you back to the CMD and your low Solvency IIRE operations?

Do you have any update or actions that you got planned in 2025 to improve those returns And the second question, just because you've given the guidance now. On the operating capital generation, life S2 operating CapGen was lower in 2024. I appreciate the 20% for 2025, but could you give some guidance on that particular CapGen going into 2025?

So basically, you're right. So to work towards the 24% to 25 of operating capital generation, we have designed you remember that very well. I assume like the capital market toolbox, which was going through a number of dimensions. Against which we had as an example some elements around moving some of our operating entities from the Sundar model to the internal model. We also, I mean, further views around optimization as a part [indiscernible] we are working on all those levers and they are currently in execution mode. When exactly they are going to emerge with exactly what effect, I cannot tell you at this point in time. But we are structurally working along the lines of of the toolbox I had mentioned at that point in time. What on your point on the lower level of of operating capital generation for life, in 2024 compared to previously, you are right. We have seen usually what we see that we have a higher level of the new business in life is consuming less capital versus the old business. That's quite logical because we are growing in our pre line of business. But last year, the growth was so big that basically the new business could not be up absorbed entirely by the runoff of the old business.

So that's why you have seen that effect. So I think going forward, if the level of growth is in line with what we have been communicating, then basically I would expect to have something in line with what you have seen previously.

That's great. Thank you.

Great. Thanks, Farhad. Next question is from Henry Heathfield Morningstar. Go ahead, Henry. Henry, is your line on mute? I know I think we've fallen victim to the IP phone virus. Okay, we'll take the next question from Andrew Crane. Andrew from Autonomous. Ahead, Andrew.

A couple of questions.

I wonder whether you could split the discount in Nat cat and runoff effects between retail and commercial Then the second question on your 26% stakes in the Indian businesses with Bajaj.

Could you give us a sense of what you think the value of those are? Relative to what you're carrying them in the books for?

I think those are very good questions. Mean, on the 20% stake in Bajaj, so this is sorry, 26% stake in badge I mean, you will understand I cannot really comment on that one. As mentioned, we are very interested in our I mean, in the Indian market, For us, it's strategically very relevant. And we are we are looking at ways to strengthen our establishment in India as opposed to anything else. And then I think you are asking [indiscernible] of the combined ratio components, if I understand well on Page B13. We do not provide that split if you have any specific questions, that basically could help us to understand some of the underlying developments. I'm happy to give you some color if you tell me what this is you will be more interested in understanding. [indiscernible] I'll take it offline. Okay, very good. Okay. Thanks Andrew. Next question is from Kailesh Kailesh Mistry of HSBC. Go ahead, Kailesh. Hi there. Good afternoon. Of follow-up questions. One on the capital consumption. Could you just elaborate on B9, how the €1,200,000,000 incremental capital consumption is split between the life P and C and other businesses. And going forward, particularly for the Life business, how should we expect this to grow over the next three years?

I think in response to one of the previous questions, I think the implication of that is it probably does not grow because the runoff should offset the new business capital consumption. Second question is just a follow-up on Will's question around focus on organic growth and also customer retention, etcetera. Could you just talk about how management and distributors incentives and weightings have been altered to reflect this shift in emphasis in managing the group. And one last quick one, if I may. The 7% to 9% per annum core EPS growth target, would that still be based on the €25 EPS or is it the 25.5% that you reported today? Thanks.

Okay. I'll start with the last one. It's basically based on the mid point. So we are not changing our guidance compared compared to the Capital Market Day in terms of commitment. At for this one. And then I think you had [indiscernible] [indiscernible] And then what was the second one? The trajectory for [indiscernible] question. So the question is very good. The first one is in order to really start to drive retention, you need to know the numbers and you need to know what drives that and what doesn't. And we've spent needed quite a few years across products and markets to build the database. Then in incentives are super important. We used to incentivize retention to a certain point, but not great net growth in policies. So what we are in fact doing now across the portfolio is to look at net growth in order to make sure we understand that. So you had a distribution of agents that are very strong in acquiring customers and others are better in retention. You know the hunters versus the palmer pictures. We've learned over the years that it's not just a crude, it's a false. So segmentation and you need to really drive all our portfolios with the same tools.

It took us quite a while to find out how that is. By the way, new Allianz Allianz platform that we now have across 4MARK adds actually functions and that we are feeding in all our other channels. It's also true that we are, for example, incentivizing customer segment or product experts think about group pension experts to not just anymore focus only on that, but having super incentives, we call them boosters, we can talk about that offline, in order to drive retention and cross selling much more strongly. So the change is holistic. We launched that last year We're going to have on our leaderships meeting this year a consistent steering towards that. That. But the requirement is always the same. You have to have outstanding products in every market and we should not be having mediocre stuff You have to have outstanding service capabilities and delivering. We're not there everywhere yet. And you need to make sure that you price not just what you think you need in order to offset inflation, but have the right product and services mix that give clients what they want and what they're ready to pay for. And let me hone in on that One of the biggest, it's an intellectually interesting hopefully comment for you This industry has learned a lot to deal with lep and testing why people are sensitive to price changes.

And what they are ready to pay for. There is a lot of very interesting and sometimes illogical behavior of people why they pay for certain services, why they don't do that. And this is not about taking advantage from people then overcharging them and things that should be overcharged. On, but making sure we give them things that they really value. So that's it's a little bit of a look into the cook We spent a little bit of time on the CMD on it. There's a lot more to come over the next few years. Now, Clementi, you had some SCR growth question Yes, indeed. So to answer your question, approximately if want to take to get a sense, it's like onethree SCR development as a associated to life and then two third national associated to P and C. In the underlying of the 1.2 I think nonetheless, I'd like to highlight maybe one point is that it's very much related to the business we are under right obviously, right? So like then depending on the diversification profile basically depending on the nature of the business and the diversification among the businesses, then you get different outcomes. So I don't think you can use that as a straightforward element to extrapolate what you should expect to see also going forward.

Just to say it's not obvious. Yes. Okay. Thanks, Kailesh.

Henry, let's try again. Henry Heathfield from Morningstar.

Go ahead. Henry, I'm afraid we can't hear you. I think this is if you're on an IP phone, it's not working today. Okay. So we got some follow ups and let's keep these [indiscernible] sharp. So Michael, a quick follow-up from you. Michael Hutner from Berenberg, go ahead.

Thank you. A very quick follow-up. The life seems to be the biggest area for beat. And you said you're still fine tuning how it works. Can you give us a rough thinking of where it's come from? Because it's not all CSM. There's other bits and it would really help. Thank you.

I'm not sure. I fully understand your point. I think what I was mentioning is on the CSR development, right? It's not on what do we expect to see in terms of development of sales, operating profit on the No. So the life profit was above your expectations, 7% or something. And you said it's beating, but not the CSM because the CSM is only part of it. And I just wondered where is the beat coming from? Where is the positives coming from? Because that sounds quite powerful. [indiscernible] basically, we I mean, some of the I think my comments in general was more related to the to the very strong level of growth we have seen, right, which basically then came into the CSMs that is still to be earned, right? And I was trying to give an indication that I don't think that this very high level of growth can basically be anticipated to reopen an entirely again this year for the reasons that we have the exit of [indiscernible] on the one hand and secondly, we had some specific one off into the numbers of 2024 that you cannot take as guaranteed for basically to come through.

That's basically what what I meant mainly. Then maybe to your point, and I think maybe you are alluding to the fact that we had some positive variances at came between the CSM release and the operating profit. Which there is more an effect of so we had some better variances in particular in the fourth quarter that are related to two FX mainly. The first one is that we had a better experience compared to what we were expecting in the French health portfolio that you bought it positively that line item. And secondly, we had some negative I mean correction that took place back in 2023. On our AZ Life portfolio that did not again because they were expecting to be one off in 2023. So those are the main effects that explain some of that Super helpful. Thank you. You're welcome.

Okay. Next for William, go ahead. William from KBW, William Hawkins from KBW.

Hi, thank you. And I'm sorry to drag the call out. I just wanted to follow-up on that response about Viridian, please, Oliver. Obviously, I'm not asking for any deal sensitive information. But conceptually, how could a third party vehicle ever add value to Alianse Leben in Germany when you've already got the massive cost of capital advantage in the free RFP of the original portfolio? I mean Germany is a completely different situation from The U. S. Where you're deploying Sconset Re. So I'm just trying to get clear in my mind what am I missing in terms of what could happen in Germany? Thank you. I think you're not missing anything, but as you well know, I'm not allowed to answer your question even I would be super keen to answer it.

My point was more I can't see how third party cap can help a German life company like yours?

No, it's not about capital efficiency. Think about about asset management income, for example.

And let's go to our last question, which is a follow-up from Andrew Sinclair of Bank of America. Go ahead, Andrew. [indiscernible] billion figure of the CMD in December.

Have you got an updated figure for that? I didn't see it in the back of the there, but my apologies if I missed So basically, I think Andrew, I mean, is that a liquidity buffer. So that's a buffer we think we need to hold in case something really adverse will happen or in case the the markets would be closed, right? So I think our views as I mentioned as well, we have a very sophisticated way of assessing what should be the level of that buffer. It's linked to various type of scenarios and so on and so forth. So our views compared to December have not moved So that's very similar to what we think we need to hold and that's basically very close to what we are holding as well.

Okay, great. Thanks very much. That completes our and A. If you have any follow ups, don't hesitate to get in touch with the IR team. Thank you very much and have a good rest of day. Thank you.

Thanks for your support and interest.

Thank you.

Bye bye.