Ladies and gentlemen, welcome to the Allianz conference call on the Allianz Group financial results for the third quarter of 2025. For your information, this conference call is being streamed live on allianz.com and YouTube.

A recording will be made available shortly after the call. At this time, I would like to turn the call over to your host today, Claire-Marie Coste-Lepoutre, Chief Financial Officer of Allianz SE.

Please go ahead, Claire-Marie.

Thank you very much, Andrew. Good afternoon, everyone.

I'm very pleased to report on another very strong quarter for the group, which is building to an excellent contribution to the year on our three-year—and our three-year plan. Our results are supported by both ongoing top-line momentum and an attractive margin development.

Across the organization, we are working on our three strategic levers of smart growth, productivity, and resilience, with first signs of materialization in our numbers. As you can see on page A4, year to date, our business volume growth continues to be very strong at 8.5%.

As previously, this growth is diversified from a segment perspective, and within the segment, across businesses and geographies, which gives us a lot of strength for the future. Our operating profit is now up by more than 13% versus last year; that number FX-adjusted would even be 13%.

Here as well, we see positive developments in all segments. Our core net income growth is accelerating compared to the first half of the year; year to date, it grows by 10.5% or 8% adjusted for the disposal gains on the Life JV with UniCredit in Italy that we did book in the second quarter, and the anticipated tax effect on the disposal of our stakes in Bajaj in the first quarter.

Our core EPS adjusted for the same effects is now up 10%, which is very strong and ahead of our 7% to 9% target range. Similarly, our core RoE is above 18% and well ahead of our target level as well.

Our solvency ratio emerged at 209%, our operating capital generations continue to be very strong, which gives us flexibility for current and future capital deployments. Given the excellent performance of the organization at the end of September, I'm very happy to indicate that we have adjusted our outlook upward yesterday night, and that we expect to land for the full year at least at €17 billion operating profit.

Of course, the year is not over, and we can still see natural catastrophes or market movements, but clearly, we are very confident in the overall outcome. Turning to P&C and having a look at page A5, here we had another excellent quarter building on previously excellent quarters, achieving another record level of operating profit, now up 15% versus last year, as you can see on the right-hand side of this slide.

Year to date, our total business volume is at plus 8%, which is excellent; this 8% growth is ahead of our assumed medium-term growth rate of 6% to 7%. Approximately half of the growth is volume, rest is price, and compared to the first half of the year, the volume growth has been accelerating from both retail and commercial.

Our internal top-line growth for the third quarter is in line with what we have seen for the second quarter, as is our rate change on renewal for the full book at around 5%. The renewal rate continues to be higher in retail at plus 7% versus commercial, which is at plus 1%.

The competitive conditions, clearly, are differentiated market by market in general, but in general, actually, personal lines continues to see a positive environment, especially in core continental Europe, with retail motor and fleet as an example pricing at plus 9%. Commercial lines remains more resilient in mid-corp than large corporate, but no real significant change compared to the second quarter.

We are as well making good progress with growth initiatives in the retail P&C business, which nonetheless will take time for full impact, as we expect, actually. We see good traction in Germany, in France, in Latin America, in Australia, as an example, and we will keep the focus on continuing to roll out our tools to deliver higher retention, new business, and cross-sell to grow volume.

In commercial, we have good ongoing momentum in some areas, like our partners business, in particular on the health side, and we remain disciplined, as required, where pricing conditions are tight. As you can see as well, we achieved a very good level of combined ratio at the end of the third quarter at 91.6%, with both retail and commercial performing.

Also, as you can see in our materials, this performance is very broadly spread across the portfolio. In particular, I'm very happy with the development of our attritional loss ratio, with more than 1 percentage point progress year to date.

This has been particularly driven by our retail business with the benefit of the underwriting and pricing actions earning through. Also, our constant focus on productivity continues to deliver, with our expense ratio down around 30 bps to just below 24%.

The third quarter was very mild from a natural catastrophes perspective, but we booked no run-off overall, we further increase our reserve confidence during the quarter. Overall, our P&C business is doing excellently.

We see volume growth, which reflects a mix of strong ongoing developments, especially in retail, and targeted growth in commercial as we are also working together with the cycle management. Our profitability is not just a reflection of more benign NatCat, but also very strong attritional improvements, relentless focus on productivity, and significant prudence when it comes to the recognition of run-off.

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

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

Life new business can always be a bit lumpy, and last year, our third quarter was extremely strong, benefiting from various promotions. You may remember that our US Life business was up 60% last year in the third quarter, and we had some large-ticket transactions, in particular at Allianz Leben.

If you want to get a good illustration of our fundamental growth in new business value, you can take the growth over the last two years between 9M 2025 and 9M 2023, which is 20%, which gives an estimated annual growth rate of around 10% FX-adjusted. We also continue to have a strong year-to-date increase in net flows, even with slower new business growth in the third quarter versus the first half.

If you look in more details at the profile of our business development, you will see as an example that we continue to grow at 93% in our preferred lines, that our health business in Germany continues to show exceptional momentum once again, with year-to-date new business profit up 56%. Italy as well is really worthwhile to mention because we see a very good growth of 13% if you exclude the UniCredit business, with the vast majority of that growth coming in unit-linked.

Moving to the contractual service margin, as the net CSM development is the indicator which matters most for us, as this reflects on the stock of profit to be earned by us in the future. The net CSM year-on-year is up 5% or 8% FX-adjusted.

This is well on track for our targets, as is the normalized growth of the CSM, just under 4% at the end of the third quarter. In the gross CSM walk, there is some variances this quarter from the annual assumption updates and the tax adjustments.

This is mainly coming from the lapse patterns we see in the AZ Life business, which is then offset in the net view given the reinsurance that is in place. The trajectory of our net CSM is a better indicator for the business, net of reinsurance.

The non-economic variances and the assumption changes are actually negligible year to date. Our Life operating profit emerged at €4.2 billion, growing 6% adjusted for FX.

This puts us well on track against our targets, and this emergence of operating profit is driven by both the CSM release and improved variances in the underlying. Overall, our Life business momentum is good, our new business profitability is at attractive level, and our IFRS profitability is emerging as expected from a diversified portfolio.

Moving to Asset Management on page A7, here you can see how structurally our business is doing well at navigating the market environment, delivering outstanding net flows, performance, and profitability. We had our best third quarter ever in terms of net inflows at €51 billion, which brings the annualized year-to-date growth rate to around 7%.

Net flows in the third quarter are positive both at PIMCO and AGI across various strategies, platforms, and geographies. Our Asset Management franchise continues to be supported by the performance we deliver to our clients, with 92% of our third-party asset under management outperforming their benchmarks on a trailing three-year basis as of the end of the third quarter.

If you look further in our material, you will see that our third-quarter revenues are up 9% FX-adjusted. They are supported by the higher average asset under management, continued resilience in fee margins at both our asset managers, together with performance fees in solid territory.

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

Overall on Asset Management, we see an attractive, diversified franchise with gross momentum and profitability. On page A8, you can see the development of our solvency ratio, which is characterized by a continued, very strong operating capital generation, fueled by the excellent performance of our P&C business in particular.

This capital generation continues to support our attractive payout, both dividends and share buyback, together with some of our recent capital deployment, like the investment into Viridium or the partnership with RAA in South Australia. As part of our Capital Markets Day commitment, we are focusing on the implementation of our capital management framework, and we are confident to achieve our full-year objective of more than 20% in terms of operating capital generation.

Our sensitivities are almost unchanged at a low level and continue to offer confidence on the resilience of our profile. Overall, we are in a very good position, both in absolute level, sensitivities, and ability to generate solvency through our business portfolio.

While we benefit from some positive one-offs in our operating capital generation this year, there are fundamentally a lot of positive elements to be appreciated here. On page A9, we are actually focusing on a special event we had this year.

As you can see, we are celebrating the 25-year partnership with PIMCO and Allianz, following the completion of our first investment into PIMCO back in 2000. We thought it very worthwhile to do a zoom on this.

Clearly, it has been an exceptional partnership, we are very proud of it, and it has generated considerable value. If we move to next page, we will see its evidence on multiple metrics.

PIMCO has, for instance, grown its asset under management seven-fold, its operating profit nine-fold, the latter now making up nearly 20% of Allianz Group operating profit. PIMCO is as well adding value through its strong management of almost 50% of the group's assets.

PIMCO's franchise as a leading active fixed-income manager has been underpinned by consistently strong investment performance. At the end of the third quarter, as an example, 97% of asset under management were outperforming on a three-year basis.

As I have already mentioned, PIMCO has seen outstanding flows this year and continues to capture a high market share of the flows seen by the industry into active fixed-income strategies, together with the support from some recent initiatives, as an example, the active ETF product I have already mentioned in the second quarter. We continue to look for ways to further increase the synergies between PIMCO and the wider Allianz Group as we leverage the benefits of an integrated asset management and insurance group.

The relationship is very symbiotic. Alongside PIMCO being a manager of our general account assets, Allianz insurance businesses can seed new strategies for PIMCO and help expand distribution.

PIMCO as well is supporting and benefiting from our third-party capital optimization vehicles, such as Conning for Allianz Life in the US. Beyond all of this, and what may be less identified in the case of PIMCO, is how innovative this business is.

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

Looking ahead, and as we outlined at the Capital Markets Day last year, we are very positive about PIMCO's future as a leading active manager with skill in both the public fixed-income markets and across a broad range of alternative strategies, which are a fast-growing part of its business. The focus is here mainly on asset-based finance strategies that support the real economy, as an example, by investing in data centers.

Overall, after 25 years of success, we look forward to many more years of working together, seizing growth opportunities, and delivering excellent performance to our clients. Let me wrap up on page A11.

Clearly, we have an excellent year so far where our delivery momentum continues across all our segments. Together, we are working on executing the Capital Markets Day levers, including the focus on higher capital generation and the strengthening of the resilience.

As part of that, both the fundamentals and the diversity of our business continue to give us confidence even if the environment can be volatile or uncertain. With all of this in mind, and given the performance achieved at the end of the third quarter, we have confirmed yesterday in our ad hoc a 17 to 17.5 range for the outlook—€17 billion to €17.5 billion range for the outlook.

This is subject to the traditional caveats, but clearly, we are very confident. What is important for me to highlight is the fact that we would want to land the year at a level which gives us confidence in our ability to sustainably grow from and to deliver on our planned trajectory.

This may mean that even if we are already today very comfortable with the quality of our balance sheet and underwriting, we are prepared to do as we did in the third quarter last year when it comes to our current accident year or previous accident year bookings. This may lead us to a higher combined ratio for the fourth quarter versus what we have experienced year to date, bringing our combined ratio for the year up versus nine months.

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

Great, thank you, Claire-Marie. We're ready for your questions.

Just to remind you how to do that, if you are on the web call, there's a talk request button on the top right; if you're on the phone, it is star five. Again, some housekeeping: if I could ask you to restrict yourself to two questions, and then we may come back for follow-ups if we have time at the end.

Great. It looks like the first question is from Andrew Sinclair of Bank of America.

Go ahead, Andrew.

Thanks, Andrew. First for me was just on P&C.

You've confirmed you're building more prudence into reserves, maybe even some more prudence to come in Q4. Can you help us put some numbers around that?

It's always tough to quantify and put context to reserving strength. Anything that you can do to give us some color on the reserving strengthening that's taken place over the past year or so?

Then just second question was on PIMCO. Clearly, you talked about the opportunity for PIMCO in private markets.

That's a space which has also probably attracted a bit more scrutiny recently. Just what's your outlook on private fixed-income risks, that market, and what Allianz has done to really mitigate those risks across the group?

Thanks very much.

Thanks a lot, Andrew, for your question. I think you were first asking—because on our side, we need to work on that further, the line is not very good so it was a bit difficult to fully understand.

I think you were asking to provide more color on the P&C reserves, right, and basically what was the level of confidence we have increased. I think please understand that in general, we don't provide detailed information when it comes to our overall level of reserves.

As I have mentioned already, we are very comfortable with the quality of our balance sheet, we have increased the level of confidence in our reserves in the second quarter and in the third quarter as well. When I look forward, we are now in the yearly process to do this fundamental revisiting of our reserve level, and globally at group level, we are also in a very comfortable situation.

What I think is important is we are obviously benefiting this year from a lower level of natural catastrophes, and as much as possible to leverage that environment to further provide flexibility for the future is an important aspect, I believe, for us overall. Then I think on PIMCO, you were more asking questions on the private fixed-income environment overall, or that was more related to our own portfolio in general?

I suppose

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

Yeah. Thanks a lot for the question.

Obviously, we are very well aware of the current discussions which are happening today around private credit or private debt in general. We are very confident with the quality of our own assets.

As we have been invested here for a very long period of time, and we have also a very long experience when it comes to the management of private debt in general. There are different ways to look at the numbers, but clearly, I have provided a full detailed disclosure at the Capital Markets Day on those numbers, and we have also updated those numbers at the end of last year.

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

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

As an example, in the middle-market lending portfolio, we have an average loan size that is lower than €10 million, so that's just to give you a sense on how that looks like. Finally, I think when you think about private credit, we have a lot of insights within the group, right?

We have PIMCO on one hand, but we also have Allianz Trade. This is a very natural place for us to be, and this is why we are extra comfortable, I would say, with our own balance sheet from that perspective, too.

Great. Thanks, Andrew.

Next question is from Andrew Baker from Goldman Sachs. Go ahead, Andrew.

The first one is just on the P&C attritional loss ratio. It looks like there's some noise coming through in the fourth quarter from AGCS accounting change, and I guess, presumably, some continued underlying earn-through.

Just are you able to give us a sense of how you think the attritional will develop, I guess, in 4Q and then into 2026? Then, secondly, on the Asset Management cost-income ratio, clearly, the third quarter was very strong, top line has helped there.

I think the press release mentioned some management actions. Are you able to just give a bit more detail on what those management actions were, and then sort of is Q3 a good level that we should be thinking about going forward, or was there any one-offs in there?

Thank you.

Thanks a lot. Just to start with, indeed, it's good you are highlighting this point.

Indeed, it's related to IFRS 17, we have the so-called non-distinct investment component, and we need to do a small adjustment in the AGCS portfolio to adjust for that effect as part of the IFRS fine-tuning of the transition, if you want. It's just a story of geography, the overall combined ratio is the same, but we have an effect between the run-off and the attritional loss ratio, which is coming.

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

If you want more details on the exact IFRS 17 effect, you can reach out to the IR team; they will explain with pleasure, but I will spare everyone the details of that one. Then on the cost-income ratio of the asset managers, actually, I would not say that there is anything specific that is coming into the cost-income ratio at this point in time for both asset managers.

I think it's really the focus that they are having on general cost discipline, and then the earning-through of some of the growth that is coming through. We have obviously also dedicated projects which are aiming at harvesting some of the benefits, in particular of the technological improvement that are being pushed through by both asset managers into their operating model.

Great. Thank you.

Okay. Thanks, Andrew.

Next question is from Michael Huttner of Berenberg. Go ahead, Michael.

Thanks, Andrew. You must be really happy, Claire-Marie, to most profitable insurer in the world, I think.

Anyway, two questions. The first one is on PIMCO, and actually, three, because I'm not sure.

It's on PIMCO two or Asset Management more generally. Is any exposure to the two names, First Brand and Tricolor?

Then more generally on PIMCO, given the enthusiasm, you put more slides in there about PIMCO, are you closer to buying in the minorities? How much could that cost, and what would be the benefit, is there some numbers there?

Then, you alluded to further progress in retail P&C from the measures you're taking, which I think are mainly to reduce churn, but there may be others. I just wondered if you can talk to a little bit more about that, the potential benefit to come.

I can't see where it would come, because you're already sky-high. Your revenues are up 8%, your pricing is up, your combined ratio is down.

I just wondered if you were to get a benefit from reduced churn, from increased retention, where would it be, and how much would it be worth? Thank you.

Thanks a lot. Thank you very much for your kind words.

Obviously, as an organization, we are very proud of what we are delivering. Thank you, and also, I did not mention it, but obviously, it's the outcome of a lot of hard work by many people, it's nice to hear as well from from your side.

Maybe just to start on the PIMCO minorities. Today, we own 91.

91% of PIMCO. We are very happy with the current arrangement.

We also like the alignment that we have between us and PIMCO partnership, there is nothing additional to report at this point in time when it comes to to that setup. Then, I think, to the specific names you were you were mentioning in terms of credit, we never report anything on a name-by-name basis.

That's very important for us not not to do so, also given the engagements we have with our with our various parties. It's maybe an opportunity just to highlight the very strong performance of Allianz Trade in particular.

You have seen the results as well, Allianz Trade continues to operate at an excellent level of profitability, and and we are extremely confident in the ability of Allianz Trade to to manage in the current environment we are experiencing in particular. The names are mainly related to the automotive industry, right, and that's the sector that is definitely under the radar screen of of Trade, given, the tariff and also the supply chain issues in particular.

Those are the typical names where we have an ability to to see things coming and to react as appropriate to basically secure secure our trajectory. Now, coming to retail P&C and where we are standing today in terms of in terms of growth experience, I would say.

What we see in the underlying of the numbers, and it's maybe interesting to to have a look at, is that our overall, where we see I think, overall, we are in the context of the Capital Markets Day of the execution of the Capital Markets Day strategy, right? The execution of the Capital Markets Day strategy, you may remember, in P&C was in particular going against two angles: one which was the platform play, and the second one was more the the retail and the growth triathletes, where we want to to generate that uplift of 3% to 4% volume growth, right?

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

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

That's important we continue to execute, and we are happy with what we see, but we we still need to to continue to work hard, actually, to deliver fully against our target. Why is it that I am saying that?

Because we also expect that the pricing momentum is going to reduce itself over the over the over the next few years, and we need that volume effect to offset some of the pricing momentum. That's the way to think about it, and that's the way we have constructed, actually, our plan.

Brilliant.

Thank you. Just a little add-on: any idea of timing?

Are you ahead of plan, or just behind plan on this three

to four? It's a bit difficult to answer this one.

I think we are happy with the pickup at this point in time, and I also think we need to continue working quite hard here.

Now, Michael, that was four questions, I'll let that in. You've got a yellow card.

Four questions, big apologies. I'll shut up.

Oh dear. Red card next time.

Sorry.

Okay. Oh, thanks, Michael.

Great. Next question is from William Hawkins from KBW.

Go ahead, William.

Thanks, Andrew. Hi, Claire-Marie.

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

Then question two, sorry maybe to focus on a negative when everything is really so good, but can you just come back and explain, in simple terms, the impact of the lapse assumption review in AZ Life and what this means for future earnings? Because on my side, I see an assumption change for higher lapses as a bad thing, and sharing with reinsurance to make a gross negative into a net positive, again, sort of a mixed message.

I think you've got a more constructive view on what's going on, I just wanted if you could help me get a bit more comfortable with what we're seeing in AZ Life, please. Thank you.

Yeah. Thank you.

I think while we are very happy with the with the development of of our results year to date, right, I think the way to read it is clearly we are, this is very strong contribution to the three-year plan. This is putting us ourselves in also in a very strong position to to deliver against against the plan.

We still have, like quite some time to go. The environment is a complex environment, and we also need to manage the overall pricing pricing environment quite carefully.

Clearly, I continue to see the 7% to 9% CAGR on the EPS being both a very good base and as well also challenging for the organization to deliver. Clearly, we have no intention to revisit that at that point in time.

On the lapse assumption review for for the for the Life for AZ Life, you are right. We did we did revisit our lapse lapse assumption, which is clearly an industry an industry situation.

Because with the the increase of the of the overall yields, there was an increased level of lapses, which is also translating itself on the positive side into higher level of new business of in the industry in general, there is a sort of recycling in the overall logic. We have reflected in the in the third quarter the the lapse level that we see in the AZ Life business at the at the at the current current industry industry experience level, if you want.

That's come that's coming as a negative in term into into the gross CSM. As this book is is, is partially reinsured, and so we get also a partial benefit from the reinsurance we have in place because the reinsurer have to take a share of that negative effect.

What we what we see as well is that we have reflected also some of those effects into the into the investment results, which is also contributing as a as a positive into into the quarter. That's the way to look at it.

The tax effect is a different topic. The tax effect is related to to the German Health business, where we are sharing the benefit where we are sharing the tax effect with our with our policyholder.

This is coming as a negative effect in the gross CSM because we are sharing with the policyholder the future profits benefits out of that one. On the net CSM, it's actually coming as a benefit to us because we are also benefiting from the from the future change in the tax effect on on the on the on the health health portfolio side.

That's the way to look at those two effects.

Thank you, Claire-Marie.

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

Go ahead, Vinit.

Yes, good afternoon. Thank you very much, Claire-Marie and Andrew.

My question, one on PIMCO, please, and one on P&C. On PIMCO, it's quite remarkable, the 97% number that you obviously flagged on slide A10.

I'm just curious has that been driven by some recent push towards alternatives or how would you say this happened, and has this been, in your view, really instrumental in this very record-breaking 3Q that we have seen? Just curious to hear your views on the importance and relevance of this number.

Second question is just on the retail P&C strategy or story. The motor is an important part of that, I think, and motor has been, I thought, benefiting, but when I see 2Q and 3Q combined ratios, I think that the disclosure is they were unchanged at 94%.

I'm just curious, is that something that we should have expected to be getting better, or is that in line with your expectation? Then if not motor, then where is the retail improvement coming from, because I think that is driving some of the underlying improvements, too.

Thank you.

Let me start with the PIMCO question. I think the performance of PIMCO is simply related to the way they are basically managing the environment and assessing the environment, it's a structural performance of the asset management as an organization.

Nothing particular, I believe, to reflect there. The flows, from our perspective, are the outcome of obviously the performance and the relationship that PIMCO has been having over many, many years, and has been developing over many, many years with multiple counterparties.

It's also linked to the environment when it comes to active fixed-income strategies, the fact that the absolute level of rate is a good one, also the fact that the slope of the curve is also a good one, and that there is also an overall positive environment, which is leading to inflows in the active fixed-income strategies. That's one angle to it.

The second angle to it is that there is also good success and pickup on some of the recent initiatives that PIMCO has been sponsoring or fueling, like the active ETF product, which is also contributing to that positive development. Then when it comes to motor, we have been seeing strong improvement, actually, in our combined ratio in motor.

If you look at the year-on-year comparison of the combined ratio in motor, it's now at 94%, as you rightfully mentioned, but a year ago, it was at 97%. We have a very strong improvement coming there, which is in line with what we were expecting to see, also given the underwriting actions we have been pushing through in the portfolio.

We are very happy with the development, and that's definitely one of the driver as well of the improvement in the attritional loss ratio.

Okay. Thank you, Claire-Marie.

Thanks, Vinit. Next question is from Iain Pearce of Exane.

Go ahead, Iain.

Hi, afternoon, everyone. Thanks for taking my questions.

The first one is just on business volumes in P&C. If I take out AGCS fronting and reinsurance and look at the business volume growth, it looks like it's roughly 3% versus 7% in H1.

I'm just trying to square that with the 8.1% retail internal growth number that you've given. Also, just trying to understand why the reinsurance number was so strong in Q3.

The second one was just on PIMCO and on the really, really strong flow number that was delivered. I'm just trying to understand if anything is sort of viewed as one-off in that number.

You mentioned data centers in your commentary. There was clearly a very big data center deal announced in the quarter.

Is that included in the net flow number, and is that sort of an expectation of a strong pipeline for that sort of deal that could lead to these sorts of flows being benefiting in the coming quarters?

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

Then now on the P&C, I think on your question on the overall growth, or maybe I can focus on the volume growth, which I think will give you a good sense overall on where we are standing. What we have in terms of overall internal growth for commercial, we are at 11%, right?

We have in that number, I think the commercial business, you always need to think through that it can always be a bit lumpy, and we always have also non-recurring items that may happen from one quarter to the next, I think that's also the way to look at this quarter. I would not take that as being the forward-looking level of growth you should anticipate in the commercial portfolio.

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

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

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

Great. Thank you.

Thanks, Iain. Next question is from Kamran Hossain from JPMorgan.

Go ahead, Kamran.

Hi, thanks for taking my questions. The first one, just on P&C.

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

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

Thank you.

Yeah. I think indeed, on the frequency benefits on P&C motor, we actually have indeed identified a bit of that, I would say, in an anecdotal manner in some of our countries or operating entities.

We also see in some operating entities actually the opposite. We have not reacted yet at those frequency benefits neither in our reserving nor in our pricing conditions at this point in time, because it's too anecdotal, I would say, and it may very well be that some of the frequency positive effect are simply related to the fact that we had no natural catastrophes, as an example, and then you were simply driving under better conditions, which is also supportive in terms of frequency experience at this point in time.

Then, I think on the Solvency II reform, indeed, so that's going to come up into place on the 1st of January 2027. At this point in time, I have no refined update to share with you in terms of number effect.

We had previously mentioned to you that we were estimated 5 to 10 percentage point positive effect into our solvency II ratio. We are, as we speak, actually, recomputing the effect, I will definitely come back to you with more insights towards year-end numbers.

Thanks so much, Claire-Marie. Oh,

thanks, Kamran. Next question is from James, James Shuck of Citi.

Go ahead, James.

Thanks, Andrew. Hi, Claire-Marie.

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

Secondly, just on the expense ratio in P&C, 23.9%, and I know you sort of indicated before it should fall by about 30 basis points per annum. Are you able to split the expense ratio for me into kind of admin ratio and kind of acquisition/other?

Kind of what's the outlook for the admin side of things? I guess I'm trying to think about the potential for positive operational leverage, given your quite strong volumes in P&C at this point.

Thank you.

Thank you. The lapsing point in the books of AZ Life, so as I have been mentioning, is an industry situation overall, right?

With the higher level of interest rate, actually, there is also a fiduciary duty to the customer, actually, to migrate contracts that have been signed under lower interest rate environment towards the new contracts which are benefiting from the higher interest rate environment. What we see is that it comes in phases, obviously, because some of those contracts still have penalties, right?

You need to wait for the penalty periods to be over before you start transferring some of the contracts. That's why you have this recycling effect, if you want, into the portfolio.

Then, I'm not so sure what was your exact question related to Sconset, but I don't think it has a direct implication to Sconset. I think Sconset had two parts, right?

There was a part which is simply reinsurance, right? Then, when there is a reinsurance, there is this translation of the effects we are seeing into the reinsurance portfolio.

Then, there is a forward-looking part in Sconset where, basically, together with our partner, we are benefiting from the new business being underwritten. Then you had a question a bit on the expense ratio, where we are structurally aiming at this 30 30 bps improvement.

What we see in our third-quarter number on a standalone basis is that our admin ratio moved down from 6.2% to 5.8%, and our acquisition ratio actually moved up from 17.5% to 17.8%. You are right to point out that we are obviously directly focusing and acting with our productivity initiatives, which are leveraging, in particular, automation, AI, where there's a lot of activities that is ongoing in the organization to drive the improvement on the admin side.

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

That's very helpful. Thank you very much.

Great. Thanks, James.

Next question is from Andrew, Andrew Crean from Autonomous. Go ahead, Andrew.

Afternoon, all. Thanks for taking my questions.

Just a couple. You talked a little bit about mid-corp saying that the volumes are growing 5% and the combined ratio is 89.6%.

Could you actually tell us a bit about large corporate, what's happening to volumes, rates, and combined ratios there? Then on the Life side, I think your new business margin is at 5.7% and stable at that level.

Your target is 5%. Why is it higher, and should we assume that you can keep it at this higher level, and therefore, what's the factors which are keeping it there, or what's the factors which might drive it down to the 5%?

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

On the rest of the business, on the other line of business, we are flat year-on-year. When it comes to the rate change on renewal, we are obviously, as seen there as well, we are in negative territory.

What we see is that overall, we are still in terms of pricing adequacy, on average across the portfolio, rate-adequate. We are at a level where we can underwrite the business, but we have to be cautious, and we see that there is quite some sharp price decrease or price decrease in general across the portfolio, but liability, which is maintaining a positive price development at this point in time, and then it's quite anecdotal.

You have other parts of the business, as an example, airlines, that also, finally, is starting to move slightly up as maybe now bottomed in terms of pricing adequacy. Now, on the new business margin, we are indeed happy with our excellent level of new business margin.

Basically, it's related to the fact that we have a different business mix compared to what we have exactly planned with, and in particular, we have a higher share of protection and health into the new business mix, which is coming with a 9.5% new business margin, so that's also explaining why we are above. I would take at this point in time the strictly above 5% as being a good reference point for the future as well.

Thanks.

Thanks, Andrew. We have a couple of follow-ups.

The first one is from William, William Hawkins from KBW. You're on again.

Go ahead, William.

Thanks, Andrew. Sorry, I know it's cheeky to follow up.

Small question: on slide B21, Claire-Marie, what is the Life in-force running yield against which the 4.7% reinvestment rate that you disclose should be compared? I'm really not sure whether your reinvestment rate is implying that you've still got an uplift in new money or a downdraft.

Thank you.

Just looking that number up, William. Give us a second.

Actually, right now, we are running slightly higher, in 2024, we were at 3.7%, and now we are at 4.6% reinvestment yield, obviously, slightly higher is the answer.

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

Indeed.

Okay. Thank you.

It's about 100 basis points uplift.

Yeah. You can follow up, Will, if you want more detail on that.

Lovely. Thank you, Andrew.

Thanks, Claire-Marie.

Okay. Next question is from Fahad Changazi from Kepler.

Go ahead, Fahad.

Hello. Thank you for taking my question.

Can I just follow up on retail, please? It's good to see the 3.5% in the middle of your range, but you're yet to deploy all your tools and get the growth.

I suppose on the other side, as pricing turns, the pool of business that you will be getting will be, I suppose, smaller. We shouldn't get too excited.

We should just stick to the 3% to 4% at this stage of the whole plan. It's probably the likely right answer, but could you just give some color around that?

Two, and just a question on Solvency II capital generation. The Q3 had a non-economic variance in Life.

What was it, and how much was it? On the SCR, it's a tiny, little increase, only 40 million.

Could you give some color around that? I suspect we still should stick to the 2% to 3% guidance you've given.

Your final question, management actions to get us to 24%, 25% part of the strategy and the visibility of any update on that? Thank you.

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

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

Okay.

Sure, and then the second questions are all focused on cap generation, it sounds like. Thank you.

I think on the P&C side, as I mentioned, we are at indeed 3.5% volume growth in the third quarter on a standalone basis. If you look at it year to date, we are at 2.1%, we are not yet entirely where we want to be within the three to four.

I think it's really good first progress, but we still need work to be in the 3% to 4% full execution of the Capital Markets Day actions or landing point we want to see. The way to look at it is that, overall, we also expect, because we benefit still from good level of price increase, right?

We believe there will be, in the coming years, a reduction of price increase, which is going to be offset in our thinking by the volume growth we are capable of achieving. As such, overall for our entire portfolio, right, we are confirming the 6% to 7% overall growth for the P&C business.

That's really the way I would think about it at this point in time. Then, I think on your question on OCG, I think OCG overall, at this stage in the year is extremely extremely good.

We are at 19%. I think we had promised for the year that we will be strictly above 20%.

I think that's the right way to think about it. We have benefit from some variances at that point in time, if I normalize a bit for those variances, I believe the right reference point for the OCG for the entire year is something like 21 to 22 percentage point for the full year.

That's the way to think about it. Now, when you look at the third quarter on a standalone basis, you had a negative effect of the assumption change and of the adjustment of the tax that basically did come through on the Life side, but you had also very positive elements that came on the P&C side.

In particular, on P&C, the fact that we have a very strong performance for the quarter, and as well the fact that we have been working very hard as an organization in deploying the capital management framework, and there is really good pickup within the organization, as an example, revisiting entirely how we are parametrizing, as an example, the P&C business, which has led also to some positive effect into the P&C capital generation for the quarter on a standalone basis. That's why you have a very strong positive on P&C this quarter, a bit of negative on Life and Health.

You had some positive on the Life and Health side at the beginning of the year. Overall, when you step back and you look at where we are now, I would say 21 to 22 percentage point OCG for the year is the right reference, very successful and very happy with the development, but with some nuancing or normalization of the variances.

Yeah. Thank you.

Thanks. A final question.

Michael, you're very lucky. I'm allowing you a follow-up, despite your yellow card.

This is not setting a precedent.

I'll stick to two. Thank you, Claire-Marie.

Viridium and the pipeline for deals, and non-life, the €1,000, which Oliver sometimes refers to, and whether this number could grow because you've just gone into partnership with HUK-COBURG on the garages. That's it.

Sorry,

I'm completely confused. What?

I don't understand the question.

I thought I was doing really well. Viridium, what's the pipeline on deals there, and more generally, what's the pipeline on M&A?

Then you remember at the dinner and I think on previous occasions Oliver has always mentioned this, if you get your policyholder to go to the garage where you have an agreement, it's €1,000 lower charge for the repair. I just wanted A, how successful that strategy is.

Is it still theoretical number, is it actually happening? B, whether your new partnership with HUK-COBURG on those franchised garages, whether that €1,000 has gone up.

Okay. I think the second one is more about our claims initiatives in Germany, if I was to interpret that.

The first one is Viridium.

Is it

Viridium specifically, Michael?

Both. If I have the opportunity, both.

Claire-Marie can answer other deals, but just on Viridium, we should clarify: we're an investor; we don't own or run Viridium, Michael. We don't have a view on the pipeline of deals.

On other M&A, Claire-Marie, do you want to—

No. Basically, on other M&A, there is absolutely no update to be shared with you.

I think the principle of our M&A strategy: it's bolt-on, it's focusing on gaining scale in our P&C businesses where we are not in the top three because we believe we really need to be in that top three to be able to deploy our infrastructure in terms of technical excellence in particular. This is also focusing on Southeast Asia, where we would like to further grow in terms of geographical diversification in particular, and then as required, constantly screening and looking and being open as well if anything could make sense for our Asset Management business.

No update whatsoever on that side. Then I think, overall, there is a lot of initiatives on the side of Allianz Versicherungs in Germany when it comes to claims and claims management and claims steering, as well together with Resolv.

I don't have an update on the specific number you were mentioning, but there is quite a number of initiatives that are very successful, in particular leveraging AI, which allows to do either fast settlement or to facilitate as well the reading of the conditions by the claims handler to accelerate as well, as an example, the indemnification of our clients, but as well, together with Resolv, both for Allianz Direct and for Allianz Verse, really leveraging the system for the steering, and then creating benefits for our clients. This one is in full swing.

I don't have the exact impact available with me, but last time I discussed with both CFOs, they were very happy with the outcome on that side.

Excellent. Thank you.

Great. Thank you, Michael.

That concludes our Q&A call and call for the third quarter. I appreciate it's been a very busy week with results across the sector, thank you for your interest.

If I could do a small plug at the end, just to remind everyone, if you haven't registered, our next Inside Allianz will take place in London on the 28th of November, please reach out if you'd like to attend that. Great.

With that, thank you very much, and good weekend, everyone.