Good morning, everyone. Welcome, everybody, to our first quarter 2025 media conference call. Thank you so much for taking the time this morning to be with us. My name is Lauren Day. I am the Group Head of Communications, and I am pleased and delighted this morning to be here with our Chief Financial Officer of Allianz Group, Claire-Marie Coste-Lepoutre. Our conference call this morning is scheduled for 60 minutes. Claire-Marie's presentation is going to take about 15 minutes, which leaves approximately 45 minutes, 40 to 45 minutes for your questions. We offered a tutorial yesterday on the technology. I hope you were able to take advantage of this. If you have to ask a question during the Q&A session, as always, please press the talk request button in the webcast or star five in the telephone conference.
If you have any technical problems when you want to ask a question, just write an email to media.contact@allianz.com, and we can assist you. Most of you also have my cell phone number, so you can also just text me. I have it next to me. I'm now delighted to hand over to Claire-Marie.
Thank you very much, Lauren. Also, a strong welcome from my side. I'm actually also really delighted to introduce you to our first quarter results. As you will see, we have changed a little bit our format for the call. We have added to our usual set of slides new pages, which are providing some highlights, and we hope as well to leave more time for Q&A. We obviously hope you will like this new format, but as always, we are really happy to take your feedback as well. Let me start on page A4, which provides an overview of the first quarter results for the Allianz Group.
Overall, you can see we had a very good start into the year and that Allianz is very well positioned to achieve its 2025 and its midterm financial targets as we focus on executing on our capital market delivers, driving smart growth, reinforcing productivity, and strengthening resilience. If you look at our top line development, which is up by almost 12%, you can see as well that all segments are contributing to this very good development. We emerge with a total business volume of EUR 54 billion, which is a record level in a quarter. Also, at a record level is our level of operating profit, which is at EUR 4.2 billion. Here again, all segments are contributing. Clearly, our performance is supported by our focus on customers, on technical excellence, and on productivity. Our shareholder net income emerged at EUR 2.6 billion, which is its highest level since year-end 2022.
We have, as you can clearly see as well, a lower translation of the growth of our operating profit into our shareholder net income. This is due in particular to two elements. The first one is that we had a higher level of restructuring in this quarter compared to the previous quarter last year. The second effect is that we had posted an exceptional tax item, which is related to the decision to sell our stakes in the Bajaj joint venture. This will clearly, over time, this transaction will create more shareholder value once we receive and we deploy the proceeds. Adjusted for this tax effect, our core EPS is up 7%, and that's fully in line with our capital market communication. You can also see that our solvency continues to be strong.
This is supported by our good operating capital generation, which has offset the impact of our dividend accrual, as always, and our previously announced new EUR 2 billion share buyback program, which costs 4.4 percentage points of solvency ratio. Let me move to page A5 and focus on our P&C business. Here, overall, you can see that we had a very strong quarter for our P&C business, which is leading to a record level of operating profit. This performance is due to the earning of our growth and to the very good level of combined ratio. With a 7% internal growth, we see good top line development, which is further growing from the strong 2024 base. Out of the 7% of internal growth, approximately 5% is price and 2% is volume in the quarter.
Clearly, the pricing and the volume effects are higher in retail, while on commercial lines, pricing momentum is slowing, as we expected and also as we have communicated in the capital market day. The overall level of combined ratio was very good at 91.8%, even slightly ahead of the first quarter last year, which had seen a very low level of natural catastrophes. Last year, cut load was 0.5 percentage points. This quarter is 2.1 percentage points. What is striking, in my view, is that when you look at our portfolio, it is clearly the breadth of strong performance we see in a very large number of our operating entities, which are delivering a combined ratio in the 80s or in the low 90s, even though the quarter has seen some natural catastrophes, as I have already mentioned. Both retail and commercial are contributing very nicely to our combined ratio development.
P&C as a whole, globally, continues to see good productivity focus, as is also evidenced by the improvement of our expense ratio. Overall, on P&C, we see strong growth. We see the earning of the actions we have undertaken in terms of profitability, which is leading to an operating profit at a record level for a quarter at EUR 2.2 billion. If we move to page A6 and we focus on life and health, there you can see that our customer centricity and our discipline underwriting is leading to an excellent performance across the board. To start with, what is particularly striking in our numbers is the continued strength of our new business production, with sales which are up 17%, again, a record level.
It is at a very healthy new business margin that we are growing at 5.5%, which is driving an excellent new business profit growth of 14%. We are delivering this growth after what was already a great new business in 2024. It reflects clearly for me on the continued strength of our product productions and the strength of our distribution networks. What is very strong as well is that our growth continues to be globally diversified, as I mentioned already during 2024, and you can clearly see that again also in the more details that are provided. Within our portfolio, you will see as well that almost all of our entities have a value of new business growth, which is above 20%. This strong new business and the very healthy dynamic of our inforce have driven a good level of growth in our CSM this quarter.
Clearly, this good development of our CSM will support going forward our profitability as we are going to earn the CSM in the future. As a consequence as well of this growth, we see that our normalized CSM growth is ahead of our yearly guidance at 1.9% and clearly as well better compared to last year. This is leading to a strong development of our operating profit, which is supported by both our CSM and as well the impact of a small portfolio transfer we have done between P&C and Life and Health. Clearly, we have a very healthy dynamic in Life and Health, and from my perspective, this is fueled by many elements we have elaborated on during the capital market day, including the need for trusted solutions both on retirement and health in a volatile environment.
Let's move to page A7, where our asset management business continues to see a good level of profitability. This quarter has seen strong net inflows of EUR 29 billion emerging from both AGI and PIMCO. As you know, the development of the asset under management is also impacted by market and FX movements, and this quarter, the FX effects were negative by almost EUR 56 billion for us, which is leading to an overall stable picture on the asset under management side. Our net flows continue to be supported by the strong relative investment performance of our franchise, which has supported a high market share of industry net flows into active strategies in the quarter. Overall, our revenues grew by 5%. As you know as well, performance fees are volatile. They are low at PIMCO for this quarter against a background of very high performance fees for the first quarter last year.
Our asset under management-driven revenues, which exclude this volatile item, grew strongly by around 10% in the quarter, as you can see supported as well by a very stable third-party asset under management margin. Our operating profit increased by 5% and is exactly at 25% of our full-year outlook midpoint. As you can see as well, we continue our focus on productivity in the asset management segment too, as the lower level of performance fees are barely impacting the cost-income ratio. This journey will continue for the segment going forward. As an example, AGI has announced a strategic reshaping of its business recently, and we have posted in our non-operating results an associated provision to support this in the first quarter. I would like to now look at slide A8 into our solvency profile.
Here you can see our strong capitalization at 208%, almost unchanged versus last quarter, with clearly the operating capital generation offset by the normal dividend accrual and the EUR 2 billion previously announced share buyback. On the right side, you can also see how stable our solvency ratio is under different stresses, with our sensitivities, which are mainly unchanged versus year-end 2024. This is clearly emphasizing the structural resilience of the group. This brings me to the next slide, A9, where I would like to also highlight some of the key elements on how we are managing our performance during uncertain times. As I mentioned to you during the capital market day, we have a clear focus as an organization on structural resilience, and we do so comprehensively when it comes to financial volatility, risk management, balance sheet, and liquidity strength or governance.
Of course, the capital markets context in recent days has been more positive, but we are mindful of the volatility which has been observed in recent months and the debate which persists on the macro outlook. This page is providing a summary on the left-hand side of the key features to remember for the Allianz Group when it comes to the market, to FX or macro sensitivities in the current volatile environment. I will not go through each line item in detail, but I think it provides you with some good elements highlighting our confidence in underlying asset and liability positioning and the options we have for risk mitigation. Clearly, as an organization, we are very proactive. We constantly monitor, we stress test, we take actions as required. Also, our diversified business model, the strength of our franchises, and the management toolbox provide strong downside protection to our organization.
While it's clearly important to focus on managing risk in volatile times, our strengths can as well allow us to take advantage of dislocations or capture opportunities as well. This can be to fuel our growth or to promote our strong life and asset management product propositions, for example. Let me now conclude on slide A10, where I want to stress out our strong performance in the first quarter. The first quarter has seen positive contribution from all segments, delivering again a record level of operating profit fueled by good growth and underlying productivity. This very good start into the year allows us to reaffirm with confidence our outlook for the full year at EUR 16 billion plus minus EUR 1 billion, with good resilience in the context of any potential volatility. Those results are as well in line with our capital market day targets.
If I adjust for the effect associated with the posting of the tax effect linked to the by-charge transaction, this transaction will over time create value for our shareholders, with the expected proceeds creating more opportunity for accurate deployment and financial flexibility. We are focused on executing our capital market day targets, with the first quarter already reflecting positively on that journey and also delivering plenty of good examples of us focusing on higher organic growth, improving capital generation, and ongoing productivity improvements. I want now to take the time to thank all our employees for their work and for their dedication in producing those results. It comes with a lot of focus and love, as Oliver will also say it. With that, I'm very happy to take your questions, and I hand over back to you, Lauren. Thank you so much, Claire-Marie.
Now we have time for our Q&A session. I hope you noticed that you have a lot more time for it. I just want to remind everyone what you have to do. It is to press talk request in the webcast and star five in the telephone conference. Basic hygiene. Mute the YouTube application if you are using it to avoid an echo. If you have any questions, you can dial in. If you have issues with the webcast, you can dial in by phone. If you still cannot reach us, you have a technical issue, media.contact@allianz.com. Now I am pleased to take the very first question from Michael Flämig from Börsenzeitung. Michael, go for it.
Hello, Mrs. Coste-Lepoutre, Mrs. Bayer. I have three questions, please, regarding the tax burden in India, the retail business, and car insurance in Germany. First one, could you please explain the kind of taxes on the exit from the joint venture in India? Second, price increases in the retail business, you mentioned it, of the property and casualty segments remain high. Is this effect now coming to an end, as can already be observed in the corporate customer business? My last question concerns car insurance in Germany. How do you assess the competitive situation there, and how are the portfolio figures developing? Thank you.
Thank you very much for your question. Let me start with the Bajaj tax effect. I think this tax effect applies to the amount of equity we had invested into Bajaj. The logic of this tax adjustment is pretty clear. As we are going to leave the joint venture, what we thought was going to emerge in terms of future profit under the shape or form of dividend, which are not taxed in India, are now expected to emerge in terms of profit on the transaction, which is then taxed in India locally at 13.6%. That is basically this delta between emergence of different shape or form of emergence of profit on the equity stake we are holding in Bajaj Allianz. The second question you were asking, maybe I start with the third question on motor insurance in Germany. We have seen very disciplined development in the market in Germany. As you know, there is a need because we continue to see inflation trends in the motor business in particular. There is the need for this disciplined approach in the market.
As you know, as an organization, we have taken strong steps ahead in terms of technical excellence to address that, also with what we are doing in terms of actions on the claim sides to mitigate the effect of the inflations, which allows us to be really well positioned in the overall context of the German market. Basically, these lead us to having a very, very successful one-on-one renewal on the motor side for the German entities, which has achieved its best-ever one-on-one renewal in motor this year, actually building on already a very strong renewal last year. The price increase in retail, you were asking. Indeed, we continue to see a higher level of price increase in retail this quarter overall. I mean, and it is very nuanced by line of business. Its high is a 10% overall increase in motor.
What we think is that it's very nuanced, depending on very nuanced market by market. We have some markets where we see less of those positive developments. Typically, U.K. will be one example of that, where we have started to see softening of the pricing in retail. This is then really reflected in the type of portfolio actions we have taken as we remain very focused on technical excellence overall. What we see is that in many markets in Europe, the focus on being very disciplined is maintained in retail as it's required, again, linked to the inflationary trends we see.
Thank you very much. Great.
Thanks, Michael. Next question comes from Alex Hubner from Reuters. Go ahead, Alex.
Are you hearing me?
Loud and clear.
Perfect. Great. Yeah, I've got two more questions on this India issue. Can you please tell us how large the tax effect was so that we can calculate this better? Can you possibly update us on the search of successor for Bajaj? There have been reports in March that you have a preliminary agreement with GEO Financial. I guess maybe you can tell something about that. Thank you.
I mean, the exact tax effect of the Bajaj transaction into the quarter into our numbers is around EUR 95 million for the quarter on the non-operating, so on the tax line, clearly. I think over time, what is very important is that you have in mind that once we get the proceed of the transaction, this will be offset by the proceed of the transaction when day comes, right?
On your second question on how we are thinking around the Bajaj transaction, what is clear is that we like a lot the Indian market, and we know the Indian market well. We have been invested in the Indian market for a very long period of time. We see potential, we continue to see strong potential in the Indian market, in particular to support the government initiatives towards insurance for all by 2047, which we want to contribute to. We were not entirely happy in our setup with Bajaj because we were limited in the minority role, and we wanted to have a stronger positioning into our activities in India. That is the background for it. We are in very good terms with the Bajaj teams, and we will be exiting along the lines that we have already communicated.
Again, we are thinking of deploying over time part of the proceeds into the Indian market, and we will come back to you later on once we can communicate in more details around that.
Thank you. Thank you, Alex. Anything further?
Not at this stage.
Thanks so much. Thanks so much for your questions. Our next question comes from Stephan Kahl from Bloomberg. Go ahead, Stephan.
Yes, hello. I hope you can hear me. I have a quick question on a development from last night. We and others reported that Allianz was looking at the insurance arm of Royal Automobile Club of Western Australia. Last night, that went to IAG, to a competitor. Can you give us maybe some flavor on why Allianz did not make this purchase in the end? Was it a matter of the price? Yeah, maybe you can give us a little bit of flavor on this current development from last night.
As you know, we never comment on M&A rumors, so I will not deviate from that here. Maybe what I can do is to remind you of the logic we are following when it comes to M&A and what is the focus we are having when it comes to M&A, right? I think there are typically three core focuses we are having for our M&A interests. The first one is to increase our market share, in particular in markets that we like and where on the P&C side, we are not in the top three usually because we believe that to be in the top three is a very important element for us to be able to deploy, if you want, the sort of technical excellence toolbox of the Allianz Group. That is definitely a focus we have. Then looking at diversification. Typically, also, the smaller deal we did in Australia last year is perfectly going into that logic of creating diversification into our portfolio to capture the right profile. Maybe first aspect, this goes on the P&C side diversification.
The second one is around going into markets where we see potential, and in particular, Southeast Asia is definitely a focus for us. The Singapore deal goes into that logic, but you see plenty of that illustration also in some of the smaller deals we have been announcing. The last one is around more convergence between asset management and life and health, also to support the logic of what we have communicated in the capital market day. Viridium was also a deal that is going into that logic as well. You know, as a CFO, I'm very focused on making sure that we have a short payback period. We have double-digit IRR for the type of deals we are making. That's the way we are thinking about M&A in general.
Thank you very much. If I may, one more question. Are you looking to grow market share in Australia? How important is a market for Allianz?
Yeah, so basically, definitely, we are looking at growing market share in Australia as we have. I mean, I think maybe last year, we did some acquisition in Australia along those lines. We see plenty of opportunities also for organic developments in Australia, and also the team is very innovative and has been actually also pursuing some very good partnership more on the digital side with some of the Australian players. I think, as an example, very recently, Allianz Australia has developed a digital distribution tool with carsales.com, which is Australia's largest used car marketplace. This is a very good illustration on how, as well, we are organically gaining market share in Australia. I think one of the topics in Australia is also making sure that we optimize our portfolio from a NatCat exposure perspective, and that was definitely the logic of one of the deals we did last year.
Thank you very much.
T hanks, Stefan. I hope that that context is helpful. I have Alex. I see you back in the queue. Do you have an additional question, Alex Hubner from Reuters?
Yes, I do, if I may.
Yes.
If you hear me?
Perfectly.
Just curious about whether there is some update as well on the situation around income insurance in Singapore and the future of your Allianz Global Investors issue, M&A-wise.
Okay, Alex, no problem. Claire-Marie will take that. You can imagine, I think you're hearing common themes of growth and discipline. Claire-Marie is nodding at me. She's going to take the question, but I'm glad you're asking. I think you'll hear a common refrain that I think you have the context you need. Please go ahead, Claire-Marie.
Yes, I think on the income side, right? I mean, you know the background from last year, which I think I explained also in the previous call, so that's really unchanged, right? We like the Singaporean market. We are also convinced we are a very good, I mean, we are a very good contributor to the Singaporean market, and there is more we can do. That is definitely an area of interest. If there are more things happening at one point in time, we will be further looking at that. We are also looking more broadly at further opportunities in the Southeast market in general. I think you were asking around AGI, right?
I mean, maybe also maybe stepping back again on the fact that we have communicated in the capital market day that we really like our business model and we like the fact that we have three pillars. We are convinced, and this is something you see also nowadays, how the three pillars are contributing to the structural resilience of the Allianz Group. The fact that we have asset management is for us absolutely important and is also very important for us to be able to do our business the way we intend to do our business. When you look at the profile of our two asset managers, they are clearly very complementary. PIMCO is much more US-oriented from a geographical perspective, while AGI is much more Europe, Asia as well. In terms of product offerings, they also offer very complementary product offerings.
Clearly, we like our asset management setup, and we are looking rather at extending our asset management setup as opposed to reducing our asset management setup. That being said, and you have heard also that we are always constantly looking at ways to optimize our operating model with, I mean, ways to create higher shareholder value creation. We will always be looking at different options for all our entities, I would say.
I think that answers it, Alex.
As far as possible.
Yeah, exactly. Exactly. Still, a clear and consistent strategy and logic, I think, gives you a pretty good look at where we are looking at opportunity and why we have the confidence to do so. Thanks very much for asking.
I don't have anyone else in the queue, so I'm going to just say again, if you'd like to go ahead, just press talk request. Give you a few seconds to go into the queue if you have any further questions. I'm seeing a frowny face in the queue saying no further requests, which makes me think that we might have answered your questions already. Just give you another second. I think, as you all know, if you have questions, if you look at the transcript and you listen to this and you go through the materials, section B, which we didn't cover today on the call, but is all the information as it was that you're used to. If you go through everything and you have questions, you know how to reach us, please write us an email. We will respond to all of your questions.
Oh, there's someone in the queue. Anne-Christine Gröger from Versicherungsmonitor. You have the line. Please go ahead with your question. Oh, Anne-Christine is out of the queue. No pressure, no pressure. If you have unanswered questions, you can write us an email. We will give you the full context for what you want to know. Maybe I'll just take the opportunity now to thank you for your participation. Thank you for your interest in Allianz. Thank you for doing your homework and covering our company so completely, thoroughly, and thoughtfully. I would like to again say, for everyone, all of the journalists on the line today, I would like to again warmly invite you to our media engagement event in July, July 15th. You know about it. You have received invitations to it, but I want you to know how warmly welcomed you will be.
Thank you so much for your participation. Thank you to Claire-Marie and the team who support us. Have a great day.