Welcome to today's telephone conference of Allianz SE on the occasion of the publication of the financial results of the first quarter of 2020. For your information, this conference will be recorded. At this point, I'd like to hand over to Claire-Marie Coste.
Good morning and welcome from my side to today's telephone conference on the results of Allianz SE Group in the first quarter 2020. As usual, our CFO, Giulio Terzariol, will guide you through the quarterly results and then answer your questions, and with this, I would like to hand over to Mr. Terzariol. Good morning, Mr. Terzariol.
I'm delighted, as always, to present to you the figures of Allianz for the first quarter. Before I enter into the figures, I hope that you're all healthy, and not just you, but also your families and your friends and next of kin, and that's the most important result, of course. But with this, I would like to switch to page three, where we have the most important KPIs for the quarter. Overall, the first quarter 2020 was, of course, not a normal quarter, but I would say that in spite of a difficult environment, we've kept ourselves in a good position. Total revenues grew by close to 6%, driven by Asset Management and Life/H ealth. The operating profit went down EUR 650 million, but of course, this can be traced back to the effects of COVID-19.
On this slide, you can see the effects of around €700 million from this, €300 million from Life/H ealth insurance. That doesn't have anything to do with mortality or other things like this, but this is the effect of the market developments on the capital margin. And then €400 million in Property and Casualty. These are losses in the actuarial area in underwriting. And later on, when we talk about P&C, I will explain a little bit more what's behind these figures. But overall, the €2.3 billion operating profit, if we take them and adjust them for the €700 million effects from COVID-19, that would bring us back to an excellent underlying performance, again, of €3 billion underlying operating profit. The shareholders' net income, as was expected, has been influenced by the development in operating profit.
Here, once again, if we adjust this for the effects of COVID, we would have had a shareholders' net income on the previous year's level. So overall, of course, there is the negative impact from COVID-19, but the underlying performance was quite solid, actually, and we had to overcome some one-off effects. But all in all, it was a robust result in the first quarter 2020. Now, on page five, you can see the shareholders' equity according to IFRS and our solvency ratio. The shareholders' equity according to IFRS went down approximately EUR 5 billion, and that was due, above all, to the development of underwriting gains from capital investments, which doesn't come as a surprise if you look at the market developments in the first quarter. The solvency ratio went down 23 percentage points, and it's now at 190%, which is still a very good level.
I think that was due to the reduction of the Solvency Ratio, above all, due to the developments in the equity markets. If we go to page seven, we can see the drivers behind this Solvency Ratio development. All in all, what's important is that the operating organic capital generation is solid, with plus 5% business evolution, and that speaks for the sustainability in the development of our Solvency Ratio. You can also see that the effects from market developments had a huge impact with minus 28 percentage points, and that was, above all, due to the development of the interest rates and also to the volatilities of the equity markets.
But all in all, a solvency ratio of 190%, which is a good level, a strong level, and is also a good basis if we have any opportunities, if we see any opportunities in the future. The situation seems to stabilize when it comes to the capital markets, but it's still early days, and there might be additional turbulences and volatilities. But with the solvency ratio, we're well prepared for volatilities in the capital market. With this, I would like to switch to the individual segments, starting on page nine. Overall, in Property and Casualty, we had solid growth, which is important to us. The growth rate was based on price developments and less on volume increases. That is usually good and promising for the stability of our business.
And if we then look at the individual countries and segments, you can see that we have good price dynamism in the U.K. and also in Spain, even though the Spanish volume decreased. So that's why you see a decreasing growth rate. And then AGCS, we even had double-digit price increases. In Italy and with Euler Hermes, you see rather negative growth rates. That was especially due to COVID-19. Euler Hermes, the negative growth rate stems from the COVID effect. And in Italy, also until February, the figures for Italy were quite flat when it comes to the growth rate. And then in March, in line with the lockdown, the premiums in Italy decreased. But all in all, 1.8% internal growth from price developments. So we're quite satisfied with the development in P&C in this regard. Page 11 shows the development of the operating profit in P&C.
Our operating profit decreased by around EUR 400 million or 29%, and that was due to the development in the underwriting results and the development of our combined ratio. As you can see, the combined ratio rose by 4 percentage points, but that shows the COVID impact that put a burden of EUR 400 million on the underwriting results. If we translate this into the loss ratio, this is 2.5% of the loss ratio. In addition to this, we had a higher burden from natural catastrophes of 3.6% compared to the 1.1% in 2019. That is to say, if we look at the loss ratio for the ongoing year and adjust it for the COVID and the higher NatCat impact, then the loss ratio would be 1 percentage point better than last year. In this, you can see that we have an improvement in this regard.
Also the expense ratio improved compared to the previous year. If we adjust this for the effects of COVID, it would have been even better. All in all, we have an improvement of 1.8 percentage points of our combined ratio if we adjust it for the one-off effects. All in all, good underlying performance. Of course, we have to deal with the effects of COVID-19, but for the sustainability of our business, we have to look at the underlying performance and adjust that or eliminate these special factors. Now, on page 13, you can see the development in the different OEs. The combined ratio in the U.K. stands out, and AGCS in Australia as well.
So in the case of Australia, where AGCS's combined ratio is above 100% in the UK, then in Australia, this is due to the natural catastrophes in the UK and also in Italy and also in Australia, where we had a high burden of natural catastrophes. So taking the NatCats out, the combined ratios would be closer to expectations. In AGCS, we also see a high combined ratio of 117.5%. And the reason in this case are not natural catastrophes, which are higher than this previous year, but not higher than we would expect for AGCS. But here we see the COVID-19 burden. As I mentioned before, all in all, we have €400 million of losses from COVID and more than €200 million of this from AGCS.
So if we look at, if we adjust the AGCS result for the COVID effects, that would have led to a combined ratio of 100% at AGCS, and that would have been in line with our expectations. Then another comment, the combined ratio of Germany was affected by COVID by around four percentage points. So we had a little less than €100 million in losses due to COVID-19. So out of the 300, a large part of the 400 million stems therefore from AGCS and Germany, about one million burden that we have overall from COVID-19. Now, page 15 shows the investment result in P&C. We have a decline of around 17 million, 70 million here, which was mainly due to fluctuations in currencies, and that is something that occurs in situations like in the first quarter. But all overall, the current yield remains stable.
With this, I would like to switch to page 17 and talk about the figures for our life and health insurance business. First of all, you can see that the new business margin grew by more than 2.7%. That is to say, in the first quarter, we didn't have any or just minimal effects of the COVID-19 crisis when it comes to production. What's important, the new business margin asset remained stable at 2.7%. If you look at the market conditions, that is quite a good result, actually. Of course, last year, we were at 3.5%, but interest rates one year ago in Europe were up 80 basis points compared to today's level. In the U.S., the interest rates were even 100 basis points higher than today.
So overall, if you look at the development in the interest rates, the new business margin of 7% is a good, shows a good performance. And we continue to work on our business mix. And you can see the production of capital-intensive products declined significantly to 11%. So in this sense, we keep on making progress towards capital-efficient products. On page 19, we show the development of the operating profit in Life/H ealth, and that went down by around EUR 300 million or 25%. That stems from the development in the capital markets. And of course, that was linked to COVID-19. In the month of March, the volatility in the markets was extremely high, and that, for example, drove down the investment margin. And there are also effects on the impact of change in the AC. So these effects stem above all from Allianz Life in Allianz Life in the U.S.
And also the additional cuts in the variable annuity business and other units also had some impairments to deal with. But the main part of the reduction stems from AV Life. So operating profit was declining, as could be expected in such a situation. But a result of more than €819 million in operating profit, we once again proved that our life and health segment has a great deal of resilience to offer. Page 21, you can see the selected units. When it comes to the value of new business, here we have a decline of around 20%, and that was mainly due to the changes in the margin. But as I mentioned before, the margin against the backdrop of the current situation was still good, and overall, we're quite satisfied with the development of our profitability of new business.
Now, when it comes to the operating profit, you can see that most of the OEs posted a decline. I already talked about AV Life in the United States with a decrease of 78%. And what also stands out is Germany Health, PKV. You can see the effects of impairments. And in the case of Spain, here we had the final consolidation of our share in Banco Popular. So that was a one-off effect. The other units, some of them had higher operating profits, or if we have a decline compared to the previous year, which against the current backdrop was still quite good. Page 23 is a technical slide, but what we want to show on this page is that the difference between the ongoing yield and the guarantees has remained stable, which is important because it speaks for the sustainability of our investment margins and our harvesting.
Negative, where we see the effects of the hedging costs in AV Life and also the effects of the basis risk in AV Life. And the impairments also are included here in this position. And a large part of this stems from the contribution from the profit sharing under IFRS and was compensated through that. But what's important is that the gap between guarantees and current yield remains stable and this will set up over time. And with this, we come to page 25 and the development in Asset Management. At the end of March, we had 2.1 trillion assets under management, 1.6 trillion of that assets, which third-party assets under management. And if we look at the development in the first quarter, you can see that the third-party assets under management went down around 8%.
We can also see that all asset classes and all regions were affected to a certain degree. You can see -13%, it says more or less. In a crisis, the size of which we had in March 2020, diversification doesn't really help if you have such a major crisis. On page 27, you can see the drivers behind this. Overall, we had net outflows of around €46 billion, and they almost all stem from March because up to February, we had net inflows. With the start of the crisis, it led to these outflows that had a clear influence. We have to say it's certainly not Allianz specific. We are just retail investors in the crisis, people just put the money aside. We assume once the situation will stabilize, that the inflows will return.
At the end of March and also in April, we've been able to perceive, or we were able to perceive a clear stabilization of the trend. If you look at the development of the market value combined with the foreign exchange effects, the value went down around €80 billion. That's got to do with the share price development and with the fact that the spreads increased. In April, we already saw a certain recovery up around €40 billion-€50 billion. There is a certain volatility in the market. March was quite a low point, and we've recovered to a certain degree. We will need to see what happens over the course of the year. Page 29, that's quite interesting. I just said that the assets under management for third parties declined, but the revenues went up compared to the previous year's level.
What's behind this? The average asset base in the first quarter of 2020 is significantly higher than the asset base which we had in the first quarter of 2019, 13% higher even. The average asset base in the first quarter of 2020 is even higher than the asset base at the beginning of the year. March was difficult, but overall, the conditions for our Asset Management segment were quite good. This means that revenues were significantly higher than a year ago. That holds true above all for PIMCO, Allianz, and AGI. We were a little bit weak in this regard. If we look on page 31, that means that the operating profit significantly increased by close to 20%. That stems from PIMCO with a growth rate of over 20%. Revenues went up significantly. The cost-income ratio improved as well.
That explains the excellent performance in PIMCO. In case of AGI, they also showed a good performance against the difficult backdrop, difficult environment. They posted a stable operating profit, and we're also able to even decrease or improve the cost-income ratio. It's a good performance in the first quarter. I would even say very good performance of Asset Management in the first quarter when it comes to the operating profit. Of course, we had then the volatility towards the end of the quarter, but we've seen stabilization in the meantime. We think that from an operating point of view, we're well set up. If the market developments, we are also prepared for market developments in every direction. But the underlying performance is strong. Page 33 shows our corporate segment compared to the previous year. We have a change of around EUR 60 million.
That's due to foreign exchange volatilities. And that's also a contribution to a Solidarity Fund in France, which we contributed to in France. And that was posted here in the corporate segment. Page 35, as always, the non-operating items. All in all, we had impairments, especially on equities, but these were balanced by profits from the sale of, especially from the sale of our participations in the joint venture with Banco Popular. So on net, those two positions set each other up. Then we had restructuring costs, which were higher than in the previous year, countered by improvement in net fees of 3% due to a special effect in the U.S. And all in all, I can say the below-the-line items didn't have that much of an effect on our annual surplus or the whole effect on our income stems from the development in operating profit.
Then finally, on page 37, yes, it certainly was a difficult environment, a challenging environment. All in all, the performance of Allianz in the first quarter, from my point of view, was really robust. If you just look at the figures, €43 billion in revenues, €2.3 billion in operating profit, €1.4 billion shareholders net income, and a solvency ratio of 190%. In addition to this, we also paid €4 billion dividends and €750 million for our share buyback. Overall, I said a robust performance. As always, I would like to thank our employees cordially for such a result. They've been doing a great job, especially under these difficult positions. 80% of the people have to work remotely, and everything worked really well.
So I would say that the efforts of our employees against these challenging backdrops have to be even more valued than usual. And I always value the work of our employees. And with this, I would like to hand over to your questions.
Thank you very much. Ladies and gentlemen, if you want to ask a question, please press the asterisk button and the number one on your phone. Please make sure that you've muted your phone so that your signal can reach our devices. Should you realize that your question has already been answered, you can withdraw the question by pressing asterisk two. Please remember, press asterisk one in order to ask a question. We will wait for a short moment to get your questions. Our first question today comes from Michael Fleming from Börsen-Zeitung. Please.
Yes. Good morning, Mr. Terzariol. Mr. Bäte, I've got three questions altogether.
First of all, on the operating results, Solvency II, and third on Asset Management. As far as operating business is concerned, COVID, which from your point of view are the drivers for burdens at Allianz in the second and third quarter, as far as you can see that? Solvency II, 139%, has declined substantially. Have you secured that? And is that the lower limit that we're seeing at the moment? And third, Asset Management, how have flows and profitability in the second quarter developed so far in the second quarter? What do you expect for the future? Thank you.
Yeah. First of all, good morning. As far as COVID is concerned, we expect as far as the underwriting result is concerned for the remainder of the year in the area of Entertainment, we will certainly see losses. We would expect losses.
We've booked a little bit more than EUR 200 million in the first quarter, but these numbers will probably double in this area. So we're thinking about a burden of some EUR 400 million in this area. And of course, there is a certain amount of uncertainty, but EUR 400 million burden for Entertainment is a solid figure, we think. Then business interruptions. We don't expect that there will be significantly more losses, but here and there, there will be the one or the other claim, the one or the other loss. But altogether, it shouldn't be too bad. Euler Hermes Credit Insurance, we expect for this year that we're not going to book more operating profit than we've already booked. So we reckon with an operating profit of just below EUR 100 billion. But this has to be taken with a grain of salt as well.
And where we can also see a burden is at Allianz Partners because people do not travel. So we have to assume that the revenues are lower than what we usually expect. On the other hand, we should also expect that the combined ratio is better. And you can certainly discuss about rebates in some situations. The rebates are already priced into the contract because they depend on kilometers as far as the auto business is concerned. And so far, you'll just have to see how the situation develops and how long the COVID situation, the COVID uncertainties will last. So it's very difficult at the moment to look into the future. But you have to reckon with these EUR 400 million burden that we've seen in the first quarter.
As far as the underwriting result is concerned, that might not be the whole burden that we're going to see until the end of the year. We will definitely also see further burdens for the future. As far as the solvency ratio is concerned, yes, the solvency ratio has decreased in part. That is to be expected in such an environment because there are certain sensibilities to the developments of the equity markets. With 119, we're still pretty solid. It might go even lower if you go back to page five. I don't know if you have page five in front of you. You can see the sensitivity in our solvency ratio. It can go down further. I think we're more secured than we were at the beginning of the year.
That also happens automatically because the hedges that we have, they are more effective if the shares go down further, the share prices go down further. We also have some EUR 5 billion of quoted shares that we sold. So altogether, we're more secured now. If you think about the sensitivity towards shares, at the beginning of the year, it was 15, and now it's minus 12. So you see how the sensitivity declines, basically, but it obviously doesn't go all the way down to zero. We always think in terms of ratios, but we should also think in capital. So the difference between our own equity and the capital requirements is EUR 37 billion. So I think we do have a big buffer at EUR 37 billion in order to withstand and to weather further shocks. And then you had a question about Asset Management as well.
We've seen more stabilization even towards the end of March. Net outflows happened in the period when all the markets went crazy, basically. And in the second quarter so far, the net inflows have amounted to some EUR 3 billion. That can obviously also change, but there is definitely some stability flowing in. And on top of that, the values of the investments that are under management have also increased because the share prices have developed positively. Also, the spreads have become greater. And so we've made up for some of the losses. So if we add some stability now, then that also applies to the prices. We're becoming a little bit bullish as far as Asset Management is concerned. But unfortunately, it's still a bit difficult to say at this time what might happen.
Thank you very much, Terzariol. Next question, please. We come to a question from Thomas Magenheim from Stuttgart. Please.
Good morning, everybody. I've got several questions. First of all, another question about what you just said, Mr. Terzariol. I've got a hard time counting what you see in future burdens, Q2, Q3, EUR 700 million COVID burden we had in the first quarter. And what I seem to have understood from your answer is that you're expecting at least another EUR 200 billion on top of that, but I might have gotten you wrong there. And beyond that, we cannot say at the moment. But can you give me another absolute figure in terms of what is certain to come in terms of additional burdens and absolute numbers for the next couple of quarters? Then in Germany, there is a lasting discussion about business closure policies where restaurant owners would like to renegotiate this Bavarian Compromise, the so-called Bavarian Compromise.
Are you open towards that, or do you say that we're expecting court cases? And then the third question, you mentioned a Solidarity Fund in France. I assume that is the industry-wide assurance fund in France that I've heard about. Can you give us more information about that? And from your point of view, is something like that also appropriate for Germany? Would you stand behind that? Would you even be a driving force for something like that in Germany, or would you hold back?
Okay. Let's start maybe with the Solidarity Fund in France. That was not only for assurance, but that was for all companies. And therefore, we booked that in corporate. And so not only specifically for insurances, I would stand for such a Solidarity Fund, but for all companies, not only for insurance. I'm not necessarily in favor of it, I would say.
But I'd say if policy moves in that direction, I would respect such a decision. I wouldn't say across the board that I'm the one who suggests something like that. You have to see how corona is going to impact the overall economy. And at the end of the day, these are decisions that politicians will have to make. And we will follow these decisions that are made by the politicians. I wouldn't advocate that. As far as business closure insurance is concerned, and you called it this Bavarian Compromise, we think that this is a good solution. And therefore, we think that such a solution should also be implemented on a federal level. There is openness towards other solutions. There is always openness, but we think this solution is a good solution.
Yeah, we think that this is really something that we should implement on a federal level across Germany. And then you also ask, and I understand your question, what about the absolute numbers? I'll give you a relative number here. And I would say it's very difficult to say to give you an estimate for property casualty. But property casualty, I would expect that as far as the underwriting result is concerned, that we have to reckon with a decrease of operating profit versus our outlook of some 15%-20%. Our outlook for property casualty was €5.6 billion. So we could expect 15%-20% lower due to COVID or due to the underwriting result. If you translate that into a burden for the operating profit for the group, that's about 10%. That amounts to about 10% or 14%.
But then, sure, we also have to observe what might happen on the capital markets. So far, I've been relating to the underwriting result. And it is very difficult to say here what's going to happen to the capital markets. We might make up for some of the losses. And maybe the impact on the capital investment segment is not going to be so big, but we might also see further turbulences. You also have to expect that given all the discussions about dividend payouts, that we might get less dividend. That is also going to be a burden potentially. But as far as the underwriting result is concerned, I can tell you that our expectation is that we're expecting some 15%-20% below our outlook for Property and Casualty for the group that would make some 10%.
Thank you very much.
Y ou're welcome. The next question, please.
Okay. The next question is by Alexander Hübner, Reuters. Please go ahead.
Good morning. Well, that was almost the question that I wanted to ask. It's almost what my predecessor asked. So let me just check back. I understood correctly that when it comes to the underwriting result, the group-wide you're 10% below your plans. And anything that might come in addition would be burdens from capital investments. And can you also give us an outlook? Or don't you assume that there will be any effects on Life/H ealth and Asset Management in the underwriting result until the end of the year? What do you say about this?
Well, in Life/H ealth, we don't foresee any burdens on the underwriting side. Well, I would say that the €100 million deviation compared to the previous year in Life/H ealth segment is a deviation from plan.
I wouldn't assume that we'll be able to catch up on this. There could be more recovery in the next month, which would lead to the fact if stability returns that we can reach our plans that we catch up the EUR 100 million. We would need a strong recovery, which I wouldn't assume that we get this kind of strong recovery now immediately. I would expect that the rest of the year should be in line with our expectations. When it comes to Asset Management, I would say that catching up will be difficult. It will depend on the behavior of the market. I wouldn't exclude the possibility that we could have a full recovery. I would assume that we remain slightly below the outlook of EUR 2.7 billion, but not significantly below this.
But of course, everything I say here might change in a week's time. What we've learned in the crisis is that you make a statement, and then suddenly something happens, and it all becomes superfluous. So usually, we have to wait for the end of the next three months to say something because in this situation, three days can change everything. But I hope that I've been able to convey a certain picture of our estimations and assessments right now. So let me check back. 3.7 was the original goal for Asset Management? No, 2.7. 2.7.
Okay. Thank you. Next question, please. Our next question is Steffen Weyer of dpa-AFX.
Good morning. So my questions have all become more or less superfluous as well. But there's one thing I didn't fully understand.
Credit insurance, you said the profit of the first quarter will remain more or less the profit for the year. And could you also tell us what the losses are compared to this so that we could include this into the damages that we had in other areas? And then a question about the Olympics here. You're not part of the pool with the IOC, but AGCS has some losses to expect around the Olympics. Could you tell us what this will be about because this might be easier to calculate than what the competitors have to deal with with a large contract?
Okay. When it comes to the Olympics, here we expect a low double-digit million amount, so below 20 million euros. We're not that exposed. And then when it comes to Euler Hermes, yes, it's right.
Until the end of the year, we expect profits more or less as in the first quarter. And of course, you expect higher losses, but also the revenues are also much lower. So the economics and credit insurance in such a situation have to be rethought to a certain degree. It's not just the damages might be higher, but it's also the fact that due to the agreement that we've entered into with the government that we reduce our income. And what happens then is that the underwriting result more or less approaches zero, but then we also have some profit from capital investment. So that is the situation in credit insurance.
Okay. Thank you.
Thank you. Then the next question, please. We'll come to a question from Jean-Philippe Lacour from AFP News Agency, please.
Yeah. Good morning.
With a view to this controversy in France between where there is talk about aggressive unfair practices on the part of competitors because the bank decided to compensate operating losses. How do you go about that in Bavaria? There is this agreement apparently. So what you do in Bavaria is apparently negative or damaging. Can you explain to me what that means? And would this Bavaria agreement generally be expanded? Is that already something that is used on a federal level? Is that something that is offered to customers abroad maybe? And maybe in summary, once again, you mentioned this global alliance with AGCS, Euler Hermes, and all the partners together. That was in the presentation. You say that you're expecting further negative impacts due to COVID-19, both in terms of revenues and results. Can you give us a summary figure there potentially? Thank you.
The first question, you have to repeat for me because that was pretty difficult to understand. What about France? Crédit Mutuel, this cooperative bank, they decided that operating losses due to COVID-19 are compensated. And that is obviously something that raised a lot of ruckus in the remainder of the segment. So there's a big controversy. And I think Allianz is also impacted. But for us, that is very, very difficult. We've got this pandemic, and we pay out losses if we have coverage. And if our policies do not cover, we don't pay. As a rule, we will pay. And it could always be the case that we find solutions together with interest groups and associations. And in case of doubt, you have to discuss things. But our position is whether there is coverage or not. If it's covered, there is no discussion. We pay.
And if it's not covered in such cases, we're going into a direction that these are special cases. It could always be the case that you have exceptions in certain cases. With a view to France, I'm not aware of moving in that direction. So that hasn't been a topic for us so far. As far as this question of AGCS, Euler Hermes, and Allianz Partners is concerned, what is the burden? I would like to refer to what I said earlier on once again. These 15%-20% as far as the underwriting result in Property and Casualty basically comes from this global alliance. So that is the impact that we're going to see. This is a statement that comes from Euler Hermes because we have fewer profits than in the previous year.
And also Allianz Partners, the revenues go down, the losses go up, and that has an impact on the underwriting result, obviously. So generally speaking, the burden and the operating profit comes from the Allianz. And that's why we made that comment.
Thank you.
You're welcome. Then the next question, please.
We'll come to Anna Gentrup from Versicherungsmonitor with the next question, please.
Yes. Good morning. I would like to come back to this Olympic question. Can you tell us a little bit about to what extent you're impacted by canceled events and to what amount? The second question is about share buybacks and dividends. Has the current result any impact on that?
The first question was Olympic. That is less than €20 million. That is the burden that we reckon with.
You also have to consider that the Olympic Games have been postponed, and they have not been canceled completely, but altogether, we're not so exposed as far as the Olympic Games are concerned, so altogether, in the Entertainment segment, we have significant losses. That goes up to €400 million, can go up to €400 million, as I said earlier on. That is our estimate at the moment. Having said that, the Olympic Games will not have a significant impact on us, or at least not a direct impact, and then your other question was whether the situation will have an impact on the share buyback. We basically have suspended the second tranche of the share buyback program, and that's got not so much to do with our figures because our liquidity situation or our solvency situation is pretty solid. We're in a good position.
But of course, there is a certain debate ongoing with a view to dividend and share buyback. And you could say that the buyback is important, but it might not have the same significance as the dividend. But as far as the buyback is concerned, we've decided to suspend that and to wait to see how the situation develops. But I would say that the decision about the second tranche of the share buyback will also have something to do with the developments and the sentiments. It's not only about the numbers, but it's going to have a lot to do with the sentiment and the overall system. And what's also very important, the second tranche of the buyback has already been deducted from our figures. So based on a survivability calculation, we've already deducted that from our equity.
But as I said, it depends on what sentiment is like overall, what the economy is going to do overall, and also the factors in our solvency ratio. Okay. Thank you very much. Then the next question, please. Next question, I couldn't handle that. Yeah. Good morning, gentlemen. And follow-up on AGCS. Now, in the past, AGCS at this point was often criticized. And now, the ongoing year was supposed to be the year of refurbishing AGCS. And the next year, you wanted to return to the black. And has this now been halted? Or what do you think about the plans for AGCS right now? Well, I would clearly say for 2020, AGCS will not make any profit. That is something we can anticipate right now that due to the COVID-19 impacts, we will not make any profits. So the combined ratio will be above 100% again.
But I would make a clear differentiation because you have to look at the underlying performance to monitor this and adjust to a certain degree for the COVID effects to see the true improvement in the VOE. And what we can see and what we've seen so far is that AGCS has developed in line with their expectations. I mentioned the price development, which was very good in the first quarter. And we also assume that the price development will continue. I mean, you could discuss that, of course, because major customers might get in trouble. But I think the whole industry, the whole insurance industry for years didn't pose good profitability when it comes to major claims. And COVID doesn't help in this regard. That's why I think the price development will remain strong.
And I can tell you that the losses in Entertainment, which we will have across the year 2020, that these losses can be recovered to a certain degree by price increases. And you just have to make a clear distinction. What's the effect of the coronavirus, which of course puts a burden on AGCS and will lead to the fact that there will not be a good result in 2020? But you have to distinguish between those effects and the underlying performance that has to be clearly analyzed. And we're happy with the underlying development. Does that answer your question?
Yeah. Thank you.
Okay. Then we'll come to the next question, please.
Thank you. We come to Olaf Storbeck of Financial Times.
Good morning. Just two short questions. Question of understanding, first of all, about the effects of COVID on the operating profit.
These 10%, which you hinted at, that refers to the €12 billion euro profit goal plus or minus €500 million, right? Is that the way to understand it? And the second question regarding the Solvency II ratio, you're only 10 percentage points above your minimum target of 180. So how large is the danger from your point of view that you might fall below this threshold? And what would you do or what would be the consequence if you fell under this line?
So the first question, yeah, the 10% refer to the €12 billion. And let me state once again that the burden on the underwriting result, which we foresee at this point today, and things might change and probably in casualty. And then we also have to see what happens on the capital markets. But if you've understood this correctly, the 10% refer to the €12 billion operating profit.
Now, when it comes to the solvency ratio, the danger of the solvency ratio going below 180%. If you go to page five, if you look at what happened to the equity markets and the interest rates, if you think that the interest rates go down 25 basis points and the equity markets 15 basis points and the spread on the government bonds might go up, then we would fall below 180%. But that wouldn't be problematic as such because during a time of crisis, you can definitely fall below the 180. Then, of course, you want to, over time, return to a higher level. But when we had the old bandwidth, we had a bandwidth of 180%-120%. And sometimes we went above the 220, which also meant that there were also situations when you come below 180 just as well.
I mean, let me underline this if you put this into capital. Also, a solvency ratio of 70% would mean EUR 30 billion excess capital. So that is also what you have to see. And so it's possible that we might drop below 180%. And that would also be absolutely understandable and not a reason for major concern in any way.
Thank you.
The next question, please.
We'll come to Carsten Herz from Handelsblatt for the next question, please.
Yes. Good morning. Into the round. I've got another question about PIMCO. There are EUR 43 billion customer money outflows. And at the same time, we've got an operating profit of almost 20%. Can you explain to me how that goes together?
Yeah. You have to observe what the development was like in the course of the year 2019 of PIMCO.
That was very good, both in terms of net inflows and as well as in terms of the capital market developments. You're comparing the first quarter of 2020 with the first quarter of 2019. It's true that in March, the asset basis declined. And we also saw outflows. But when you take a look at the figures for 2019, you always have to consider that the asset basis in the first quarter of 2020 was 13% higher than in the first quarter of 2019. And that is thanks to the development in the last year. Is that clear? Did I make myself clear here? I'll do my very best to understand it. Yeah. Just consider. Let's give you a pretty simple example. Let's say a share has a value in the first quarter of 2019 of 100. Then the share price increases to 130 by the year's end.
Then it goes down by 10% again. So we're at 120 in the first quarter. And you do a fee on the share. The fee that you get for the shares in the first quarter of 2020 will be higher than the one you get for the first quarter of 2019. Even though the share price has decreased a little bit in the first quarter, you always have to think point to point.
Okay. Thank you very much.
Then I would say we've got one more question in the German line. The next question, please. That is a follow-up question by Jean-Philippe Lacour from AFP News Agency.
Yeah. Thank you very much. I wanted to come back to France, but my question relates to the whole sector. The economic minister, Bruno Le Maire, has obviously hailed the insurers in France who contributed €100 million into the Solidarity Fund.
But he also said that the insurance economy could do more, and he thought that the risks of all companies should have to be covered, and that should also be included in all the insurance policies so that if there is another pandemic tomorrow, that all French companies have insurance coverage, and he expects specific suggestions within six months. Can you tell us what you think about that?
I would say as far as the topic pandemic is concerned, of course, we have to think about what we can do in the future because at the moment, we've got a situation of a pandemic. Pandemics are usually not covered. But the customers will obviously say, "I want to have coverage for a pandemic." I think the sensitivity for the topic will increase, and so we will have to try and find solutions.
But it's naive to think that insurance companies can offer a pandemic coverage. That's simply not possible. We can only find solutions together with governments as far as that is concerned, how we can create a system where we as insurers, we can certainly do customer service. We can do the management to a certain extent. We can also assume risks. But I think the majority of the risk will have to be shouldered by the government and cannot be shouldered by a private insurance company. At the end of the day, we will have different solutions. But it's a topic that we've got to work on and that we have to find solutions for. Whether we can find solutions, we will see. But it's a good thing that the minister tries to contribute to the solution. He's part of the solution because the private companies cannot shoulder that alone.
Okay. Thank you very much. I'll pass that on.
Thank you. So we have two questions in the English line. Then we'll.
Willkommen nun zu Fragen aus der englischen Konferenz. I'll answer the first question from Catrin Shi, Insurance Insider. Please go ahead.
Hello. Thank you for taking my question. The first point is a clarification, really. If you could just clarify what your 2020 outlook for operating profit for the P&C division was. And my second question is to do with liability losses from COVID-19. The numbers you've given so far are for short-tail classes. And I wondered whether you had any view on when the losses for the longer-tail classes, such as D&O, might start coming into your results? Thank you.
Yes. So the first question is the outlook for Property Casualty is €5.6 billion. That was the outlook that we announced at the beginning of the year.
And then on the D&O financial line losses, no, we don't have a sort of outlook for that. We think that should be very manageable. That's our expectation at this point in time. So to a certain degree, in our numbers, we have incorporated also some impact coming from D&O and financial lines. But we think it shouldn't be, at least for our business, there shouldn't be a primary cause of losses.
Thank you.
Welcome. All right. Then next question, please.
Next question will come from Ben Dyson of S&P Global Market Intelligence. Please go ahead.
Hi. Good morning. I was just wondering if you could, well, impact on reserving for IBNR on the P&C side and whether you've had to increase reserves in the first quarter or whether you're expecting to do so either for claims incurred or for incurred but not reported claims.
Yes. I would say the impact we are referring to is mostly coming from incurred but not reported. In reality, the amount of claims we've seen is very limited, as of March. So what we are talking about is more we have not seen yet what we expect is going to be reported. Otherwise, the COVID crisis impacting most of the countries starting March, mid-March, so you don't see a lot of claims coming through, at least not at the end of March. So the amount that we are referring to is mostly due to incurred but not reported reserving.
Okay.
All right. So I think Ich schaue mal noch kurz in die deutsche Leitung, ob es noch. We'll take a look at the German line to see if there are any additional questions.
Yes. We do have a follow-up question in the German conference. Would you like to take that?
Yeah. We'll be glad to.
Jean-Philippe Lacour again, please. That's the last time, I swear. NatCat in the first quarter, if you could tell us where the big damage occurred. I think it was Australia and the U.K. If you could tell us what it was. In Australia, it was the fires, the bushfires.
Yeah. We had the bushfire because you mentioned that in Australia. We had about EUR 40 million. And we had storms. In Europe, we had more than EUR 200 million losses on storms. And the biggest impact comes from Sabine, the storm Sabine. And then we had EUR 160 million also for storms in Australia. So EUR 200 million, basically, from Australia because of storms and a little bit of bushfires. And then we had a little bit more than EUR 200 million losses for storms in Europe, mainly Sabine. But Sabine was also Ciara in the UK. And then we had a small tornado. That happens all the time, basically. And so if you lump that all together, we're talking about some €500 million burden in the first quarter. These bushfires in Australia, how much? €40 million. That was €40 million.
Okay. Thank you.
Then as far as I can see, we're done. I don't see any other questions here. Then I would close the call.