Allianz SE (ALV) Earnings Call Transcript

Ladies and gentlemen, welcome to the Allianz conference call on the Allianz Group Financial Results for the Second Quarter and First Half of 2026. 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 over the call to your host today, Oliver Bate, Chief Executive Officer of Allianz SE. Please go ahead, Oliver.

Thank you, Andrew, and thank you, investors, for taking interest. I know you had a couple of calls already, so we are trying to keep it mercifully short and focused in order to make sure we make the best out of your time. So Page A2 is where I would like to start. Just as context and that you're all aware of, we are in a very volatile environment, not just geopolitical tensions, but also enormous nervousness, investor nervousness around who's going to win and lose from AI, including the people that are actually spending hundreds of billions on building AI infrastructure. And therefore, just as a reminder, we are very, very focused on our 3 strategic priorities, which we've outlined in the last Capital Markets Day, driving smart growth, reinforcing productivity now with the help of AI become -- getting implemented into the core of the company and further strengthening our resilience, which has now reached a new height. Just as another reminder, Allianz has made a deliberate choice to try to lead on a number of factors that we believe are important in such a really volatile environment. The first is the trust of our stakeholders, not just shareholders, but particularly society and customers at the core of it and our own people. So we are the #1 in the Edelman Trust Barometer. We've also captured the #1 position on the Evident AI Index for insurance as a leader in not just understanding, but implementing AI in our business. And what we believe is super important in an agentic world is to have the strongest brand that emanates the trust of consumers. And again, we are by far the most valuable brand in the Interbrand ranking, and it's also true for a number of other brand rankings. So we believe we are well positioned to deal with this global challenge, but we are humble enough to understand that the world can be a very difficult place, and we cannot do well all the time and always. Now let's move forward, Page #A3, please. What's really interesting to see in the first 6 months, and I'm going to talk about 6 months, not the quarter. It's obviously important for you to -- we address your questions on the Q2. I'd like to talk about what we've done on the 2 businesses that we outlined. We report on 3 reporting segments, but the 2 businesses that we strategically differentiate Protection and Retirement. We are on track on all of the key parameters across the portfolio. Productivity further 30 bps down, and that is also what we should be seeing by the end of the year. Since 2018, we have been continuously delivering, and I'm very confident we'll keep on delivering. Why is this important? It gives us the flexibility on pricing and on reinvestments into the brand and distribution and growing the business. [indiscernible], our platform business continue with very strong growth momentum as promised and as indicated before. A reminder, mid-corp combined ratio at 88%, super strong despite the pressure we are seeing on reinsurance markets in large corp. We are expanding our footprint in some of the important segments. The partnership with Coalition is one, accessing alternative reinsurance capacity via Lloyd's coming at very attractive rates even relative to other items is important. And Health and Protection OP stands at EUR 1.2 billion, which is also a nice level. So on the protection side, we're happy. The other side of the coin retirement, we have a couple of things at important record net inflows, inflows continue throughout the years and by the way, continue as in the first half also in July. We are further supported by excellent investment performance, as you can see on that. And we are supporting further growth with investments into building our ownership in asset management, both in PIMCO with the purchase of the M units and our investment in UOB Asset Management in Singapore. That, combined with the acquisition of HSBC in Singapore, helps us to establish a decent presence in one of the most important wealth markets in Asia. We believe Singapore has a strong future ahead in an environment where people will be nervous where to put your money, very strongly regulated, very well regulated, very good rule of law. So we are big fans, and we have finally had the opportunity to invest in both areas. By the way, a coincidence that is happening literally within a few days of each other. But there's no coincidence is that we want to strengthen both the life side and the asset management side. And Singapore has a lot of innovation opportunities. The experience that we've had in the U.S. with AZ Life in the wealth market will be a big asset to bring to Singapore just as an example. A little more detail to that on Page A4, where we are showing some details. I don't want to go through this slide actually, you could probably read faster than I can speak to it, even though I speak very fast. Just as a reminder, PIMCO buyout of minorities has been a long-term plan. It's happening now because we have reached a point where we can do it 5 years after we stopped issuing the options. We have the right to call them, and we have agreed with the PIMCO leadership that this is a good time and to do this very, very good investment for many reasons, including a very decent return on the business we know very well and that's doing exceptionally well. And we are very happy and very proud to partner with UOB on asset management, a very strong bank, by the way, not just domiciled in Singapore, but in some important Southeast Asian markets. So that's quite important. On the left-hand side, again, some information on HSBC. Important is to point out, if I may say so, under the ownership of HSBC, this franchise has massively transformed in a very short period of time. It's not a bancassurance agreement alone. That is important because HSBC has doubled down on building out a wealth management in partnering with Allianz in Singapore. They just added another 100 relationship managers to build out wealth, but it has other distribution structures that are important as well, agents and more importantly, independent financial advisers. So it's multichannel, and we want to build that out further. And it's not just life, it's also a health insurance platform from which we would like to build. So we are very happy as we see. We think we're going to have very good returns across these investments. And by the way, a very good mix, low risk, a bit higher risk so that we make sure we -- you can, as investors rely on us getting a decent return on investment on these growth investments. So let me then go to Page A5. As a summary, then I'm already done. I love this slide, my favorite in the deck because it nicely shows that we are not relying on a single cylinder. We've been saying it over all of the years that not every machine can really work all of the time. We're in the fortunate position at the moment that all our engines are powering the group results to have a nice diversified portfolio. And we believe we will be in a good position to hit our outlooks and the midpoint, not just for the earnings outlook, but the midpoint for our strategic cycle. We are exactly 18 months, i.e., 50%, into the 3-year cycle. So as we can say, nicely so far, so good.

So thank you very much, Oliver, and maybe moving into Section B. So good afternoon, everyone. As mentioned by Oliver already, we had an excellent set of results for the first half, where all segments are contributing, again, demonstrating the rigor we put in the execution of our Capital Markets Day levers, including from leveraging AI. Building on Q1, we reached 54% of full year operating profit midpoint, and we have an excellent level of Solvency II ratio. We are very confident clearly against our yearly and our Capital Markets Day targets. So on this page, you can see starting by the right left corner that our total business volume is at EUR 99 billion at the end of the first half with an internal growth of 4.3%. In Q1, we were at 4%. In Q2, we are at 6% internal growth. So clearly, there is an accelerated momentum in terms of internal growth in our numbers. You can see as well in the underlying that we have a very strong performance. As an example, Asset Management is at 19% growth in the second quarter. This level of growth in the first half of 2026 is building on a 10% internal growth that we have achieved in the first half in 2025. So if you bring the 2 together, we achieved a high single-digit level of growth over the last 2 years. The development of our operating profit demonstrates from our perspective, both our technical excellence and as well our ability to grow profitably. We emerged at a EUR 9.4 billion level of operating profit, which is our highest level ever for the first half. And we have been growing that operating profit by 9% compared to last year, which is an excellent level to which all segments are contributing, including our Health and Protection business. So the Health and Protection business, you get more details as we are building on the first transparency we have been providing in the first quarter this year. So it's basically displayed transparently in the backup of this document. And you will see there that we have a 9% of underlying growth, which is also an excellent level. Our shareholder core net income emerged at EUR 6.4 billion. And you have seen that already that in the year-on-year comparison of the net income, we have many effects this year at the first half. We have effects coming first from the disposals that we have seen both last year and this year. And we have also the effect from the restructuring. As mentioned in the first quarter, we are leveraging the gains we are generating on the sale of Bajaj -- of the JV with Bajaj to advance our AI-driven transformation. So if you adjust for both effects, meaning the disposals and the restructuring or the excess restructuring, our shareholder core net income grew by 9%, which is an excellent level. Now if you also further look into the analyst presentation, you will get more details on our estimate for nonoperating profit for year-end. As you know, there is quite some natural volatility in that number that is linked in particular to the hyperinflation effects. But it's important to note that in addition to the approximately EUR 600 million of further Bajaj -- further offset of the Bajaj gain, further restructuring could be expected in the second half in line with past experience. As an example, the minus EUR 200 million that we have seen as per the first half of 2026. Now coming back to this -- to the development of our core EPS, you can also see that our adjusted core EPS is up 10%, which is better than our target range of 7% to 9%, so also at an excellent level. Resilience continued to be very strong with our solvency ratio at 225% as well our operating capital generation is very good at 11 percentage points, fully in line with our expectations for the year. So we have a very healthy level of coverage and also a very high financial flexibility into our numbers. This supports very well the transaction that we have announced recently. So moving to P&C on Page B4. Here, you can see our excellent level of profitability. You can see as well the very good level of internal growth we have with high-quality performance across the portfolio when you go into the further details. So our total business volume is close to EUR 50 billion for the first half. Our level of internal growth is 6%. And as part of that internal growth, commercial is at 4% and retail is at 7%. That 7% is very good from my perspective. And what you see as well in the underlying is that volume growth is building up from Q1 to Q2. Q2 is at 3% volume growth in retail. Our internal growth is as well spread. You can see in the further details, as an example, the very strong performance of Germany that is at 6%, also even Q2 is at 7%. Eastern Europe is at 7%, LatAm is at 13%. And we see as well the continuous very strong dynamic in our platform business where Direct is at 11% and Partners is at 10%. Also in terms of pricing dynamic, we see a resilient environment overall. In retail, we are at 5%. In Motor, we are at 7%. And commercial continues to present quite a diverse picture and where we are clearly focused on cycle management with good opportunities we continue to see across the portfolio. Our combined ratio is at 91.4% for the first half, and our operating profit is at EUR 4.9 billion, which is up 9%. This is a record level of profitability for the first half. And this record level of profitability is delivered both via the technical result and as well as the investment results. Both commercial and retail have a very strong level of combined ratio, as you can see as well. And if you look further into the details of our insurance technical results, there you will see first that our underlying loss ratio is essentially flat year-on-year against a very strong prior year base. From my perspective, this is a very good result that has been achieved while we have also added to our inflation buffers, in particular in commercial out of caution. Our caution is similarly reflected in our lower level of runoff versus prior year. And in total, if you take those 2 elements together, the extra buildup of inflationary reserves we have performed in the first half represent approximately 1 percentage point of combined ratio. Our expense ratio as well, as mentioned by Oliver, continues moving toward our long-term target, and we achieved 30 bps reduction year-on-year of the expense ratio. In terms of transformation, we continue to be very focused as an organization on revisiting our processes end-to-end, leveraging AI, starting and putting the customer at the center. We are rolling out numerous tools as an example, to improve ultimately our growth via better services or also rate adjustment. As an example, what we see there is that we are embedding AI to help the productivity of our agents. We are growing the AI-assisted search and brand visibility. We are also achieving automated quote and buying capabilities where we see as well that the funnel of success is improving also quarter after quarter. And on commercial, we continue the focus that we had presented also already in the first quarter, mainly on helping growth, as an example, through faster response and booking times to support the development of the business. So if you look at P&C at the end of the first half, we continue to deliver growth at an excellent level of profitability. Clearly, we are confident in our ability to leverage our technical strength and as well our diversified portfolio to navigate the current environment and to deliver strong performance. Moving into Life and Health on Page B5. Overall, here, we see good results for the segment at the end of the first half. We see good recovery in the second quarter of a number of negative effects that we had observed in the first quarter. So the momentum is good with growth of our key indicators in line with our expectations. The value of new business is at EUR 2.4 billion, which is approximately stable if you adjust for the FX effect and as well for the impact of the JV -- of the disposal of the JV with UniCredit. Also adjusted, our VNB is up 4% and our PVNBP is up 9% in the second quarter stand-alone. So clearly, a good momentum there. The high quality and the diversified profile of the growth is also supported by a healthy share of protection, health and unit-linked in the underlying. We have some examples of that. If you go into the details of the portfolio, we have CEE that is showing double-digit growth on top of a very strong previous year. In the U.S., the sales are up in U.S. dollar terms despite promotion that was running last year in the second quarter. In particular, in the RILA segment, we are doing very well with a 13% growth in the second quarter. And in Italy, we continue to see a very impressive development. If you adjust for the disposal of the JV with UniCredit, our volume, as an example, with financial advisers is up 16% in the second quarter. We see as well a good level of development of our normalized CSM, which is at 2.7%, and this is fully in line with our full year outlook. And also the absolute level of CSM has recovered very well from the Q1 market effect fully in line with our sensitivity. So you see very well the briefing of the CSM in the further detail. This improved momentum is as well clearly translating itself into the development of our operating profit, which is up 5% FX adjusted and emerging at 2.9%. Just to illustrate this recapture of momentum as well into the operating profit, the operating profit was down 2% in Q1. So you really see well the positive development there. In Q2 as well, we see that the operating profit is developing positively across a widespread base of operating entities. We see as well that our investment results include the reversal of some of the market volatility we have seen, in particular, coming from the U.S. in the first quarter. And we also see in the investment results in Q2, the first-time dividend coming from Viridium and Sconset. So overall, for the first half, we have good results with strength nicely diversified across the portfolio. We are pleased with the improved momentum, which leaves us well on track for the full year guidance. Moving to B6, and that's also one of my favorite page of the deck overall. We see the excellent first half results of the Asset Management business here. We see record net inflows of EUR 84 billion. We see the double-digit revenue and profit growth emerging from the Asset Management segment. And this is coming from both asset managers, which are contributing there. Our annualized organic growth is at 8%. PIMCO is at 9%, AGI is at 7%. And this is clearly an impressive level, which is at the high end of the industry, in particular, for active asset managers. Clearly, what we see there as well is that we have a nice regional diversification of emergence of the net flows. We see as well the product innovation that is coming from both asset managers, which is clearly supporting as well the good development of the margin. And we see that quarter after quarter, we continue to add value to our customers. Our performance is very good. We have 93% of our assets under management that are outperforming their benchmark on a 3-year basis. I think it's fair to say as well that while the environment for Asset Management is not so straightforward right now with many questions, as an example, on the direction of rates, on credit markets, on AI financing, et cetera, our asset management business continues to respond very well with a differentiated offering. And that's also one clear element that is contributing to their success. And in July, actually, as we speak, we continue to see flows that are continued emerging, following the same pace in comparison to what we have seen in the first half. Our revenues grew by 16% FX adjusted. As mentioned, you can see as well a very resilient level of margin. Our operating profit is up by an impressive 19% FX adjusted too. And the good development as well of the cost/income ratio is supportive of the overdevelopment of the operating profit against the revenue growth. So we are very happy with the performance in our Asset Management business and as well the fundamental strength we see there provide confidence for the future. In addition, building on those strengths, we have pursued the 2 transactions already mentioned by Oliver on the Asset Management space, and we are going to extract from that future value over time. Moving to Page B7, where you can see the very clean development of our solvency ratio for the first half. We are emerging at 225% of solvency ratio, which is our highest level since 2018. And this is also -- you can see as well, sorry, on this page, a very consistent delivery of operating capital generation, which is at 11% and actually almost exactly at the same level for Q1 and Q2, and this is fully in line with our target of at least 22 percentage points for the full year. As mentioned, for the future, the aggregated impact of both in terms of solvency and liquidity of the M&A or the transaction we have announced is highly manageable, and we will as well generate, over time, attractive returns from those operations, which are going to further support our positive development. So our resilience is very strong. We see high ability to manage the volatile environment in our resilience overall, as already mentioned by Oliver. This is clearly a focus for us as an organization, and this is a fundamental way we are operating our business into. If we move to Page B8 to wrap up. Here, you will see that first and just as a repetition of what I said on my first page, halfway through the year, we are very confident in our ability to deliver against our 2026 outlook. We are very, very well on track. But in addition, I want to spend a bit of time reviewing our status against our 3-year strategic cycle as we are exactly midpoint through the Capital Markets Day journey. What you can see on the left-hand side is that in terms of financial KPIs, we are very well on track. Both our growth and our profitability across all segments are very supportive of the development of our core EPS growth and also the development of our core ROE. For both, we are trending ahead of our targets, as you can see. On the Solvency II operating capital generation, we are also performing well against our own expectations, right? Clearly, there is still a way to go, and we knew that, and we are pushing on the levers we have identified. The work is ongoing and the work is going very well. So we are confident on our ability to deliver there. In terms of strategic delivery against our 3 main levers. On driving smart growth, I think you have seen in the document a lot of good illustration when it comes to, as an example, third-party net inflows, but also development of the operating profit of Protection and Health. On the P&C retail volume growth, we see progress in our numbers. At the end of the second quarter, we were at 3% volume growth, which is at the low range of what is our target to achieve 3% to 4% volume growth as part of driving smart growth. So there is still work needed together with -- as part of our Growth Triathlon initiative in order to be able to deliver, including leveraging AI to support our journey. When it comes to reinforcing productivity, Here, we are on track against our target very clearly. But even more importantly, I think what we see across the organization is a lot of fundamental work in terms of rethinking the processes from a customer-centric manner and also harnessing AI to advance the productivity across the organization. And this is very important not only to deliver on the targets right now, but also for the next strategic cycle and for the fundamental transformation required on the way we are servicing our customers, also when it comes to the product -- to make our product affordable for the future. Finally, on resilience, a lot of elements ongoing, as I was already mentioning, together with the fact, and I want to maybe reemphasize the point I was making on the P&C business that we are actively managing the cycle, which is clearly part of building resilience. And also on claims inflation, given the uncertainty that is currently ongoing associated to the inflationary environment, we have built extra resilience as an example, in the first half of the year. So overall, this was an excellent first 6 months. We are very well on track to deliver our Capital Markets Day ambitions. We want to continue building resilience while sustaining profitable growth and also while tapping into new technology across the value chain. So with that, I thank you all very much for your attention, and I hand over back for questions to you, Andrew.

Great. Thank you, Claire-Marie. We are ready for questions. [Operator Instructions] Okay. Look, with that, I think our first question is from Michael, Michael Huttner of Berenberg.

Congratulations. Lovely numbers. Two. One, could you -- all these deals that you've done, I'm sure you've got the numbers right there at your hand, and I don't. Can you give us the kind of the pro forma impact, both in solvency and operating profit, whatever metrics you think we use? I know you might use slightly different ones. The second is on AI. So the benefits are coming through, which is lovely. The bits -- I can't quite figure is the cost of it. So I just wondered if you could give us an idea of either the cost or how you account for it in the expense ratio, whatever. And in particular, if suddenly we all decided AI, we didn't like it, is there a kind of potential write-down risk?

Okay. Claire-Marie, do you want to take the first question? And then...

Yes, sure. So just because the line was not so good on our side, what you are mostly interested into is the solvency ratio effect of the 3 deals, right?

Yes, not just solvency. That's easy. I want to know the operating profit.

Yes, that's fine. No, I wasn't sure. So I think like -- so those -- I mean, for all those -- I mean, we are very rigorous in the way we are doing M&A, as you know. So for each of those capital deployment, what we always ensure and we are looking at is delivering a double-digit level of ROI in the medium term. And here, what is a bit tricky, obviously, to give you the exact number is that we need to wait for the deals to be completed to really tell you what's going to impact overall as part of our trajectory, but we'll do that once we get there. I think just to give you maybe some indications for each and every of those deals. If you start with the PIMCO M unit, which is maybe the straightforward one, what will happen depending on the share of the overall net income we are getting associated with the minority -- with the buyout of minority, you will get an equivalent effect into the net income. So like the level of -- the minimum level of extra ownership of PIMCO, we are going to get is 4.4%, which corresponds to the former employees, and we may have a higher take-up also with the current employees. But then basically, that positive effect will not come into the operating profit, but will come into the net income. And you can expect from 2027 onwards to have already there a triple-digit benefit to come into the net income. Then for UOB, this is currently a business where we have -- actually, maybe to give you like directly the effect, both for UOB and for the HSBC Singapore, we have not yet closed. The closing will happen later on. And then what you should expect is more starting 2028, I would say, to start seeing a triple-digit positive impact in terms of operating profit from which we expect also to see quite some fast growth over time because this is definitely a growth focus. I think once we get the further details, we will be happy to provide you with more insights. And then your other question was around what is the effect of AI, right? And from the restructuring, I believe that was the question.

Yes, Michael, I didn't quite get. What was your second question, the cost of AI or...

Yes, yes, the cost of AI, but also how you account for it? Is it capitalized straight off? Is it in the P&C? Just to have a feel for it.

So are we activating the investment into AI? And if we are on the wrong tech, do we need to write it down at some point?

So basically, I think -- I mean, we are tapping into AI across the organization. That's also, as an example, it's not -- that's also the case in asset management, and that's also one driver of the very strong improvement of the good development of the cost/income ratio as an example. And we are -- but obviously, also leveraging it very much on the P&C side, as I was already mentioning. And there, we have a very strict approach when it comes to everything that is activation of those new technology where we are very strict across the organization to minimize possible -- because simply like this new tech is much faster compared to old historical development. And maybe because connected to your question, what is also very important is that the restructuring we have already done, right, will come with ultimately a very good level of return as well. So we expect to have an overall return that is above 20% for the restructuring that have already been booked today.

The next question is from Andrew Baker from Goldman Sachs.

First one, just on the Life and Health investment income. I believe there was EUR 87 million of dividends from Viridium and Sconset Re. Is it fair to assume a similar level of dividends going forward? Or are there any one-offs to consider in this? And I guess, can you just confirm that we should expect these dividends to come through annually just in 2Q? And then secondly, just curious on the alternative reinsurance capacity capabilities that you mentioned, are you seeing any material differences in either rates or terms and conditions between what you can get on the alternative reinsurance side that you've developed versus what's available through traditional capacity?

So I think on the dividends, basically, the highest contributor to the dividend we have received is coming from Viridium. As you know, we are just an investor. So we are just a shareholder of Viridium. So we don't know what will be the level of dividends and what will be the pattern of dividend as well. And also what we have received this year for multiple reasons is more than a yearly dividend. So likely also lower on a steady-state basis. But again, we don't know what should be the right level. And then you were mentioning on alternative reinsurance. So I think, indeed, I mean, there is -- I think the main play with this alternative reinsurance approach is actually to ensure that we have a diversification of capacity and diversification of capacity at high quality and a very good level of rating. So that's one angle to it. And then, I mean, the overall environment when it comes to competition for reinsurance capacity is obviously more on our side as we are a net buyer of reinsurance as opposed to the other way around at this point in time.

Next question is from Fahad Changazi from Kepler Cheuvreux.

Could I just touch upon the plan and where we are still on retail volume growth? I think year-to-date, the CAGR is 2.5% versus planned ambition 3% to 4%. You sort of highlighted geopolitical concerns and you've taken inflation buffers. So can we or do we not expect a volume acceleration in H2 '26? And in view of this, does the planned ambition of 3% to 4% retail volume growth still stand? And again, just a plan-related question on Solvency II capital generation. Could you remind us again of the management actions you've taken already along with the recurring uplift in capital generation to date? And any update if there is visibility on future actions within the plan period?

Okay. Fahad, your line wasn't great. You want retail volume growth update and cap generation...

Yes, I can do that.

Okay, go for it. Oliver, you take the first one. Claire-Marie, the second one.

Yes. Thank you, Andrew, and thank you for the question because it's a very good one. So first, we had a slow start in the year. It's improving in the second quarter, and I hope that we are making progress throughout the year. What is good because it's an effect between how much do we get in and then how much do we retain. So the customer acquisition side is actually going very well. What is not yet according to plan, at least from my expectation, is the improvement in retention that we had planned to do. And there's 2 or 3 drivers for that. There is rising price elasticity in the customer side. And as we are very, very focused on making sure we reflect increasing claims inflation into pricing, we need to do even more to balance that with higher retention. So helping clients, for example, to adjust their deductibles, their covers, in order to make sure affordability is balanced with margin even more. That's something -- that's a muscle that, as an organization, we have to train. And the second component that is important, the low growth, particularly in the core of Europe, of disposable income is further increasing sensitivity. So people are actually also insuring less overall. So that's a very good call, a good question, and we need to do quite a bit of more work. But the good news is customer attraction to our brand is super strong. The upside is higher retention.

Yes. So on your question on the capital management action, so we have already done a lot when it comes to really looking at the portfolio, portfolio performance, capital intensity ratio of the businesses. So a lot of work has been going there, which has been very helpful, I think, to also revisit and question if we were performing or developing the business with the right level of capital consumption. And this is what has been fueling quite a lot some of the positive developments over the last 18 months. We are working in parallel on a couple of more fundamental levers. And you may remember from the Capital Markets Day presentation, we were in particular, showing the share of what is a business that is operating on the internal model as opposed to the standard model. So there is quite some work ongoing to move more of our business into the internal model that will give us a further support when it comes to the capital intensity of our business. And that's where we know the work is ongoing. We are working also closely with our regulators, and we are confident it's going to get there. And by the way, there will be also further benefit after 2027, but that's what is also creating that sort of one-off effect a bit later on.

Okay. The next question is from Vinit Malhotra of Mediobanca.

I hope you can hear me. I'll take one question, which is on the internal growth. And I'm more curious about commercial lines where there's been a bit of up and down. I mean, 4Q was not so good and 1Q was a bit of a jump. And now again, we have a 1%. And I can see -- I mean, I can see some of these numbers, AGCS is minus 1.8%, but also maybe U.K. has a minus sign. I don't know if it's linked to the commercial topic. But if you could just comment on commercial and maybe also throw in a comment on these 2 OEs, which are showing a negative internal growth, that would be very kind.

Sure. So I think indeed, you are right. There is quite some volatility in the numbers in particular, when you look at Q1 versus Q2. And this is also linked to some technical effects in the underlying. So for me, what I would do, and I think that the most interesting way to look at it is more to look at the first half overall together. And what you see if you do first half overall together is that the volume growth is actually flattish. That's what you see in the underlying. And then it's -- and then you have a very nuanced and diverse picture across our various parts of the portfolio. First of all, you will have the MidCorp business, which is actually performing in a robust manner in the overall environment with also a good level of rate overall at the first half level. You will have, in the case of partners, a very, very good dynamic, which is fueled as well with different parts of the business, which are responding quite well. But in particular, I think the travel business is doing well as an example. And then you will have trade that is doing well in terms of volume growth, in particular, building on the diversified picture between surety and credit, but what we see overall is that the rate environment continues to closely follow, in the credit part, the current economic environment we are operating into. And then in the case of AGCS, we have a rapid softening in particular in the -- we have observed a rapid softening in the second quarter, in particular, around property, around natural resources and construction as an example, as a type of business. But the team is doing a very good job also at continuously tapping into the areas where they can perform well in terms of technical excellence. So I think overall, I'm happy with the picture I see in commercial and how the various parts of our comprehensive commercial book are responding in the environment.

Can I just also ask my second question on inflation, please? The inflation buffer, that's coming in the commercial book, isn't it? There's a comment somewhere on that?

Yes. So basically, overall, for the overall book, we have built 1 percentage point of inflation or further inflation buffer into our numbers. So it's an increased level. And it's mainly into commercial, but it's not only into commercial.

Next question is from William Hawkins of KBW.

First of all, could you talk a bit about your view of the sustainable growth rate for Life new business value, please? You're still down in the first half, and I know the reasons for that. But I'm kind of wondering what you think you can accelerate to? For businesses of your size, is it 5% to 10%? Or could you do better than that? And sorry to be very short term, I'm not very clear about the seasonality of your new business value. So is the second half expected to be better than the first half? Or are there structural headwinds? And then secondly, Oliver, around your slide on A3, I appreciate this is a very big topic. So just asking you for key top of head views. But after the Singapore deals, how do you view Allianz's positioning for growth in Asia? Do you think you've kind of taken your main actions now, so it's all about execution? Or is there other stuff you need to do to be really comfortable with your footprint and growth potential?

Claire-Marie, do you want to kick off first?

Sure, sure. So indeed, you're right. It's a bit noisy, but the way I will think about it is that you can also now is the last quarter where we have seen the effect associated with the UniCredit JV. So you can take the second half of last year as being a reference in terms of PVNBP, and you can apply our expected growth rate of 5% as we have communicated in the Capital Markets Day. So I think that should give you a good order of magnitude.

Can I take the second one, Andy?

Yes. Go for it. Yes.

So thank you for the question. So this was very important for us because we -- again, we had a gap in Singapore. We established presence there in '91. We never really had a strong operating business on the Life and Health side in Singapore itself. And as you know, we've been trying for a while to build a proper beachhead that reflects the power of the brand. So this has been achieved. If you are asking for additional investments, we always are open. So we are happy with now having closed that chapter, but there's tons of opportunity in Asia still coming, and we will always continue to look at it. As we have said in the past, always on a market-by-market, asset-by-asset basis. Sorry that I don't give you -- I have a gap in this country or a gap in this. In terms of materiality, though, we have to say Singapore has been one of the most important things to be looking at because relative to the national size, you would say, why do you invest in something that has only 6 million people or 6.5 million people now. It is the most important market for wealth -- growth market for wealth in Southeast Asia. So that was essential. But we're never done.

The next question is from Andrew Crean of Autonomous.

I just had a couple of questions. Firstly, your restructuring provisions this year, which look to be about possibly EUR 1.3 billion, EUR 1.5 billion by the time you finish. Could you tell me how much of that is writing off software as opposed to active investment? And can you give us a sense as to what the return on that sort of EUR 1 billion-plus investment will be over the next couple of years? So that's the first question. Second question is a very small one. Your corporate center losses are just 21% of your target for the full year. Can you give us a sense as to where you think that will land this year because it's clearly not going to be minus EUR 800 million?

Yes. So on the -- so as mentioned, Andrew, overall, from what we have already performed in terms of restructuring at this point in time, right, we have the EUR 200 million of debt losses. On that one, we expect to get EUR 40 million OP more on a full year basis. Obviously, at the end of this year, we will already have seen 3/4 of the benefit coming through. And for the EUR 400 million of acceleration of decommissioning of IT system associated with AI that we have -- that went through in the second quarter, you should expect to see something approximately like EUR 70 million of operating profit to come through forward through lower future amortization. And then I think from what is going to come on top, I would expect as well to see further positive associated benefits as things go forward, right? And then I think you were on the corporate centers, there is, as always, a lot of seasonality, as you know, in the corporate center. We see usually 40% of the cost coming in the first half of the year, 60% of the cost coming in the second half of the year. This year as well, in addition, given the inflationary environment, we have seen higher benefit coming from the inflation-linked bonds. So there is always conservatism in the EUR 800 million negative we are seeing there. I think you can take some assumptions. But in particular, I think you can reflect as an example, the effect of the inflation-linked bonds as an example.

Andrew, I love your question. Can I give a bit of strategic context, if that's okay, also to our friend, Mr. Crean?