MLP SE (MLP) Earnings Call Transcript

Good afternoon, ladies and gentlemen, and welcome to the MLP SE conference call regarding the publication of the results for the second quarter and the first half year 2026. The conference will be recorded. [Operator Instructions] Let me now turn the floor over to your host, Pascal Locher.

Thank you very much, and welcome to MLP's conference call to our results for the second quarter and the first half year of 2026. With me today is our CFO, Reinhard Loose. He will guide you through the presentation. And of course, we are happy to take your questions after the presentation. So please go ahead, Reinhard.

Thank you, Pascal, and good afternoon, ladies and gentlemen. First, the key finding regarding our business performance in the first half of 2026. MLP Group achieved a new record high in both total revenue and earnings before interest and taxes or EBIT for short, and continued on its growth trajectory. After we already made a good start to the year in the first quarter, we were then able to deliver a particularly strong second quarter. Across the first half year, we recorded growth in all three competence fields: Wealth, Life & Health, and Property & Casualty. Revenue growth was particularly strong in the Property and Casualty and Wealth competence fields. At the same time, MLP Group also increased the key figures relevant to future revenue development to new record levels. This applies equally to the assets under management and the non-life insurance premium volume. The success of the MLP Group is above all the result of the continuous and highly targeted development over recent years. We have positioned the company on a significantly broader footing and strategically interlinked the individual divisions in such a way that they reinforce each other. In the first quarter of 2026, the resilience of our business model became clearly evident. We were able to successfully withstand the negative external factors resulting from the conflict in Persian Gulf. We achieved this despite the fact that the challenges facing the German economy and the volatility in the capital market increased sharply during this period and consumers were noticeably unsettled. The second quarter, it became particularly clear what growth potential we can unlock with our business model now and in the future. And that, in a sense, we have only just begun to realize this potential. Both of these factors: resilience and growth potential are based on the fact that we have invested in a focused manner in the past in digitalization, artificial intelligence, training, quality and innovation. And these investments across the entire MLP Group are paying off. At the same time, we continue to work hard on expanding our high-quality range of services in a targeted manner, not only for our private clients, but in particular, also for our corporate clients. In terms of EBIT, MLP was able to record a significant increase, particularly in the second quarter compared to the same period of the previous year. Particularly an increase in assets under management, higher performance-based compensation and an improved interest result positively influenced this very strong development. In short, we are on a very good path, both for the full year and for the years ahead. We are confirming our EBIT full year forecast for 2026 of EUR 100 million to EUR 110 million. At the same time, we are also reaffirming our planning to achieve EBIT of EUR 140 million to EUR 155 million by the end of 2028. On Slide 4 of the presentation, you will find an overview of revenue development. In the first 6 months, we increased total revenue by 10%, thereby reaching a new record high of around EUR 583 million. Alongside growth potential, our business model also offers a high degree of stability as reflected in the large proportion of recurring revenue. At the end of 2025, this figure stood at around 70%. We generate recurring revenue through the continuous high-quality support we provide to our existing clients across the entire MLP Group, above all in the property and casualty and wealth competence fields. The remaining portion of revenue comes from our new business, particularly in the Life and Health competence field. In the first half of 2026, the group grew across all three competence fields. The Property and Casualty competence field with growth of 12% and the Wealth competence field with growth of 11%, performed particularly strong. The key driver in the Property and Casualty competence field was a non-life insurance premium volume managed for corporate and private clients, which we significantly expanded compared with the same period of the previous year. In the Wealth competence field, MLP recorded notably higher revenue in Wealth Management, in particular, resulting from the further strong growth in assets under management and from performance-based compensation. The MLP Group also recorded a positive development in the Life and Health competence field. Given the persistently challenging market environment, this is anything but a given. Within the Life and Health competence field, both the Old-age Provision business field and the Health Insurance business field was slightly above the previous year's levels. In the other competence field, revenue remained stable. The continuing high level of trust that our clients place in our consulting services is also reflected in our key figures. These figures are an important indicator of the MLP Group's future revenue development. It is particularly encouraging that despite the temporary decline in the capital markets during the first half of the year, we're able to increase assets under management significantly to a new record level of EUR 68.8 billion. This development once again underlines the substance of our business model and the quality of our long-term client relationships. Our second key figure also recorded a significant increase. The non-life insurance premium volume reached a new record high of EUR 865 million. The multiyear development shows that we are growing continuously and sustainably in this area. In Property and Casualty, we have established a significant market position. For the MLP Group, this means additional stability in the portfolio business and at the same time, further growth potential. You will find the current income statement on Slide 7. The first half of 2026, the MLP Group increased EBIT to a new record high of EUR 64 million (sic) [ EUR 60.4 million ]. This development reflects, in particular, the strong growth in total revenue and is also an expression of our continued disciplined cost management. It once again demonstrates the resilience of our strategically enhanced business model. At the same time, we have significant growth potential. I will go into this in more detail shortly when discussing our forecast and planning. If you now take a brief look at the right-hand side of the slide, you'll see the key figures that underline our solid balance sheet structure. Compared to the 2025 balance sheet date, equity increased from EUR 585 million to EUR 589 million. The regulatory core capital ratio stood at 17.7% as of the 30th of June 2026. Our short-term liquidity position also remains very comfortable. The Liquidity Coverage Ratio or LCR for short, stood at 831% and was therefore significantly above the regulatory requirement of 100%. I would now like to explain individual strategic business developments within the group in some more detail. I will begin with the expansion of our business model with medical professionals. Here, following a successful trial period, we have developed a new offering called Praxeasy, which has now been available to our medical professional clients for several weeks and is attracting noticeable interest. In the market for medical professionals, where we already hold a strong position today, we support our clients in their financial matters, both private and business related. And there is a clear trend. The willingness among doctors to set up in practice is declining noticeably, above all due to growing bureaucracy, a shortage of skilled staff and increasing cost pressure in the outpatient care system. This is precisely where our new offering comes in. The AI-supported solution provides targeted relief for doctors in private practice and administrative processes such as appointment and patient management, thereby strengthening operational performance in day-to-day practice. AI-supported processes flanked by an operations center and integrated into established practice management systems create tangible efficiency gains without any system discontinuities. At the same time, one point is crucial to us. Unlike other market models, our new offering expressly supports the entrepreneurial independence of doctors. This is one of the reasons why we received positive feedback in the preceding pilot phase. In short, we are making a concrete contribution to the future viability of doctors in private practice. Creating new points of contact, particularly with younger medical professionals and at the same time, underlining our ambition to support this client group holistically from a 360-degree perspective. Obviously, no data whatsoever is transferred to MLP, including patient data. Everything remains with the medical professional. This new offering is also another example of the consistent expansion and deployment of our digital platforms within the MLP Group. With these independent units, we create concrete benefits for clients, in this case, by relieving doctors in private practice of demanding administrative processes. The individual platforms each offer their own attractive revenue potential, which is further expanded through networking within the group. For example, in future, we will also be able to offer doctors in private practice integrated access to our corporate benefits platform TaxTra. Key elements of our platform strategy also include the scalability and AI capability of the individual platforms. The interconnectedness and mutual integration create additional benefits for our clients and at the same time, further potential for MLP. Another strategically important topic is the new Altersvorsorgedepot initiated by the government, which is intended to replace the current Riester pension as of the 1st of January 2027. This will fundamentally change the framework conditions in the market for subsidized private pension provision. What is the essential about? The capital markets will play a significantly stronger role in subsidized private pension provision, and there will be greater flexibility for consumers. Both developments are to be welcomed. This approach will be implemented through new product solutions. Guarantees will remain possible, but they are no longer mandatory. The aim is above all to increase return opportunities. In addition, the payout plan instead of a lifelong pension will also be possible in the future. The group of eligible persons will be expanded. At the same time, more contribution proportional subsidies are planned. MLP has, of course, prepared for these changes, both in terms of consulting and products. Our clients will be able to use an Altersvorsorgedepot anchored at MLP Banking. They can choose between the standard product that must be offered and client-specific solutions. Insurance solutions from our quality assessed product partners will continue to be available for our consultants to broker as well. For our clients, this development brings new opportunities while at the same time increasing the need for consulting. This is because the new world of subsidized old-age provision will inevitably also create a certain degree of complexity for new pension savers as well as for existing clients. The latter are faced with a question of whether they should now switch to the new world or whether the old one is more advantageous for them. Our consultants are the first point of contact here and have already started discussing the retirement savings account with their clients as well as with prospective clients. It is already becoming evident that consulting will be the key differentiating factor, not least when compared to purely digital providers. MLP can support a wide range of client groups in finding the solution that is right for them. I'll now come to our forecast for the financial year 2026. MLP continues to expect the established growth trajectory to carry forward and confirms its EBIT forecast of EUR 100 million to EUR 110 million. Increasing revenue in all three competence fields, Wealth, Life and Health, and Property and Casualty is expected to contribute to the forecast earnings growth in 2026. Today, we are, therefore, also confirming the revenue forecast in these three competence fields. The performance-based compensations that we generate in the Wealth competence field are traditionally forecasted conservatively. Our midterm planning for the end of 2028, which we are reaffirming today also remains unchanged. We continue to plan for EBIT of EUR 140 million to EUR 155 million with total revenue of EUR 1.3 billion to EUR 1.4 billion. Moreover, the following applies. Performance-based compensation, which, as we have often said, is also heavily influenced by external factors, has been taken into account conservatively and only to a limited extent. By contrast, the significant increase in the key figures, namely assets under management and the managed non-life insurance premium volume on property and casualty has been factored in. The strategically planned unlocking of potential and consulting family clients, the targeted expansion of the corporate client business and the multi-asset approach for institutional and high net worth clients are expected to lead to sustained growth across all competence fields. The targeted significant increase in earnings will also be supported by the digitalization strategy and in particular, AI applications, which are expected to drive ongoing efficiency gains and improvements in client support as well for our client consultants. This is complemented by continued disciplined and tight cost management. Ladies and gentlemen, I now come to the summary. First, the success of the MLP Group is above all the result of the continuous and highly targeted development over recent years. Our investments in digitalization, artificial intelligence, training, quality and innovation are increasingly paying off, and we have only just begun to realize our potential. Second, following the good results in the first half of the year, we have established an excellent position for achieving our EBIT forecast for the full year 2026. Third, we are pressing ahead in a targeted manner with our strategic priorities. Namely asset growth and the expansion of the corporate client business as well as the client-centered use of artificial intelligence. And we continue to keep a close eye on costs. Accordingly, we are also on track with our midterm planning for 2028. Thank you for your attention and your interest. I will now be happy to answer your questions.

[Operator Instructions] We already have a few questions on the queue. The first question is from Simon Keller from NuWays.

I'll start off with three. Firstly, what drove the improvement in Life & Health in Q2? And do you see this momentum that you've built in Q2 continuing in Q3? Secondly, what was the level of performance fees you had in Q2? Can you remind us also what's the incremental EBIT margin on these performance fees? And I guess also somewhat related is my third question, what is the personnel cost run rate that we should assume for Q3, i.e., without bonus components that I think might have impacted Q2? Maybe you can clarify this.

Thank you for your questions. Life & Health, we overall -- I think there is no special effect. We just saw a little bit higher interest there in our consulting discussions with our clients. I would see, especially in Health, where we saw a higher growth rate. I think especially in Health, it will continue like this also or in a similar manner also in the second half of the year in Q3 due to all the discussions around, let's say, the health system, and this definitely supports the questions of our customers and therefore, supports the need for more consultancy. And therefore, especially in Health, we are positive in Life, as we all have in mind, especially in the Q4 is the strongest quarter for Life. And therefore, it's also important that it continues with the, let's say, Life slightly positive tendence of the first half of the year. Performance fees in the second quarter, I would like to bring, let's say, the first half of the year, the pure performance fees for the first half of the year were EUR 8.5 million. And additionally, we had, by the way, only in Q2, carries fees coming from carries of EUR 3.6 million. The EBIT effect of the carries in this quarter was almost 0. The EBIT effect of the performance fees is around 2/3 of the overall number. And therefore, let's say, the performance fees in this second quarter and then in the first half of the year were a little bit special than normal ways that we have around 2/3 of EBIT effect out of the overall number. Personnel costs. Obviously, there was a bonus effect. Nevertheless, we also had an increase in staff in some areas, FERI Banking and DOMCURA, especially due to also the growth in business. But you're totally right, the bonus effect has a high impact there. And let's say, we all hope that the bonus effect also will have a high impact in the second half of the year. But the run-rate for the pure personnel cost is around 3%. I hope this answered your question.

The next question is from Marius Fuhrberg from Berenberg.

A few, if I may. The first one on your guidance, which you had remained unchanged with EUR 100 million to EUR 110 million EBIT. Compared to last year, we will hopefully not see a respective impairment in Q4. And looking at your underlying performance in your general business and deducting those -- I think it was EUR 9.5 million impairment last year Q4. EBIT should at least in the second half of the year be in the area of EUR 55 million to EUR 60 million in my view, which would then imply that you run above your guidance for the full year. So what are your thoughts on this? The second question is with regards to the Altersvorsorgedepot. Can you quantify the revenue potential of the introduction of this over the next 3 to 5 years? A ballpark area here would be nice to know. And also, what do you expect with regards to EBIT there? And the last one, which is to Praxeasy. Is this included in the Financial Consulting segment? And how is the monetization of Praxeasy structured? And maybe one additional question. I saw that you have resegmented quite a lot with Deutschland.Immobilien and the Financial Consulting segment. Can you please elaborate on that a little bit and how we should model this in our financial models, please?

Fuhrberg, thank you for the question. Very good question. I'll start with the guidance. Yes, obviously, we had a good start in the first half of the year. The remaining question is what will we see in the second half of the year, not only from, let's say, what we can influence directly on our own, but especially how the capital markets will act or react. And we saw the volatility, for example, at the end of Q1, we saw that the markets were down. And you saw that, for example, in our assets under management, we saw this that there was no performance fees or almost no performance fees. And the question is what comes in the second half of the year. Let's say it this way, if the market continues as good as they are right now, then obviously, there might be a potential at the end of the next quarter to discuss about changing our guidance. But at the moment, we are a little bit, let's say, concerned or anxious might be too much, but at least concerned what the capital markets will bring in the second half of the year, and that was the reason why we didn't change our guidance. And in -- let's say, our expectation for the next month or for the second half of the year are no more performance fees included. And definitely, this will be something which will influence the results also of the second half of the year. Altersvorsorgedepot, you asked me to quantify this. To be quite honest, at the moment, we can't. The reason is it's more or less a new market with new market participants with many, many questions still how the markets will be, let's say, divided, split up. We see it overall as a positive effect for us, definitely. But even internally, we, at the moment, feel very unsecured to plan it right now. I think three months later, we will know more. But at the moment, there are still too many questions who will -- how step into the market and especially when we are preparing to start in the 1st of January. We personally think or we believe that it's important to start very early to be from the beginning in the market. We know that some market participants might have problems to start in the 1st of January. Others definitely will be there. Therefore, many questions there at the moment, we can't quantify this. The last question, Praxeasy, it will be part of the segment of [Foreign Language]. And obviously, at the moment, there are almost no -- or there are in the figures of the first half year, there is no influence of Praxeasy because it's just started. Let's see how this develops. The acceptance in the market, the first reactions were quite good. And now we have to start with the medical doctors there to reach their efficient or the revenues we need there. And then last question was concerning the Deutschland.Immobilien segment and [Foreign Language]. We did a restructuring with the following idea behind it in all the areas we are in Life and Health or in Non-life insurance, the [Foreign Language] segment has a product management inside the company, MLP [Foreign Language]. The only case where it was not so was in the Real Estate segment. And we decided to put the sales support and the product management into [Foreign Language] as well because 95% of the revenues in sales in -- were done via [Foreign Language]. And with this, we want to, on one side, strengthen the support for the consultants of MLP. On the other side, we want to focus more on the sales channel via third parties. And now Deutschland.Immobilien can focus more on this channel. With the sale of -- therefore, we -- let's say, sold the company, Vertrieb Deutschland, which includes the sales support and the product management from Deutschland.Immobilien to [Foreign Language] with the effect that there was a profit out of this transaction or a price of EUR 60 million going from [Foreign Language] to the segment. Deutschland.Immobilien with obviously on group level is reconciled, you'll find that, therefore, also the higher numbers in the column consolidation. And therefore, on a group level, there is no effect. It's only an effect in the respective segments. I hope this answered your questions.

Okay. So Deutschland.Immobilien basically remains with a very -- yes, I would say, single-digit million revenue business then for the remaining quarters?