Operator: Ladies and gentlemen, welcome to the Allianz Conference Call on the financial results of the Third Quarter 2020. For your information, this conference is being streamed live on Allianz.com and YouTube. A recording will be made available shortly after the call. At this time, I would like to turn the call over to your host today, Mr. Oliver Schmidt, Head of Investor Relations.

Please go ahead.

Oliver Schmidt: Thank you, Bettina. Yeah, good afternoon, and welcome to our conference call. There's nothing specific to be added from my side today, so I hand over directly to Giulio.

Giulio Terzariol: Thank you, Oliver.

And good afternoon and good morning to everybody. And I am pleased to present you the results of Allianz for the nine months. If you go page three. We are starting with a year-to-date view. Overall, we had an operating profit of €7.8 billion.

As you see this number is 14.6% lower compared to the prior period or in euro is €1.3 billion below the prior period. But as you see the deviation is explained by the impact of COVID. And as you remember, the majority of the impact of COVID came from Q1 and Q2. So if adjust a number for the impact from COVID, we will be at €9.1 billion of operating profit, which is in line with the prior period and also in line with our expectation of our total value by pro rata for the period. When we look at the Property, Casualty segment, we have an operating profit of €3.5 billion, which is €700 million below the prior period.

If you adjust for the COVID impact, in reality, we will be even slightly better compared to last year and when you look at the combined ratio with 96%. If you adjust for the COVID impact the combined ratio will be slightly below 94. So better compared to the level of last year. On the Life side we have an operating profit of €3 billion. Again, here we had a impact in, especially in Q1, we had done a normalization in Q2 and as you're going to see in a second, that Q3 results has been in line with our expectation.

On top of that business margin with 2.9% is a very strong new business margin in this environment. And then Asset Management with €2 billion of operating profit is ahead of last year. And on a year-to- date basis, we have a positive influence. So overall, I would say a good set of results in a nine months basis. And when we go to page five, and we look at the quarter, I will say we see a very, very good quarter.

As you see as the situation is, at least for the third quarter stabilized, you can see how the underlying performance is kicking in. Overall, we have an operating profit of €2.9 billion. The impact from COVID was in the quarter only €100 million. This is coming from the Property, Casualty side. When we look at the combined ratio 94.5.

If adjusted for the COVID impact, we are below the 94% level. So again, an indication that we are running below 94. And we are positioned to get to 93 combined ratio next year. On the Life side, the operating profit, as I was saying before, is very good at €1.1 billion. So that's in line with our expectations, new business margin also in the quarter was strong, despite very low interest rate at 2.9.

The asset management operating profit is slightly short of €700 million. So that's also good results. If you remember, our outlook for the 12 month is €2.7 billion. So these numbers basically, totally in line with our outlook divided by four. And in the quarter you see also very strong net inflows with €26 billion.

The net income is over €2 billion. So that's a reflection of the solid operating profit. And also we had some realized gains, as a consequence of de-risking at the beginning of the quarter. And this has also supported the net income. So a strong set of results.

So the IFRS basis in the third quarter, which underline the good - the good performers on a underlying basis. And with that, I would like to move to page seven, on the solvency ratio capitalization. As you see our solvency capital has increased by 5 percentage points from 187% to 192%. So that's a good development, I'm going to explain it in a few seconds. And when you look at the sensitivities, the sensitivities basically unchanged, just slightly better compared to the sensitivities that we had at the end of June.

If we move to page nine, you can see that the organic generation of capital was strong at 6 percentage points. If you remove the taxes and dividend, accrue for that profit generation that will be about 2 percentage points, so in line with our expectation. The market impact is being positive on a pretax basis. We've had a 6 percentage point positive impact because of market and here we had the benefit coming from the narrowing or the credit spreads and also the interest rate volatility has been lower, especially on the long duration. So this has been a positive, including some also non-linear momentum to credit spreads.

So that's the reason why we see a little bit of a better benefit even compared to what could have been expected. Then I want to comment on the management action. Here you see basically a deduction from their own fund of €1.5 billion. This is a consequence of the dividend accrual and also we have completed the acquisition of Sul America. So which means if you remove the dividend accrual and acquisitions Sul America, the impact on the on that will be zero, but on the same time, you see that the management action have a positive impact or reducing the SCR.

So, if you run the math, in reality due to measurement, actual de risking we have created about 3 to 4 percentage point of solvency ratio. And this was the – these are selection that we put in place in order to sustain or even improve our solvency ratio. So all in all, this leads to 192 solvency ratio. As you might know, we are decided to cancel the buyback. The buyback is still deducted from these numbers, which means on a pro forma basis, a solvency ratio Allianz Group will be 194%.

So overall, a strong capital position. And with that, I would like to move to page 11. Where, as usual, we go into the Property, Casualty segment. And we can speak about growth first. Clearly what is eye catching this slide is the minus 4% on internal growth, but if you look down on the table, and you look at the development of Allianz Partners and Euler Hermes, these explains, basically why we have a minus 4% growth, if you adjust for those two entities, we will be basically at zero growth rate for the quarter.

On top of that, there are a couple of entities where we are taking clearly cleaning action. So one is obviously AGCS, where we also get rid of portfolios, but also in the UK in the commercial business, we are definitely pushing also for better underwriting performance. Otherwise, I would say what's good, what was very good is the performance in Germany. And also it is good if you look at their price momentum, basically in all countries is positive or stable. And only exception will be Italy, where we have anywhere very strong performers, and then Central very helpful, the rate increases that we are getting at AGCS in our Industrial business.

So fundamentally from a price momentum, we did see an environment which is either neutral or positive. Moving to page 13, the operating profit and the combined ratio in P&C. PNC up basically flat over the prior period, when we look at the combined ratio, maybe we focus first on the loss ratio, we see a deterioration of 50 basis points, but this is explained by COVID. So, if you remove the COVID, the loss ratio will be basically flat over the prior period. Then you can see that the run-off is 20 basis point lower compared to the prior period.

But this has been offset by better net NatCat load and also by a better underlying development or the other loss ratio. One comment on the run-off, because clearly loads pretty low, I will say that here we tend to be very prudent based on the situation where we are, so from their point of view, I will read this in a positive way because it's just a sign of prudency. And as you see, we were still booking overall very, very good results. One final comment on the expense ratio with 26.7, so that's better compared to what we had last year, also last quarter, we added an expense ratio which was below 27. So I will say there are some one-off or some effects.

But I will definitely say that we are currently operating at an expense ratio level of about 20, 27. Moving to page 15. You can also see here a good picture, in my opinion, because if you just look at the combined ratio, the different entities, you can see that we have 89 combined ratio in Germany, 86 in Italy, 87 in Central Eastern Europe, you can go down the list, you're going to see that there are a lot of companies delivering very healthy combined ratio. So this is a sign of strength across different entities. On AGCS, a comment, the combined ratio is 102.9.

In the quarter, we didn't have a lot on NetCat. But we had a lot of weather-related events. So if you adjust somehow the numbers and normalize a little bit for that, the combined ratio will be more or less at 100%. This was also the number that we quoted in Q2 as we run our analysis. This is close to be the level of combined ratio that we have right now at AGCS, when we normalize for COVID or we normalize for NatCat weather-related volatility.

With that I would like to move to page 17, on the investment result. Overall, the investment results in Property, Casualty is stable. But we had to say also that if you look at the current yield or if you look at the current income, this is going down. In the quarter this is being offset by a better harvesting reserves and lower expenses. But there is some pressure on the investment reserves.

So this is something that we need to keep in mind and this is also the reason why we are even more determined to push the combined ratio to the 93% level to make sure that we get there. And then clearly, as we go into the following years, we need to think also how we might get a combined ratio even below that level, because there is no doubt that on the investment results we are going to see some different numbers in the future compared to what we saw in the past. Now coming to page 19 on the Life side. Clearly, production is down, which is a reflection of the current situation, also I will say last year production was pretty elevated. So we have also a little bit of a basis effect.

But I believe what the good story is here is the level of new business margin is despite very low interest rates, we are capable to operate the new business margin 2.9%. And as you know, we are taking product actions the Tommy Now, they are going to come next year. So from their point of view, the fact that we have been able to achieve a 2.9% of new business margin. Already now it's a good indication of how we are positioned also as we go into 2021. And then a final comment on the mix.

As you see the mix is also moving in the right direction. This is also supported new business margin. So from that point of view, I think we are taking all needed action to preserve the profitability of the new business. Moving to page 21, the operating profit in Life, as I was saying before, is strong at €1.1 billion with a growth rate of over 3% compared to the prior period. And if you adjust for the deconsolidation, the joint venture with Banco Bilbao, the growth rate will be even slightly above 5%.

So we'll say also from this metric, you can see that our Life Insurance business with a situation just stable. And I will still say that the mix was not at the lowest level ever, let's put it this way, we see that the results are basically in line with our expectation of a €1.1 billion for a quarter. We move now to page 23. Clearly the value of new business is down. But that's a reflection of the fact that we have lower production for the quarter.

As I was saying before, the new business margin is healthy €2.9. And also if you go down the list other OEs [ph] the other the entities, you can see that all entities have either a good new business margin or at least a decent new business margin, so also from their point of view, I was saying all entities we take in the direction that we need to take. On the operating profit, I will say there are no major development. You can see a lift in Asia Pacific and also in the USA. But fundamentally, you see a lot of positive signs and I was saying before in Spain, that will all be still also to the deconsolidation of the joint venture with Banco Bilbao.

Moving now to page 25. On the investment margin, you can see that we have an increase of 4%. And that's the consequence of having an increasing asset basis. And on the same time the margin is stable. If you take the - express in relative terms, if you take the investment margin 19 basis points, you analyze the number you'll get basically to 76 basis point and this will be within the range that we were expecting for this year.

And with that, I'd like to move to asset management. Overall we are €2.3 trillion of assets under management. And as you can see here, both the third-party assets and the proprietary assets have been growing this quarter. But I would just move very quickly to page 29 because that's more insightful and here we get an explanation of the movement in the assets under management. As you'll see there was an increase for third party, as you see there was an increase of €12 billion and the main driver for this increase was the inflows with positive, very positive influence at PIMCO.

Then you can see also that the impact on the market was favorable. On the other side, we had a strong negative deviation due to - impact due to FX and this is clearly driven by the depreciation for the US dollar. But despite significant depreciation, the US dollar, we have been able to increase our assets under management. And clearly we are very happy, especially with the flow situation at PIMCO. With that page 31.

The revenue and asset management, if you adjust the numbers for fixed effect, basically stable, we see a little bit of a plus, clearly this is due to the development at PIMCO. When you look at the AGI, you see a significant deterioration minus 8%. But this is mostly driven by the volatility around the performance fees. So, if you adjust the numbers for the performance fees, you just look at the basis fee, in reality, the growth rate was just slightly negative and minus 1%. So, from that point of view, there is more stability on the basis fees and then clearly, there can be some volatility around the performance fees.

Moving at to page 33, the operating profit is very good at €677 million, its below the prior period level, but as you can see, right away the deviation is driven by the impact of fixed effect. And we look then at entity, we can see that PIMCO had a good performance. Indeed, even despite the FX effect, which are particularly positive in the Euro to residential for PIMCO, PIMCO has been able to grow the operating profit. And then you can also see that the cost income ratio is very healthy at 58%. In the case of AGI, you see a significant drop in the operating profit, but this is explained by the performance fee.

So the same effect that is explaining the revenue drop is also explaining most of the drop investments in operating profit. Indeed, I will say when you look at the absolute amount of operating profit at €150 million, it's a very good operating profit, if you annualize that number, there will be basically north of €600 for the year. So, it's definitely a good result. Now, moving to page 35. On corporate we see a deterioration compared to the last year, but there are always some effects that can go one year one direction, the other year in the different direction.

Overall, I will say the result in line with our expectation. And then moving to page 37. On the non-operating items, as I was say at the beginning of the presentation, the realized gains a little bit higher compared to last year. That's also driven by the fact that last year we had a negative impact on realized gains due to the buyback of a bond. But also this year, as I was saying before, we had realized gains on equity as a consequence of derisking, that we undertook at the beginning of the quarter.

Otherwise impairment lower compared to last year. And then as you see, the restructuring expenses are higher and that's a reflection of all the things that we are doing or including the commissioning to push further productivity also for the future. So all in all, the net income of €2.1 billion, which is obviously a very, very good number. And with that, I come to page 39. So, in summary, I will say we had a very good quarter and aligned that when the situation is stable, you can see that the numbers are coming back to what is a more normal level.

As always we are focusing on the things we can control and as you see, our expense ratio is going in the right direction. On the loss ratio its a little bit more difficult to read the numbers, but I can tell you that we are confident about what we see. On the Life business, you see that the new business margin is 2.9% despite rates which are very low and also and as a management, I will say the numbers are pretty, pretty solid over there with the operating profits of another million, almost €9 million for the quarter. So I think we are focusing on the things we can control and I believe we are successful on this. And with that, I would like to take your questions.

Operator: Thank you. [Operator Instructions] Our first question today comes from Jon Hocking of Morgan Stanley.

Jon Hocking: Good afternoon, everybody. I've got three questions, please. Firstly, on AGCS, have you now completed all the portfolio pruning that you want to do? That’s the first question? Second question, just coming back to the run-off results.

You sort of mentioned that, you sort of being conservative, but were there any particular portfolios where you strengthen reserves at third quarter stage? And then finally, I just wonder whether you could give any comment, as far as you're able to do all the dividend today, discussions you might have in the past, and in recent weeks? Thank you.

Giulio Terzariol: Yeah. So thank you for the questions, Jon. On AGCS, I will say the pruning in the sense of getting rid of some book-of-businesses is fairly completed, but we are clearly still taking a lot of written actions, locate exposure. So from that point of view, we are still in a situation where we are driving margin profitability.

And we are using the market to do that, instead of maybe start thinking about growth. So that's the priority number one. As we go into 2021, once we see that the combined ratio is going below the 100% level, and also, you know, we want to see this below 100, doesn't mean 99, once we get there, once we have also comfort about elements like social inflation, or these kinds of things, at that point, we might start thinking about growth. But for the time being, clearly the priorities still making sure that we have an underwriting performance, which is better compared also to the underwriting performance that we see right now. We should not forget that the combined ratio according to our you know, analytics is 100%, we are not saying it's 93% or 94%.

So from that point of view, we are going in the right direction, but there is still some work to do. On your question about the run-off, no, there was nothing funny. So I just tell you that in general, we have taken a more conservative view across the board. And this is just a reflection. There is uncertainty clearly as you go into the fourth quarter and also as you go, you prepare for 2021.

So there is nothing specific in a entity that justify, you know, the lower number, just overall conservative view on - just to make sure that we are well prepared for anything that might happen as we move forward. On the dividend, I will say the conversation that we have with our regulator, the same conversation that we had at the beginning of the year. So at the end of the day, the position has not changed, which means that as long as a company has a good solvency ratio and good capital management and liquidity, it is going to be the basis for the decision on dividend. So that’s the status as of now and there's also the status based on the conversation that we had with our regulators. So no change on that position compared to what we saw in April, last year at AGCS.

Jon Hocking: Thank you. Could I just come back on the on the run-off comments? You mentioned being more conservative? Is there anything particular you've seen in the environment of this major - driving that decision?

Giulio Terzariol: No, I think it’s a normal reaction. There is not that we see anything. Yes, I'm shown that you know, we say we need to change something, its just a normal reflection to say let's hold a little bit power dry in a situation where you don’t know what might come. In front of you, if you ask me, what I'm referring to, we need to see in the next year the revenue might be below or we might have also a situation that revenue might be lower also and we discussed that already.

Also, because motor for example, premium expansion or the frequency that you might have it in the current year, so this is going to influence the premium for the next year. But we might see a spike in severity maybe in frequency next year. So it's a little bit, you know, be more conservative to prepare for the developments that you know we had not seen before and as a result of this COVID situation. But there is nothing that we are seeing right now. Its just been prudent.

Jon Hocking: Okay. Thanks very much.

Giulio Terzariol: Welcome.

Operator: We will now take a question from Michael Huttner, Berenberg. Please go ahead.

Michael Huttner: Thank you. And fantastic, lovely results. I have three questions. One is, when you began to approach the revenues. Just wondered if you can expand a little bit on more - on your thinking on revenue growth in 2021? The other is a maybe an important question.

What would be the solvency ex-UFR? And I think, I understand you would say, well, it's a little bit unfair because we invest in risky assets, and of course, wanted risky assets, but just to give a feel for it? And then last one is maybe you can say something on what's next for COVID both 2020 and maybe more claims in future? Thank you.

Giulio Terzariol: Yeah. I didn't get to your second question, can you repeat the second one.

Michael Huttner: What would be solvency excluding the...

Giulio Terzariol: Okay, so and the solvency, excluding UFR, I tell you right away, I don't have the number on brand this calculation.

I can tell you a however, what will be the impact in the case, you know, the current proposal of Europa [ph] is implemented, that will be assuming we do no management action, there will be about between about 15 percentage points on the solvency ratio of the group, but these would assume that we clearly sit here we do nothing, but don't have now a number in the case the last week, point will be completely removed from the picture. So on the COVID. At the beginning of the year, we guided that we expect to have you know about €1 billion plus of COVID expenses, COVID impacts. So as our Q3 we are at €900 million. So I would expect that in the last quarter, we're still going to see the impact coming from Euler Hermes, because clearly on that one, we are still going to book a combined ratio about 100, that we might have some, at the end of the year we’re going to decide whether we want to add some reserve for financial Life and D&O you know, just to be prudent because one day, it might be that we're going to see some claims coming there.

So I could expect that in Q4, we're going to see the remaining 100 million to hundred 200 million that we have anticipated from the beginning of the COVID situations. That could be my expectation for Q4. So about, I would say a couple of 100 million of impact.

Michael Huttner: And then on the revenues, on the growth yeah?

Giulio Terzariol: On the growth for next year, I just said, it depends, right? We - clearly we are going to be still on a different trajectory of revenue for travel. So it might be that we are going to be at the level where we are right now, maybe a little bit better depending on how the COVID situation develops.

But fundamentally, clearly, there's a line of business where the revenue are still going to be lower compared to a normal run rate. The same to a certain degree is going to apply to Euler Hermes and then when we start looking at the other businesses, like our operation in Italy, in Spain, Germany, I will say that on aggregate I would expect growth to be flattish or maybe slightly positive. But fundamentally we are not going to see next year the growth rate or 3% or 4% that we were used to see in prior period. So from their point of view, yeah, we are thinking that growth is going to be relatively muted next year. So that’s our expectation on the Life side.

That's little bit of a different story because on the Life side, you might also see you know, fundamentally when if the situation stabilizes, a pickup in production, so it's very difficult to say, on the Life side what will happen to revenue. On the Life side is also less, let’s say critical compared to Property, Casualty because clearly, they dynamic of the financials on the Life side are somehow different compared to the dynamic that you have on the Property, Casualty side. But clearly on the growth side, we are kind of cautious as we go into 2021. And that's also the reason why we are indeed focusing a lot on productivity. We know that we need to work hard on the expense side in order to preserve the margin.

And then also, that's one of the reason why we put a lot of emphasis also on making sure that we don't have leakage on technical excellence, because we will need also a good loss ratio. So that's very high in our - on our priority list right now.

Michael Huttner: Thank you very much.

Operator: We will now take a question from Peter Eliot of Kepler Cheuvreux. Please go ahead.

Peter Eliot: Thank you very much. I have three questions as well, please. First one is a little bit of continuation to the topic of the growth outlook. But - and in Life, I just wondered if you could sort of specifically talk about the competitive situation and as you steer away from guarantees, you know, how the rest of the industry is moving or following and what the sort of customer perception is. So I just wonder sort of competitive pressures, great, if you could talk about those a little bit? And secondly, on the derisking actions, you've taken as, I was a little bit surprised that the solvency sensitivities didn't change very much, given that you have taken those actions.

So I just wanted you to explain what's happening there? And then finally, COVID losses, you made it clear that overall the losses for this year, you know, your base cases, they shouldn't change very much. And I'm just wondering, could you just highlight what you see as the main sort of downside risks from here? I mean, what a worst case scenario, in terms of the environment, the development? And what that might mean for you or is that very difficult downside risk now that contract terms have been changed, and renewed and so on? Thank you very much.

Giulio Terzariol: Perfect. So starting from the first question about the competitive environment. On the Life side, I would say the following that not concern in Germany.

I will say that more than we are doing is totally logical. And I'm pretty confident also that competitors are going to follow and also from a customer point of view, I think everybody's going to understand that the new product offering is, first of all, is still a good product offering because yeah, it's true that the guarantees are lower or, let’s put this way, there is more sort of protection which is given, but you can still on the long run get a return and the alternatives are either you go to a bank, you get zero, or you can clearly invest in a high risk, higher risk strategy, but then you need to pay to be also willing to bear the consequences. So in Germany, I will say, I think also because of the branding, the strength that we have, I strongly believe they we are going to be successful. Also in France, just to give you an idea, I see that also the competition is moving. So from that point of view, I believe that the entire industry is moving somehow in the same direction, that's very helpful.

In Italy, anyway, we have already changed our mix to Unit Linked. So in Italy, we don't have even the need to make a lot of changes. And then we always go back to the United States, where I will say in the United States sometimes we might be in a situation that we operate with different metrics compared to what the competition is doing. But I will say the majority or the competition is adjusting also because they, you know, rates are anyway also not on a real word basis. You need to make changes in order to preserve the profitability.

So that's not only the case if you are running a market consistent by the value, kind of pricing. So I will say fundamentally, there is a change. And then as usually in the US there is somebody who didn't get the email. So there are some companies they might stay a little bit more aggressive, but eventually even the companies that stay a little bit more aggressive for maybe a couple of quarters eventually, you know, they need to realize what reality is. So I would also - I would even say that in the United States, when I speak to my former colleagues over there, there is a good degree of confidence that they can have a product offering, which is going to be competitive, is going to be accepted by their customers.

And we can get to a premium level that we need to get in order to operate successfully. Then you had a question about the sensitivities, why they are not going down, though, we do the risk and to tell you that's a good observation. The reason why they are not going down, even if we sell equity, if their rates, interest rates are going down, somehow, you get to the same level of sensitivity, because every time the interest rates are going down, especially on these multiple system, better value, you have less distance for the guarantee. So automatically, this is kind of - everything has been equal, that would increase the sensitivity. So we need to - the risk to a certain degree, in order to keep this sensitivity stable in the case of lower interest rates.

If we have a combination of the risk on the equity side and increasing interest rates, there you're going to see how the sensitivities are going to go down significantly. But that's exactly what is happening right now. So we take action on investment portfolio, this is going to decrease the sensitivity, but on the other side, lower interest rates are going to put them back more or less to the level we will - we were before. And then on the credit losses. I understand you are referring to in general, the credits, how we view that.

Peter Eliot: COVID…

Giulio Terzariol: COVID, sorry, I understood, credit loss. On the COVID losses - to okay. I will say fundamentally, as we look into 2021, the situation is going to be such that our exposure to COVID losses coming on the business interruption is going to be way lower compared to what we've had this year, its not going to zero, but it's going to be significantly lower. So from that point of view, I will say there wouldn't be a concern. And then when we think about entertainment, in decades, we have done a calculation that assuming we have a lockdown - basically for again a situation where for 12 months no events are going to take place, then we will have potentially loss that would up to €200 million, but they will be really situation what that is happening basically for the entire year.

So from that point of view, I will say the situation as we look into 2021, if you ask me is manageable, you have always assumed that in the famous situation where we might see, you know, that kind of impact in entertainment, most likely, the frequency model will be also a little bit better compared to the historical average. So as we look into 2021, on the underwriting side, I think the impact from COVID on the claim side will be limited. So it's more about thinking, Oh, what the implication is going to be or revenue or the sentiment in the market, on the capital market, but from a pure claim point of view, I would say this shouldn't be a major concern for 2021.

Peter Eliot: That's great. Thank you.

Could I just quickly follow up on your comment on the sensitivity. And given what you said, does that mean there's more work to be done? I mean, should we maybe expect you to still be working on that?

Giulio Terzariol: Yeah, we always tell you, we work a lot on Solvency II and sensitivity. So from that point of view, that's an ongoing effort. And you know, part of the work that we do is also to do that book transaction, because at the end of the day, there is a point where you need to think not only about how you change your assets, but also your maybe change your perimeter. From that point of view, there is no doubt that we have been working on our solvency ratio for basically throughout the year.

We have also action that we will constantly put in place. So let me also tell you, we are at a very good combine solvency ratio. So the level is anyway, very, very good and very comforting. But clearly, we take all opportunities and all action that we can take in order to stabilize the solvency ratio even further and potentially to increase it

Peter Eliot: Thank you very much.

Giulio Terzariol: Welcome.

Operator: Our next question comes from Andrew Ritchie of Autonomous. Please go ahead.

Andrew Ritchie: Hi, there. A couple of questions. First of all, Giulio, just remind me or clarify what you said on the outlook for the Life spread, which is annualizing, as you said, at around 80, I think it may have benefited this quarter from prepayments in the US.

So I'm just wondering if that drops out? Is it - do you still anticipating it can be held around this level? Second question, is it - I think, in Q4, you review the assumptions, the back assumptions in the US? You have any concerns on that? And I guess the only other two quick questions, has there been any new discoveries in terms of efficiencies, cost savings that you might build on as the year closes? And in particular, is there enough material from learning from COVID to launch a new cost saving program? And then the final question was, you mentioned in your previous answer that you can obviously look at in-force management. There has been a lot of private equity interest in the last month or so, particularly in the US blocks. Do you think your ability to offload problematic blocks has actually gone up?

Giulio Terzariol: Yeah. Okay. Thank you, Andrew for the question.

So starting from the first one about prepayment, its not something that we e saw or not to the extent that it was brought to our attention. So I will not say that there was a driver what happened in Q3 on the spreads. And regarding your question, where do – I’ve seen this spread is going to go, but from my standpoint, that is the investment margin in a relative terms, we know this number can just go down, it's not going to go up. This is going to be partially offset by the Federal Reserve basis, this is going to increase and we should not forget that the capital intensity on that reserve basis is different compared to the capital intensity we had in the past. But then it's pretty clear that what we need to have is more earnings coming from loadings and also from the technical margin.

We are not going, let’s say with better by lifting investment margin, this is not going to happen in this kind of environment. So we need to think a little bit different about the composition of our profit on the Life side, as we move forward. On your question regarding DAC in the United States. No, I'm not concerned on the DAC in the United States, what we might see in Q4 the one side, I believe that we are going to see potentially loss recognition in Latakia [ph] But on the other side, we're going to see most likely some positive effect on other lines of business, where we see that we have a positive development or the assumption compared to what we have in our reserving. So don't expect to see any surprise coming from the US in four quarter.

But you know, we're going to add some lines of business like LTC, where we are going to have a negative unlocking, we're going to have other line of business where we're going to have a positive unlocking. So overall, I would say the quality of the balance sheet in the US is strong. And this leads me to the last question. And I'm not going to speak now specifically about the United States. And this is going to be more of a generic comment.

What we see is that, you know, and I said this already before, our book of businesses, they tend to - maybe they don't tend maybe to have sometimes the best ROE, but the quality relative to other things that are out there is pretty good. And that's just a consequence of the discipline that we put in place over many years. So in our situation is really that – I think we took the right steps and decisions, clearly where rates are so low, taking the capital intensity of those businesses might be higher than anticipated. But this means that for us to find buyers might not be overly complicated, and this is a generic statement. Because the quality of the business that we add there its a little bit better.

And so this is more easier, if you want to potentially find an agreement with a with a buyer, but leave that as a very generic statement. And to come back to your specific question. Do I think that in general the possibility to sell book today are higher compared to a few maybe a year ago? I would say, yeah, maybe they are a little bit better compared to a year ago. Definitely, they are now worse, because my concern was as we went into the COVID crisis that maybe capacity might dry up, but that's not the case. So there is definitely an insurance for bad books.

And if you have a bad book, which is not really that bad of a bad book, the interest might be even slightly better. And then on the efficiency. I’ll just tell you, out of COVID I will say yes, you can learn something also about efficiency, but I will not overplay that because in order to be less travel, yeah, my type expense ratio I wouldn’t say this is the main driver. We are also looking at location, clearly, potentially one might say that, if less space is needed, you can do something there. But fundamentally for me if the COVID is more, the proof that we can move to a more digital world, so from that point of view we can accelerate what our plan was anyway with ACA model with Allianz customer model.

So it's more an acceleration of what we wanted to do or prove that this can work. Its going to shape also the customer relationship potential or the interaction with the distribution a little bit differently. But I wouldn't say that just because of COVID now suddenly the space need is going down one percentage point, I wouldn't see that way. But clearly can – COVID can support our agenda. From their point of view, that will be one of the positive out of the COVID situation.

Andrew Ritchie: Okay, thanks very much for the conference.

Giulio Terzariol: Thank you. Operator We will now take a question from Farooq Hanif of Crédit Suisse.

Farooq Hanif: Thank you very much. Hi, everybody.

First question on AGCS. The level of pricing that you're seeing on renewals is really quite high. It seems to suggest that you're taking advantage of liability and longer tail lines of businesses. If you could talk about you know why that is particularly high? That will be helpful. And secondly, if next year, you find that you're, for whatever reason, not allowed to buy back capital.

Would you still be looking to deploy the €2 billion to €3 billion that you have? And last question, maybe, on the UK, you've always had a very high level of reinsurance in the UK. So you're going to - I think your net to gross is sort of 50% to 60%. Do you really need that, now that you have a more diversified book? And are there any plans to adjust the reinsurance ranges in the UK? Thank you.

Giulio Terzariol: Yeah, maybe I’ll start from the UK one, I believe, what you see there is a consequence of the quota share that we do, which is are capital management quota share that we put in place in most of the entities. And we do that not only in the UK, we do also in other countries.

In most of the entities, when we talk to you guys, we show you the view basically before this quota share that we do. In the case of the UK, we didn't do that so far. But next year, we're going to flip also for the UK to use the same methodology. So reality is we're still retaining basically, the risk and the profit. And that's just an indication of the UK.

You saw this so far the numbers included in quota share to the group, moving forward, you're going to see a picture, which is more similar to what saw - what you're seeing for the other country. So that's on the UK. So back to your question. Now, we wouldn't need that kind of reinsurance. So you got the point right.

And we're not doing that. On the buyback, will say that assuming that in 2021 is not possible - is not feasible because of the regulatory environment to do buyback. Clearly, we would look at the possibility to deploy capital. And that we always do, but we will not compromise on the financial discipline, because, you know, there is no point to deploy capital at suboptimal return of or buy suboptimal assets. Because at that point in time, I'd rather wait a year longer and do a buyback, as opposed to regret, for the next 10 years why we bought something which is not quality, or that has you know, not the return that we want.

I am sitting in front of one of our investment guys, he would like to add the money to invest in more risky assets, that what he's telling me, but we're going to keep the discipline. That's what we're going to do. But clearly, if we cannot do buyback, we're going to look at alternative way to deploy capital. And then on the rate increases in AGCS, I will say that we see rate increases basically across all lines of business. So it's not just in financial lines or in liability, we see even bigger increases in property.

So that's a hardening which is basically across the board. And I would even say at this point in time across almost all geographies. So that's what we are currently seeing in the industrial business. And we are not the only one. So that's market trends, which is pretty strong.

And we don't see that is coming to an end yet. So rate increases are still going through. But this also tells you that there is potentially still uncertainty around social inflation. This means that, you know that there is still a way to go before companies can claim that they are comfortable with the level of profitability. So otherwise, you wouldn't see these kinds of rate increases throughout the market.

Farooq Hanif: Thank you very much. If I may could go back on the capital deployment. Maybe I can ask it in a different way. If you – I mean, we know that you want financial discipline, you know, you have obviously seen quite a lot of opportunities, and you've deployed the capital. I mean, if you aren't able to, let's say in 2021, deploy the capital in buybacks or find deals or, you really don't want to derisk for whatever reason.

I mean, is that buffer still there as a budget to be used? Or does it just get absorbed as surplus capital stays in the business forever? So for example, would you think about doubling the buyback the year after? Is the one way putting it?

Giulio Terzariol: That could potentially be always a possibility. But I will say, let's go through 2021. And let's see what is happening in 2021, what kind of situation we're going to have. And then, we can speak about 2022, ‘23, maybe a one year down the road.

Farooq Hanif: Okay, thank you very much.

Giulio Terzariol: Welcome.

Operator: Our next question comes from Vinit Malhotra of Mediobanca. Please go ahead.

Vinit Malhotra: Hello. Can you hear me?

Giulio Terzariol: Hi.

Yeah, absolutely.

Vinit Malhotra: Giulio, a few quick clarification, please, if you like. First one is the, I noticed the capital efficient products in Life, we've got a very nice €300 million plus operating profit after a long time. And I also noticed the reserves in that - the unit in the area in that segment are doubled in the quarter, despite new business value literally, like for 20%, 25%, down and into the premium 20% down. Is there something going on in that segment that you would like to flag and we should know about? So that's the first question.

And if you can assume €300 million is not going to happen. The second question is just on the frequency benefit in PMC being quite a bit lower than the previous two quarters, that €100 million now, €400 million run rate previously. Is that part of the conservative approach? Or is that actually that, okay, things are more normalized. And that's what we should have expected. So that's it.

The third quick one is that the Solvency II market impact of six points, would you say that there was some surprise for you there in the spread or the volatility because obviously, consensus were surprises and so was I. So just any comment there? And very last quick follow up on this whole M&A thing, is that - there were news around a particular collection in France. And then it came to fit with your strategy, but are you able to comment a bit about that particular view of France transaction at all? Thank you.

Giulio Terzariol: Okay. So I go first – I am not sure I got all your questions, but then maybe you can repeat.

On the capital-efficient product, the improvement in operating profit is driven once by Allianz Life, the situation in the - recover the spread margin, if you want on average basis in Q3 this year, has been good compared to some pressure that we had in last year. And the other one is, Allianz Germany, you know, up to now we didn't see a lot of profit in that line of business coming from Allianz Germany. But now, we see more profitability coming through, just to give you an idea, anyway, are the development in Germany last year, the reserve associated to this business in Allianz Germany were €40 billion and this year their reserve average reserve were €40. And this year, they are €64 billion. So you see a big increase in volume there.

And this clearly is also then leading to a different impact on the profit. So I think this is where you have a combination of most stable margins on the Allianz Life side, and there you see also the profitability of Allianz Leben kicking in. Then I - that's also the picture that you would expect. And we are not necessarily surprised by these developments. Because I said there was potential for further profit in that line of business for the year was well over €1 billion.

So from their point of view, it might be a little bit more elevated, however [Technical Difficulty] this quarter, but fundamentally the numbers are directionally correct. Then you had a question, I believe related to another line of business, but I didn't get it.

Vinit Malhotra: The frequency benefited…

Giulio Terzariol: Yeah, on the frequency in PNC. And the question was, because I did…

Vinit Malhotra: I mean, it's much lower now in 3Q. Is it just the change in the economic environment or is it also your conservative approach, that you mentioned…

Giulio Terzariol: Okay….

Vinit Malhotra: Reserve getting…

Giulio Terzariol: So I - the only thing I can say about frequency in general is the frequency moto tends to be lower compared to what you historically see in Q3. Anyway, the frequency moto was higher compared to what we saw in Q2. So overall, there was a little bit of a benefit from frequency in moto in Q3, but that wasn't overly significant. So I would say was relatively minor. But that's what you're looking for on the frequency…

Vinit Malhotra: Yeah.

I just wanted to understand if you recognize it a lower number…

Giulio Terzariol: Okay, I got the question. I will say that, that's also potentially part of the prudency, I believe, for sure we had a conversation in Q2 where the reduction frequency was a little bit more compared to what we reflected. And I would also say that to a certain degree, we might have been a little bit conservative in Q3, but in Q3, the development of frequency was anyway different compared to Q4. So I will say there might be some entities, some level conservatives, but I wouldn't for Q3, overplay that element on the frequency driver. I will say it's less of an item compared to the conversation we had in Q2.

Then you had any question on the Solvency II market impacts. And, yeah, you know, the things that have driven this additional improvement, if you want in a Solvency II capital was the interest rate volatility is lower. So that's also something that one has to keep an eye on, but clearly, we cannot put a possible you know, driver there. But there was a reduction, especially on the interest rate volatility on the long end. And this is also the most relevant when you think about the fact that we have also long tail liability.

And then also when we do this sensitivity, we give you the sensitivity to rates or credit spreads, these are all, if you want linear sensitivity, but you can add twisting of the curve, you can also add twisting of the credit spread curve, there was definitely an element that this quarter has been beneficial. But then we go back to the conversation that we had also in the past, there is always some noise and sometimes the noise can be positive, sometimes the noise can be negative. I will be concerned if I were you, if I see that the noise is always negative, then it means – then I will start questioning, whether we have a fundamental misunderstanding, what is happening. As long as you see a couple of percentage points, sometimes it can be up, sometimes it can be down. I think that's totally understandable when you have a calculation like – so obviously to end a light theory, what this calculation fees.

So first of all you need to - when we try to estimate solvency – the solvency ratio, when you try to do that, based on our sensitivity, this calculation tells you first of all, you need to do a [indiscernible] calculation of a lot of liabilities, okay, that's how you calculate the own fund. And then you need to ask yourself how this own fund is going to look after you run 50,000 scenario and you look at what is happening in a 99.5% higher level. So, you can imagine that when you try to estimate what happened to that number. There might be - you just need to be off by €400 million, and you have a couple of percentage points of solvency ratio differential. So if you start thinking this way, you understand that two or three percentage points are more or less of solvency due to market movement is in reality only mistake.

And the point is you should not have a clear trend in one direction, if it is always positive, this noise always negative, there would be concerned as long as it is up and down in this part of the game. And that's what we are saying. And then you had another question, which was on…

Vinit Malhotra: On M&A and who was in France.

Giulio Terzariol: Then a comment on M&A rumors. So from that point of view, I don't have much to say about M&A rumors.

Vinit Malhotra: Perfect. Thank you very much.

Giulio Terzariol: Thank you for the question. Thank you.

Operator: We will now move to a question from William Hawkins of KBW.

Please go ahead.

William Hawkins: Hello, Giulio. Thank you very much. Two questions on the de-risking and Solvency II you've been referring to. It may seem a stupid question, but can you just remind me, why have you been doing this de-risking in the first place? I mean, I'm not blind to the environment around us.

But you might have thought that with all the central bank action going on, and all the market movements that have already happened, and all the prudency that Allianz already has, you know, de-risking from things like equities and P&C and duration matching, would have been something you'd already done or something, which is not really necessary to do, given all the central bank support for the capital markets. So if you just remind me why you've done this? And then maybe easier to answer, I don't know. Could you also - presumably, there's a cost to the future capital generation, or the de-risking you've done this year may not be a massive number. But could you just tell us how much in euro terms your future operating profits for Solvency II would be dragged by the de-risking? And then the last question, please, given everything that you've said about the down up, down challenges, the ongoing opportunities, efficiency measures and the rest of it. Into 2021 and beyond, can Allianz still grow its operating profits at 4% a year? I mean, it seems to me, you're talking cautiously on the Life side of the business, low yields are a big problem.

So everything hinges on yet more and more efficiencies in the combined ratio, and presumably at some point that just becomes very hard to achieve, given you've already been quite efficient. So how confident are you with that 4% is a growth figure you can achieve in 2021 and beyond?

Giulio Terzariol: Okay, maybe - thank you, Bill for your question. So starting from the first question, why we do de-risking, under the circumstances, I would say, you know, export is always a little bit easier to say maybe equity market when didn't go south, and they stay relatively flat so far. But when you are in a situation where you see that there is a lot of people that can get very nervous around you, you want to be a little bit more prudent. By the way, I think that's the position that we have, right now is also the rights position, but clearly, one can take also a different view.

I don't think that for our success is so critical to have a few billion more shares. And in these kinds of environments, I think to be prudent or semi prudent, if you want capital management on preserving the Solvency ratio, I think is the right move to do. And coming to your question, what is the cost difference - what is the cost of these theories came from a profit point of view. But I can tell you that on the Life side, de-risking was I would say €3 billion plus of equity that we sold. So you can just - and clearly this kind of reinvest – the equity that we sold we have been reinvested in the normal fixed strategic asset allocation.

So from that point of view, you might say that everything has been equal. One can lose two to three percentage points of income. But I would also tell you, that will not be the kind of income where I would necessarily consider also the volatility that can come with that, what I would attach a high P ratio, so from that point of view, yes, one can say the profit might be lower compared to keeping equity, but on the other side, there is really a benefit from a risk point of view and in theory, having €3 billion of equity or €3 billion of some other assets, first doesn't make any difference, its €3 billon and then one year later, you can see whether the €3 billion have been - what kind of strategy has outperformed the other strategy. So from their point of view, yes, there is a cost if you want on a normalized basis. In a tail scenario, there is a benefit.

And I will say this is not potentially the most critical element and in this environment, we go for safety. On - while we think about the future, and I'm going to speak now about 2021 specifically and in 2021, there might be clearly a lot of moving pieces. We are still in situation where we are - we have lockdowns as we speak. And we don't know what those lockdowns might create in the capital markets, what kind of impact they might eventually have on the revenue basis for 2021. But I can tell you that beyond 2021 how do I see Allianz on a normalized basis.

I will say on a normalized basis, I believe that, based on our footprint, we're going to be able, at some point in time to go back to our growth rate that you saw also in the recent past, there will be growth where you have 3 to 4 percentage point of improvement in growth in premium. And then if you combine that with action on the underwriting results, because there is always something you can improve if you combine that with also improvements productivity, or maybe for any situation where you can go back to investing in equity, I believe that, you know, fundamentally the business should be set up to achieve a growth rate, similar to what you saw also in the last year. So, now, you know, we're going to go through a specific phase. 2021, we will see how this is going to play out. But fundamentally, the trajectory of Allianz five years down the road is not going to be any different I will say, because of what we're going through right now.

William Hawkins: Thank you, Giulio.

Giulio Terzariol: Welcome.

Operator: Our next question will now come from Nick Holmes of Societe Generale. Please go ahead.

Nick Holmes: Hi, there.

Thank you very much. Just the quick couple of follow up. Firstly, with Eopa [ph] Do you think there's a need to make some changes to avoid the confusion? We've had over dividends this year? I mean, I'm thinking maybe restricting Eopa's powers or giving more power to national regulators? And then secondly, just coming back on the de-risking German Life, are you - I know you touched on this earlier. But are you a bit worried that in the US you're not really doing the same? I thought you said the US market is more competitive. But that is really a danger to you is met rather than an opportunity? You know, that doesn't make sense to pull back in the US? Thank you.

Giulio Terzariol: Thanks for you question. On the dividend, and the power of different regulators, that's really not my place to comment, I can just get into trouble if I get there. So coming to a more familiar topic, which is Allianz Life, maybe I gave you wrong impression, we are making changes in Allianz Life definitely. So the production is shifting more and more to these IVA products. Also, we have introduced in FIA we introduced a different structure where we have basically a fee that we can also increase in the case there is a spike in defaults, or there is a situation with a downgrade.

So we have definitely put even more flexibility and management levers into the product. So we are definitely making changes. And there is also by the way, apparently some regulatory change coming that should support somehow the profitability of the business because they are going to lower basically the minimal guarantee because there is a sort of minimum guarantee on these FIA products coming from the regulator. So from their point of view, we are taking actions and we also believe that some of the regulatory changes will be beneficial. And my point was that it looks like other competitors are also moving in the same - in the same direction.

But indeed, so that we don't see now this disconnect that we need to do more compared to others. So, we are doing what we are supposed to do. And the competitors, most of the competitors are also moving, but unfortunately, there is always somebody who is not going to move and these might cause something on the revenue side. But there is no doubt that our principle in the US has always been, first, we make sure that we feel comfortable with the risk and with the profitability of the products. And then we see how much revenue are we getting.

And I would say if I look at the numbers as of now, the revenue that we get might be lower compared to what we had in the past, but they are self sufficient for Allianz Life to operate. I was the CFO there. And we had a clear number in mind how much revenue we need to have in order to be able to comfortably cover our expenses. And I will say at this point in time Allianz Life is definitely at a level of production where they can cover the expenses and this means also they can get to the margin they need to get to.

Nick Holmes: That's great.

Giulio Terzariol: I hope its clear.

Nick Holmes: Yeah, that's very clear. Just one very quick follow up on US. Would you say, therefore, that the growth prospects in the US are not looking that great?

Giulio Terzariol: Yeah, I would say for the time being their growth prospect might be more limited. And I don't have a problem with that to be perfectly blunt, because I was there many years and I as a CFO of Allianz Life I never had an issue, if the growth was a little bit slower for some period.

I will not make any statement about what might happen three or four years down the road. But to go through a phase of lower production that happened already also during my time, and I think that's the right way to do things. And fundamentally, there is still a growing book of business anyway, because the company is not in a situation where the outflows are more than the inflows, if you think almost in a asset measurement logic. So even if we see a little bit less growth, I will say on the revenue side, I would say the assets under management, they are not going to decrease, they're going to increase over time.

Nick Holmes: That's very helpful.

Thank you, Giulio.

Giulio Terzariol: Welcome.

Operator: Our next question today comes from James Shuck of Citi.

James Shuck: Hi, good afternoon. Just couple of things left from me.

Giulio, the restructuring costs were quite high in the third quarter, we've had €4 million or €500 million each of the last few years. I think previously, the indication was that the restructuring charges would start to come down. But the world is a different place now. And you're talking about accelerating the plan with ACM. So could you give us some indication about the outlook for the restructuring charges, please? Secondly, I just wanted to return to M&A.

And just understand clear about what your appetite is for larger deal. So I know you've taken a step back from that narrative recently. But there are certain assets around that’s becoming cheaper. There's a U.S. P&C asset that could on the horizon at some stage.

Could you just talk about the potential capacity you have to do an M&A a larger, M&A deal should be financials stack up? And you know how likely you might be to actually pull the trigger on that sort of thing? Thank you.

Giulio Terzariol: Okay, so starting from your first question about the restructuring charges, I will say that moving forward, you should expect that we're going to have about €500 million statue in charges below the line, and the number might be a little bit higher, or a little bit lower, depending on the on the situation. But I think that you should work based on a assumption that you're going to see for €100 million [ph] restructuring below the line which is by the way a combination of three things. One is what we define as pure restructuring costs when you know, you have – yeah, when you go through a statue and then we have also integration costs when we do M&A, which from once point of view is also similar to a statue and then we have also all the IKEA [ph] commission in, and that we are pushing in order to get to the new IT platform and also to the new overall business platform that we want to build up with Allianz customer model. So from their point of view, we have three driver, and so you should expect more or less to see for €100 million [ph] of restructuring costs below the line as we move forward.

On your questions about M&A, I will say the following anyway, I am not so sure that prices really so much lower because it's true the valuations have come down. But what happens is when you want to - when you look at the companies that the premium might go up, so I believe there is a tendency from the seller point of view to normalize almost a devaluation, to you know, what will be the level before there was this kind of situation recovery that has been driving down the valuation issue when I saw that you saw just an example yesterday, with a rich premium over the current price, so from that point of view, I wouldn't say the valuations are coming down significantly if you want to buy something. And as far as we are concerned, we're not quoting numbers, but clearly our ability to do M&A, it's significant. The point is we are not in the need to do M&A, we are not in a hurry to do M&A. So from that point of view, I think that’s an option that we have.

But that's not necessarily the thing which is keeping me busy right now on a daily basis, let’s put this way.

James Shuck: Okay. Thank you very much.

Giulio Terzariol: Welcome.

Operator: We will now take a question from Michael Haid of Commerzbank.

Please go ahead.\

Michael Haid: Thank you very much. Good afternoon. And two questions. First on the Life new business generation in the third quarter, when I compared the second quarter to the third quarter, I noticed maturity materially, more -- materially more pronounced decline in new business from recurring premiums in the third quarter, which more than half year-over-year, that was not the case in the second quarter. Is this due to the basis effect you mentioned before? I think it was Italy? Or is it a product based observation? Second question price increases in P&C.

In the UK prices in the first half increased 5.5%, after nine months it has reduced to 3.7%. So it appears may have been some pressure in the third quarter, some decrease in the momentum. Is that the right interpretation or is that something seasonal going on?

Giulio Terzariol: Thank you for the question. To start on the first one, I don't really know about a single premium versus recurring premium, to be honest, but there is always I believe, also on a quarterly basis, you can see some volatility from premium level, you know, give you also an example sometimes you might have a promotion in the United States, this is going to drive premium in the United States in the United States, and premium in the United States are largely single premiums. So I was not very much into that.

I believe its just the consequence of the volatility. I wouldn't call it seasonality, volatility that you might have between different quarters. On your question about the UK. The point is what we are showing right now on the UK is the UK meant as Allianz UK and LV, what we were showing in Q2 was the just a Allianz UK and we what we see fundamentally, you know, the comparison is not on the same basis. What we see in the UK is that on the commercial lines, we have a rate increases, which as you pointed out very substantial.

On the personalized in LV, the rate increases are just positive, but not as large as in commercialized. So this explains why you see now a different number because - lower number because that's weighted for the two entities and in Q2, the numbers that we provided were just based on the UK, or Allianz U.K. perimeter. And just anyway, I have to speak about the UK pricing momentum that we see in general, if you ask me, okay, give me now a view, Q3 over Q2 on a combined basis, we see nice momentum in commercialized. But there is a little bit more pressure on the personalized side.

So the rate increases that we could get to the beginning of the year in personalized and all the same that we can get, we can get now. So the number would have come down anyway. But not to the level that you have seen because of this difference in basis of reporting.

Michael Haid: Okay, fantastic. Thanks so much.

Giulio Terzariol: Thank you.

Operator: [Operator Instructions] We will now take a follow up question from Michael Huttner of Berenberg. Please go ahead.

Michael Huttner: Thank you, Giulio. Must be looking forward to this.

I have two very, very nice questions. What is the - what are you seeing a net inflows in Q4 at PIMCO. And the other question is, is any updates on those lawsuits which you saw filed during Q3, like from the MTA and others relating to the structured after funds? Thank you.

Giulio Terzariol: Okay, thank you. I don't drink tea.

On the net inflows, in October the net infows at PIMCO were being positive, and there were about €7 billion. I don't remember where the US dollar, euro, but anyway, a good number. So from that point of view, as of October, the flows were still positive. On the lawsuits, regarding AGI, there are no news. So we within that clearly the lawsuits are baseless from our standpoint.

And from that point of view, you know, we're going to defend ourselves. I think the process is going to take a long time, just for you to know is not something that is going to be resolved in the next two months, not even the next year. So here we are speaking of something that could take several years before there is a conclusion. But from our standpoint, we are strong about our position that their lawsuits are founded.

Michael Huttner: Thank you.

Giulio Terzariol: Welcome.

Oliver Schmidt: So we have time for one last question, if there's any, Bettina, yeah, sorry.

Operator: We currently have no questions in the queue.

Oliver Schmidt: Okay, perfect.

Giulio Terzariol: Okay, thank you very much.

I hope that you have appreciated the quality of the results of Allianz this quarter. And again, I don't know what might happen in next quarter. So towards the end of the year, with the volatility that’s out there, but we feel confident about the underlying performance that we have. So from that point of view, we think we also well positioned as we go into 2021. We are focusing on the things that we can control.

And I believe that when we go through this volatility, I think you can appreciate that we are taking the right measure, making sure that we are Allianz in the right direction. So thank you for your time and I wish you, as Michael said a nice cup of tea. Thank you.

Oliver Schmidt: Thanks and goodbye from my side as well and have a nice weekend. Bye=bye.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.