Operator: [Operator Instructions]. And with that, I turn the call over to our CFO Giulio Terzariol.

Giulio Terzariol: Thank you, Oliver. And good afternoon or good morning to everybody. Then, we can go straight to Page 3 of the presentation where we showed the numbers for the 9 months.

And as you already know, we had a very good quarter, and also very good 9 months results, and these applies to all segments and also to all KPIs. As you see the growth in revenue was 6 %. And this is being driven by all segments, the operating profit is 27 % higher compared to the level last year. Clearly, last year we had the COVID effects but even if you adjust for that, the growth rate to the operating profit will be 9 %. All segments have also contributed positively to these developments.

The combined ratio is 2 % point better compared to last year. Here, I will say is more important even to look at the normalization that combined ratio we have combined ratio 93.9. The NetCat loss is 3.7. If you adjust the 3.7 to the 2 % point that we usually expect in the combined ratio will be basically slashed in also 92 %, so that's So that's also a clear sign that if you adjust the numbers for the NetCat, we are very much in line with our 93 combined ratio targets, if not even a little bit better of that. On the light side, you'll see nice operating profit and also a nice no business margin than when you -- when we look at the estimates made the operating profit for the 9 months is 2.5 with the cost income ratio way below 60 and also of lows of $90billion.

They're off €36 billion are coming from AGI, which is a very good number. €54 billion are coming from PIMCO. So very good picture for the 9 month and when you go to Page 5, you can see also that's in the third quarter stand-alone, we had very good numbers. Here, you can see also more momentum on the revenue line for property casualty, with the growth rate of 7 %, when you look at the operating profit, we have a double-digit growth in operating profits. And when we look at the KPI's by segment, you can see a slight deterioration that combine ratio but consider it a NetCat load of 4.9% is a very good combined ratio.

And then in the other lines of business, you can see a very healthy level. On the business margin, a very good level. In the life side, a very good level of cost-income ratio. In Asset Management, also positive flows, but I'm going to come back on these numbers later on in the presentation as I go through the segment. At Page 7, the solvency ratio is 207 %, which is stable compared to the level that we had in June or at the beginning of the year.

And when you look at the sensitivities are pretty much unchanged compared to what we had in the prior quarter. At page 9, we show, as always, they are what they're for, and you can see that the organic capital generation is continuously strong with a 7 %-point number, where you adjust for the dividend accrual, and also for taxes we have organic capital generation 2.5%. The market impact is minus 1 %. It's relatively minor, and that's coming from a twisting if you want, of the curve, especially the credit spread curve, then capital management in total, basically neutralizing themselves. And then we have a negative impact of 5 % in tax and other.

2 % points to the impact is due to taxes, and 3 % points is due to miscellaneous or small items that accumulated themselves to this 3 %-point negative impact. Overall, we have a strong solvency ratio, stable solvency ratio towards 7, which is in line also with the level that we had in the prior quarters. Now, we go to Page 11, come into the segments. We had strong growth in [Indiscernible] of 7.2%. Clearly, Allianz partners has contributed to this growth with a growth rate of about 50 %.

But even if we adjust for the numbers for Alliance partners as we have about 4 % percent of growth. So overall, a good growth rate for the segment. Overall, we see growth in Germany, we see growth in Australia, and Eastern Europe, in Latin America, Turkey, [Indiscernible], Alliance partners, as I said before and also [Indiscernible]. We have just a few entities where we are now growing at the moment, and usually the reason can be pressure on the motor side, or in some cases we are doing pruning in commercialize. The rate environment is stable with the [Indiscernible] with the growth rate for the renewal of 3.8%.

And as you look at the different countries, you can see also that's in all countries the development is either stable or positive, so also from that point of view, we are in a good situation. Now, we move to the to Slide number 15. New crediting profit is relatively stable compared to the level of 2020 when we look at the combined ratio, you could see a slight increase of 20 basis points. Here, we need to consider that's we had more than 4 % points of deviation compared to the prior-year period because of the NetCat. On the other side last year, we had about 50 basis point of negative impact because of COVID.

And then this year we have about 2.4% or better. So, when you anywhere normalized the numbers for these effects, we still have an improvement compared to the prior period of about 1 % points. Most of this improvement is coming from -- also lower weather-related losses, but there is also a little bit of a underlie improvement, but again, where you normalize these numbers, and you get very easily to combined ratio, which is well south of 93 is also for the quarter. Again, a confirmation that we are on track for the 93 combined ratios on an underlying basis. When we move to Page 15, on the picture by [Indiscernible], we see that clearly a few subsidiaries have been impacted by the NetCat.

Germany, clearly, with 14 % points impacts mainly because of the flats, but there were also some storms impacting Germany. So overall 97.9 of combine ratio, which is a very healthy combine ratio considering the impacts for the NetCat. Also, very good combined ratio in England, France, Australia, Eastern Europe, Italy, we have a combined ratio which is a little bit higher compared to what we are used to. But also, the NetCat's impact was higher compared to what we usually expect to see in Italy. And then AGCNS has a combine ratio of over 100 %, but considering the NetCat impact of 16.3, this is a very healthy combine ratio, so we are very confident that AGCS is going to get to the 98 combined ratios by the end of the year.

And then, we have a very good performance in ULA Herrmann. So, when you put together overall, 94.7 combined ratio, again, considering the level of NetCat of the third quarter, I will say these are very good results, proving a very strong underlying performance. Page 17, on the Investment Income, we see a decrease of 6 %, but this decrease is mainly due to swings in the Net harvesting and other, which is basically swing in the fixed effects. Otherwise, when you look at the development of the current yield or stable, where you look at the insurance, a similar income is even a little bit higher compared to what we had last year. So, summarizing for the segment, I will say very strong quarter.

Yes, we had impact from the natural catastrophe. But the underlying performance continue to be pretty strong. Now we come to life on the life-size. I'm very pleased about the development or the no-business. First of all, you see a growth rate, so the present value of new business premium of about 50 %.

Here we have also the impact because of a contract over an insurance contract that we assume the insurance contract that we are done, but even adjusted for that. The growth rate will be about 30 %. And now we can see basically growth across the board. Germany is down, but just for the quarter. When you look at Germany on 9 months basis, in the IT we're growing also in Germany where -- then you look at the business mix is definitely developing the right way, even if you adjusted numbers for the transaction for the assumed reinsurance transaction, you will see that's the mix is definitely going the right direction.

Now moving to Page 21. On the operating profit development, we see an increase of about 12 %, and this is explained by the increase in loading fees, in investment margin, and also technical margins, so I will say all profit sources have contributed to this increase. Clearly you see also highest basis, but that's also the consequence clearly of a higher production. So, in total, $1.3 billion, if you are around it, operating profit, which is well above the $1.1 billion expectation that we have for the -- usually for the quarter. I will also say that we are at a point where we believe that our rate is a little bit higher than the 1.1 that we have usually communicated.

And with that, when we go then on Page 23, on the value of new business, is clearly very healthy with an increase compare to prior-year period of 80 %. Part of it is also explained by these contracts on the insurance side, but even if you adjusted numbers for their contracts, you see a 45 % increase in value new business. And, I would say that basically, almost all countries have contributed to this development, and also in their new business margin, you'll see a very strong pitch across the board. And the same applies in general to the operating profits. So overall a strong performance in the life segment, and also a widespread strong performance.

Moving to Page 25, on the investment margin, you see a growth rate of 13 % and that's clearly the combination 2 drivers. On the one side, we are increasing the policy reserves, so there is a growth rate of 4 %, and on the other side, we are also improving the investment margin. Investment margin is better compared to what we had last year. This an increase by about 8 %. I'm referring here to the margin expressing a percentual term.

And clearly where you combine the 2 affects you get a growth rate of which is double-digit. One thing which is also important, we are growing the reserve basis. But, when you look at the obviously to evolution, there is basically no increase in FCI because of the growth for the life side. From that point of view, I would say there is really capital efficiency, which is coming into place. So, we have more reserves, normal capital, and when you look IFRS numbers, you'll see an improvement in investment margin.

Also, here you see that the current yield is much higher compared to last year. And that's because last year the dividends were pretty low. Where now we see a normalization in the dividend payment. And on the other side, you also see that we are continuously reducing their guarantee. So that's a very nice effect because clearly this development is going to give stability to this ratio as we move forward.

Now, come into ESA management, we have now more than €2.5 trillion of assets under management. When you look at the growth of our assets under management compared to the beginning of 2020, you'll see a 7 % growth rate. If you look at the growth compared to September last year, you'll see a 12 % increase in assets under management. Part of these increase is due clearly to the market development, but in these 12 months, we have been enabling to record 120 billion of inflows, so that's also a very important number to remember. So, these increases are not just your go-to-market, but also to very strong [Indiscernible] ratio of inflows, which was also pretty consistent, quarter over quarter.

Now, if we move to page 29, for speaking specifically about Q3, we see a floor of $26 billion. They are from about $20 billion coming from [Indiscernible] current. Then we have about $7 billion coming from AGI. When you see this split by asset classes, so, by regions, you can see that there was a contribution coming from almost all asset classes and coming from all regions, and then, also when you look at the split between mutual fund, a separate account, you see that the flows are coming from mutual fund, which is also where we have a higher fee margin. And now coming to page 31, you can see clearly that revenue is up compared to last year by 16 % when you adjust for F/X.

And both the PIMCO and AGI grow very nicely. And on the fee margin, you see also an increase of the fee margin over about 1 basis point. This is coming from PIMCO, and that's also the effect of basically having higher mix in mutual fund, compared to the separate accounts. So, overall, a good revenue growth for the segment, and also, when we look at the segment, a stronger fee margin level. This means when you go to Page 33 that's our operating profit is clearly growing This is the effect to the growth in revenue and also the operational leverage that you have in asset management.

So overall, we had a gross rate of 30 %. And when you look at a single entity, you see that PIMCO grew the operating profit by about 20 %. And I will say very noteworthy is the developmental with AGI with a growth rate of a 72 % percent. Also, the cost-income ratio is clearly going the right direction, especially its AGI. You see a reduction this cost-income ratio by more than 10 % point.

When you look at the 9 months number for AGI, you'll see cost-income ratio of about 61 %. Also, with an improvement of 10 % point compared to last year. So, overall, very strong performance in ECA management, PIMCO, but also I will say an exceptional performance at TGI. Some we're very happy with this development. Page 35, on the corporate segment.

There is not much to say. It's basically a little bit better compared to last year and in line with our expectation. Now, I come to page 37. here you can see that the non-operating items are about $300 million, lower compared to last year. This has to do with the amount of realized gains, which has been lower compared to what we had last year.

When you put all together, we have a €2.1 billion of net income, which is 2 % above the prior period levels. So, also a good number considering the development of the operating profit. And then we had less realized case below the line. So, summarizing, a very good quarter and also very good 9 months with growth in revenue, growth in operating profit again, even if you adjust for COVID last year. The growth rate in operating profit was almost double-digit.

A good increase, very healthy increase in net income. Our solvency ratio is stable and much above our target. We have paid between dividend buyback €4.7 billion of remittances to our shareholder. And as you know, considering the strong underlying performance, we have also revised their outlook from upper-half of their range to the higher-end of the range, so I will say that's based on where we are right now, we are very confident about our operating performance in the fourth quarter. And with that I would like to take your question.

Operator: Thank you, Giulio. Perhaps before we start with the Q&A session, let me just quickly remind you how you can raise your hand in the new setup. [Operator Instructions]. And we will take our first question from Andrew Ritchie. Andrew, go ahead.

Andrew Ritchie: Hi there, good afternoon. I wonder if you could just give us an update on what you're seeing in terms of frequency and severity trends in your key non-life markets. I guess in the context of activity returning to normal. And also, the context of any sort of inflation returns. The second question was the media call this morning, you suggested an answer to a journalist that I think the -- you could take a reserve related to the structured alpha situation before the year end.

I was surprised you are willing to say that. So maybe you could you just give us some color why you felt the need to say that. Is there anything you can say in terms of timing where there's a bit more clarity? Thanks.

Giulio Terzariol: Thank you, Angelo (ph. ).

So, starting for the first question on the frequency severity, I will say the guide in frequency, we basically see a normalization of frequency that's almost across the board. There might be a couple of countries where frequency might be slightly lower level that we had pre COVID, but in general, we see a frequency pretty much normalized in pre COVID level. In the case of severity, I will say it's a few questions about inflation, I will say, we don't see a widespread increasing inflation. So that is not the case. Then clearly is always a different situation country by country or line of business by line of business.

I will say Moto TPL in general, we don't see increase in inflation and that's also because as you know, for the time being, there is no real waging ratio kicking in. So, from a multi-layer ability point of view, we don't see that. As you know, we don't have exposure -- meaningful exposure to workers compensation, but also for workers comp, there will be the same line of think, as long as you don't see wage inflation you're not going to see a necessarily an increase in severity. When we look at other lines of business, which could be also more to on the image, or maybe, property in some cases, you can see a little bit of an increase in inflation. But again, I wouldn't say it is widespread.

So, if you ask me, do we see any impact in our numbers as we speak, no. Do I expect to see an impact in the fourth quarter numbers, not really? Clearly we are monitoring this development very carefully. So, I will say we are very proactive in monitoring and then we are going to be also extremely reactive. Let's put this way, if we see that inflation is really picking up. And to this point the way we are thinking is clearly you can always do a tariff increases to offset inflation, but we also thinking what we can do on the claim’s management, because that's also needed where we can try to offset some of the inflation that we might eventually see.

So bottom-line, no -- not widespread, but in some regions, in some countries, or lines of business, definitely we see a little bit of a pickup in inflation, but for the time being it's not having any impact on our numbers. So, I think we are over-all well-positioned that we see what is coming our way. On the other question, which was booking before year-end, no, I didn't say that. First of all, we are going to do a booking when we add information to do a booking, I cannot envision that we're going to be capable to do a booking before year-end, but you never know, what I said is I believe that we're going to do potentially a booking for the fourth quarter where we closed the numbers that's a -- but that's also something that I cannot tell you that this is going to happen. So, what I can say is that, clearly, we are giving high priority to the resolution of this case.

And also, we would like to put their certainty behind us as quick as possible. On the other side clearly, we want to be very cautious because we want to get to the best -- to a good outcome from an economic point of view. If you ask me, I cannot tell you when we're going to do a booking. I don't see us doing a booking before year-end, but definitely for the year in closing we need to think very, very hard about what if we can put a number, what kind of number we can put there. I hope this clarifies the topic.

Andrew Ritchie: Okay. Thank you.

Giulio Terzariol: Welcome.

Operator: Okay. Then we take the next question from Peter Eliot (ph.

). Peter, go ahead.

Peter Eliot: Thank you very much and first of all congrats on the -- to great results. I have 3 questions, please. The first one I probably predictably on the AGI cost-income ratio.

Just wondering if you can help us understand how sustainable that might be. You seem to be pointing us to the 9 months figure now, [Indiscernible] in Q3, so maybe part of the answer. But even for the 9 months, I guess, if I compare the divisions to your outlook -- asset management, is the one that's performing by far the best, I know, you said that the outlook was probably most conservative for that division with the part of the year, but I'm just wondering how much of it surprised you or whether it's all in line with what you expected after the actions you took. Any thoughts there would be great. The second one was, I was just wondering how that whole structured Alpha Fund issue affects your thinking on your ability to do share buybacks or other flexibility M&A or whatever you might use money for.

I mean, even though you haven't disclosed any scenarios for the financial inflation yet. I guess you got some idea back of your mind. And I'm just wondering, do you think of the position necessary or do you think that you can gradually allow for them overtime. I'm wondering whether the Solvency ratio might become more of a binding constraint. Just how you're thinking about that would be very helpful.

And then thirdly, I just want to ask about cyber insurance actually, because obviously prices have rocketed up recently and it's being attributed to increased frequency and severity of losses there. I know we covered it in an insight earlier that you answered. There is a well fact, but I was just wondering if you could update us on your sort of assessment of the risks there. Just given that it's a very young and volatile business. Yeah.

Source that be great. Thanks very much.

Giulio Terzariol: Thank you, Peter. And starting from the first question of AGI yes. the reason why AGI pointed out to 621.3 was just to say [Indiscernible] exploitation, so I wouldn't say that's 57.3 should be the cost-income ratio that's -- we should expect moving forward for AGI.

I believe that's AGI can operate at a 61 cost-income ratio clearly, because that's where we are already. Now on reality, I don't know where this is going to be the real target that we are going to have for AGI, because to certain degree we want always to allow also for the possibility to do additional investments. I would say that 62 to 63 could be a cost-income ratio target that we have for AGI. And this would anywhere mean that we had the ability to operate lower than that. That's the important thing.

It's like for PIMCO. For PIMCO we have basically an idea that we like to run PIMCO at, not above 60 so slightly below 60. We know, if you really want to just go in savings more tweaking than 55 maybe so 56. That will be a little bit the philosophy that we're going to run also with AGI. So, I believe we are going to fix 62 to 63 costing ratio targets, knowing that skinny bias, either the possibility to invest in good times or some protection the case.

We go through periods where revenue could be lower because, as you know, as a management can be also headed to be volatile. But I can say we are in a good spot, so that's really a good spot to be. We made a major step change. If you ask me, I would definitely say that's been a step change in their cost-income ratio, AGI, you can see also the floors really good. 35 billion flows.

That's something that A GI never had before. I can tell you also on October we had positive flows of $2 billion for AGI. So, I believe this Company is now performing at a different level. So, from that point of view, I think we are starting from a position of strength, that's on the AGI question. On the [Indiscernible] where the -- this is changing our thinking regarding capital deployment.

I will tell you not really, I don't see that we have a constrain on the solvency ratio for the investments or deployment [Indiscernible] that we want to do. So, at the end of the day clearly, one can put some numbers around Solvency II and adjust our Solvency II ratio down. I think you can do the exercise the way you like to do. I believe you're going to come straight to a Solvency II number, which is well above our 180 % level. And I will tell you just since you're asking, buyback.

Let's say a billion buyback is a couple of percentage points above our Solvency II ratio. I don't feel that there is any constrain when we're seeing about a billion buyback, 1.5 billion buybacks. I don't see that. If we start talking, our capital deployment of 5-6 billion, that's a different story. But, as long as we are speaking, normal state capital deployments, I will say there is no constraint at all, so we feel we have all the flexibility that we need to have in order to pursue the course of action that we had before such [Indiscernible]and also stay tuned because we might also do black book transaction in the course of the next 6 months and they can also somehow provide additional solvency ratio.

But even in the absence of that, I am very confident we have all the flexibility and obviously to strengthen. We need to continue with our strategy like before [Indiscernible] Alpha starts came into our life. And the last question on Cyber Insurance, I tell you, we're very cautious. I'm personally very cautious. I know that price is going up, but I don't know who is going to win between price, frequency, severity, or these kinds of effect that you need to consider.

We are extremely cautious, so we give -- we do some Cyber, but in very limited amounts. These means that we have very low capacity. risk and also we have a pretty strong reinsurance program around it. So, which means we are not really going strong in this market at all. So, from their point of view, if you ask me, do I see cyber to be an engine of growth and profitability for Allianz in the next 2, 3 years, the answer is no.

This also means anyway, that shouldn't be an area of risk because we are taking very cautious positioning on cyber.

Peter Eliot: Great. Giulio, thanks very much. Thank you.

Giulio Terzariol: Welcome.

Operator: All right, thanks Giulio, and we will take our next question from Michael Huttner. Michael, please go ahead.

Michael Huttner: Fantastic. Thank you so much. And yeah, well done to these results.

And my first question -- and I really apologize to getting on the same topic. How much of your time is spent thinking, whether board level or personally or when you have dinner with your family, on structure bill, sir. Because clearly, it's the only topic which I believe investing and thinking about at the moment. I just wonder how big the disconnect is. And then the other more boring questions.

93 % used to mention that as a target for the combined ratio for the year. I haven't heard it at this call, but maybe I missed it. You were talking about underlying which may not be quite the same, but it may be [Indiscernible]. You said something by bite life buyback deals or back to transactions, very backward transaction. Just wanted if you could give a little bit more of an update and then the final question is on this list.

I was really surprised! I know it's not [Indiscernible] but I've been so used to seeing H6 within the combined ratio, this one of these days ago. Thank you.

Giulio Terzariol: Thank you. So, starting for stats, we don't -- no, I don't talk to my wife above stats, I thought she would divorce me. She's a saint but not to the extent to everything, but when we talk about [Indiscernible] otherwise, clearly, that's essentially where, as a board of management, we're spending time, but reality is we spend a lot of time also on underlying performance, and as you all see, the underlying performance is very good.

And I like to highlight also, again, the underlying performance specifically of AGI is very good. So, we let, these will lead this for stretch alpha. Now come into your question regarding the combined ratio. I think your question was how we look at a combined ratio in a 93, and how we look at the combined ratio normalize. So, I'd just tell you.

So as of now, I will say that it's an -- if we just take a normal course of action, our combined ratio by year-end is going to be above 93. And if you were to ask my number, I will say that should be about 93.5 based on the normal level on NetCat s in the fourth quarter, and we have also an aggregate, which is going to kick in. So that will be my expectation. Can we go to 93 if we really want to? Yes, that will be possible, because we have clearly the balance sheet strength to get there. But I believe it makes more sense to focus on the underlying.

And so, I will say it's going to be very clear that if we close 2021 with a combined ratio of about 93.5 with a NetCat load of about 3% point, you're going to see that there are no fees, very, very normal. I think everybody is going to be he's going to have a very good pitch about the fact that we are in the 93 in the capital market day we're going to anyway, talk about a target for the combined ratio moving forward. And also consider that overall we are having very good results in asset management, and also in Life. So, I think we're very happy with our operating performance. And so, I don't see they need to push the combined ratio, and as you can appreciate a combined ratio, it's definitely a very good underlying level.

So that's on that topic on Italy, because you were asking, I believe about the combined ratio of Italy. First of all, usually in Italy, we would expect a capital percentage point of NetCat. Now we had about four. So, if you normalize for that, you are at 89. Then I will say there is some pressure in Italy on the [Indiscernible] side.

The competition is pretty tough there. And we also have to be cautious, most likely, as we think about reserve inflation on the pickup in severity that we might see in the future. So, from that point of view, there is a little bit of that tool, but also just tell you and we -- I think we talk about that already in the past. We should not expect Italy always to perform at 83 or 85 combined ratios. So, we need also to understand that the combined ratio of Italy, is still going to be very, very good and very healthy, but it's now going to be the 83 that we have seen for a few years in the past.

But that's always been part of our line of thinking. So, from that point of view, there is no news here. On the back-book, we are continuously looking at where it makes sense to those some transaction you saw that we did a transaction in Switzerland just a few weeks ago. We are potentially close to do a very small transaction in France and we're looking at other opportunities always there. In the case of France and Italy, we are not necessarily just to doing both transition in the sense of doing reinsurance contract.

But we are also looking at reworking some of the contracts or to do transfer from legacy products to new products. And also, we are looking at opportunity in other countries about how we can clearly optimize our capital situation on the Life side. Keep in mind that our ROE in the Life is about 12 % We have fundamentally a healthy business, so that's something to keep in mind. But clearly, as we see opportunity to make ROE in agency transaction we are going to do so. To give you an idea, Switzerland -- in Switzerland, we had over the last year a ROE of 10 %.

Which is not too bad ROE, by the way, for Switzerland. Very stable market, 10 %. Now, based on the transaction that we have completed, once we're going to get the capture upstreaming, which is going to happen in 2022. Then by 2023, we expect the ROE in Switzerland to be 13 %. So that's, I think, a good example of how we can lift the ROE from 10 % to 13 % through a transition.

And, I will say that if you have a 13 % ROE in Swiss operation, I believe it's a very stable Swiss operation, I think that's a very good number.

Michael Huttner: It was helpful. Thank you.

Giulio Terzariol: Welcome.

Operator: All right.

Then we take our next question from Fulin Liang. Fulin, go ahead, we will open your line now.

Fulin Liang: Hi. Good afternoon, Thank you very much. 3 quick questions.

The first 1 is, you upgraded you normalize capital generation again from 10 % to 12 % point and then your quarterly capital generation is like 2.5% or 3 % points in the last 2 quarters despite very heavy NetCat. Can I take this like 2 to 2.5, 3 as a new norm quarterly CapGen? That's the first question. And then secondly is you're enormous, if I remember correctly, you guided that the -- we should expect to see a higher operating profit, after the government scheme finished. But if I look at the operating profit from Q2 versus Q3, they are very similar. So, am I missing anything there? And then, the last question is, I just wanted to understand what is your liquidity capacity or limits and in terms of if you agreed on some kind of settlement with DOJ? Thank you.

Giulio Terzariol: Yes, on the organic capital generation, I will say yes. You could say that the new normal is to have a capital generation of 10% point per annum. Now, there is always one thing to consider. In reality, there is also a capital strain in P&C. So, if we -- it makes a difference, if you go a 3 % in P&C, if you grow 5 %, 6 %, 7 %, 8 % in P&C.

So, from that point of view, I will always say that there is that element that can depend and it's subject to the growth rates, subtract to this 10 %. The good news is on the life side, we don't see basically any increase in FCR in the business evolution, because even if we're growing pretty strongly on the life side, the new products are very efficient, and then we had the release of FCR coming from the in-force. From that point of view, I think that's a very good news that we are not so basically increasing our FCR for life and then on the P&C sides it depends on the growth rates, you might have more business evolution or not. So, for example, if you see in this quarter, the business evolution is 0.2. This is coming from P&C.

I believe last quarter the business evolution was about 0. Fundamentally, yes. If you ask me to give you a rough indication of our solvency to organic ratio will point out to a 10 % point. The other question was Euler Hermes. I will say, first of all, technically speaking, you have a slight increase in operating profit in Euler Hermes in third quarter versus Q2.

Now, the point is also that in Q2 we had a substantial release of runoff. And this quarter we have also some release or run off in Euler Hermes but to a lower degree compared to what we had in Q2. But if you look at the number of third quarter for Euler Hermes is 130 million. If you annualized that number, we're speaking for 520 million. And before COVID, ULA Herrmann was running at about €450 million of operating profit, so that close are pretty, pretty, pretty, pretty good indeed.

And the last question, can you please? Liquidity capacity. The liquidity capacity. Okay. We have ample liquidity, so really you should never be concerned about our liquidity position because we have a lot -- plenty liquidity. I would say for -- first of all, we have liquidity -- let's put this way for ma'am -- we think from a corporate holding point of view, but you need also to consider that our holding is also an insurance Company at the same time.

So, from that point of view, we have also access to liquidity from the insurance portfolio, but we don't even consider for that. We just first run with the healthy level liquidity. And the corporate holding level, but we can always excess other liquidity sources if needed. So, liquidity, we have ample amount of liquidity.

Fulin Liang: Thank you.

Operator: All right, Fulin.

Giulio Terzariol: Welcome.

Fulin Liang: Thank you.

Operator: Good. Then we will take the next question from, Will Hardcastle will do next.

Will Hardcastle: Good afternoon everyone. Hope you well. Two questions from me. The first one is solvency. Is there any possibility you can help us to understand the five-percentage point move in tax and other? I'm sure it's a lot of small moving parts, but any color that might be helpful? And the second component is just on AGI -- I guess one risk in? Second Sultan's made it [Indiscernible]To where the world is town,? Great opinion or recommend clients to switch away from AGI, at some point that's always been the tail risk, I guess.

Have you experienced any of this year to-date? Any color there would be helpful. Thanks.

Giulio Terzariol: Yeah, no. Thank you. So, starting from Solvency II, when you look at the 5% point of impact on Solvency II, 2% point, about 2 is coming from just tax.

So, then you need to reallocate to the operating earnings or market impact, which in this case it's been 0. The rest is basically about 3 %. And so, when I look at the split of the 3 %, I can tell you that about €200 million. So, let's just talk about it from a €100 million, right, 0.5 is around media. €200 million is supposed coming from the tax offset.

We have less tax offsets compared to what we had before. Now, just to give you an idea, the tax offset it is over €5 billion. So now that you have €5.2 billion of tax offset of €5.4 billion tax upside. That's really coming from where you ran the and what kind of -- which companies are going to contribute in the given scenario to our ACS. So, there's really nice, but these are -- already is playing, basically about 1 % or the 3 % you were referring to.

Then, we have also some minor updates -- assumption updates. Then, we have an exposure updates that can be also about 50 basis points. And the point is, when you calculate a Solvency II FCR you need to make basically a projection about what you expect your premium exposure to be next year. So, if you are planning for with premium growth. It is going to lead to higher FCR right away.

So that's what we put in under when we do the business evolution report under the business evolution, the effective increase in premium. But when your annual Solvency II model, you need already to consider for the expected premium increase, so there will be about 50 basis points. The diversification is a little bit less than you get the other 50 basis points. And then if you want, I can buy that you with some other very technical stuff. But really we're speaking of very minor amounts and they all accumulate in the same direction.

But for example, the exposure update, that's very simple to understand. This means that we are anticipating that next year we are going to have a higher level of premium compared to what we currently have. These helps?

Will Hardcastle: It does. It does indeed.

Giulio Terzariol: Yes.

And so, but I can always organize a one-on-one with these guys. More and more logical than you, sort of logical, expected logical and then clearly it's -- we have €42 billion or €43 billion of FCR. So, it just needs more movement here and there. And these can -- this is really just a small noise. On AGI, on your question about the consultants.

Yes, that could potentially be a risk. We didn't say this yet. As I was saying before, we had €2 billion of inflows, it's AGI in October, and we had also positive inflows in September. Please keep in mind that in reality the AGI Institution on Business in the U.S. is not really crucial, let's put it this way, for AGI.

And also keep in mind, the Structured Alpha is really a specific strategy. So, from that point of view, I cannot disclose that we might see some consultants suggesting to the clients to go somewhere else. But it's not something that we saw such of that was a very specific strategy. And in any case, the institution invests -- institutional business in AGI is now the -- by far, not really the primarily source of revenue for AGI.

Operator: All right.

Then we will take our next question from Will Hawkins. Will, we will open your line now. William Hawkins : Sorry, can you hear me?

Operator: Yes, we can. All good. William Hawkins : Thank you.

You've already said useful stuff about the ability to, to buybacks, which I think was mostly focusing on the kind of flow that you're generating each year. Just with regards to capital management on the balance sheet, as with some of the big volatility that we know could be around the corner. What's your incentive direction of travel for this Solvency II ratio. There's a difficulty for me, and see -- the only single you've put out there is the target is a 190 % and you're massively above that. And so, I don't know if we should always be considering a massive cushion or as far -- you should be running your balance sheet more efficiently.

So, given that you're around to 10 %, so the moment, structurally, is the intention to keep it at that level, so, you get the right share back down some more efficient level, or maybe even to be building the cushion up? out. I mean, when you used to have a ceiling, I think it was 220 % or something but I know you've dropped the ceiling. That's question 1, please. Question 2, forgive me if I missed it and tell me if I do and I'll get back and read the transcript, but when you were talking in detail about back-book transactions, I think you referred to the U.S. which clearly is the market that's most in focus at the moment.

Can you just remind us you've always been really committed to use portfolio and I'm proud of it? What is the size and nature of the kind of business that you may be looking to exit from in U.S. life? And then lastly, just very briefly. You've done another RT one debt issue. You've already been very clear about your confidence on liquidity. But what's the overall direction of travel for debt leverage from here or are you at a level that you want to maintain.

Could you be issuing more debt or bringing it down again? Thank you.

Giulio Terzariol: Thank you, William. Maybe starting from the last one or from an amount of leverage that we have right now, from amount of hybrid, I would say, we're planning to be stable. Then clearly over time, the idea is to increase the level of hybrid base on the increase in the size of the business. But as we go into, let's say next year, the idea would be to keep the amount of hybrid flat, which means, since the business going to grow automatically, they would also mean a reality lower leverage ratio.

So, from that point of view, you should expect stability on the amount and the leverage ratio, which is slightly decreasing. And then we usually wait a couple of years and then we do again and bump in the hybrid in order to keep a certain level. So that is the way we're thinking about our hybrid issuance and our leverage ratio. But as you think about the next 12 months, you can expect that we're now going to be particularly active on increasing the amount of hybrid. On your question about U.S.A..

Fundamentally, and as you said, the business is high quality, we might be looking at reinsurance also of fixing this annuity and also VA. So, both they can be depending then clearly on what kind of offer we guess we can go down both routes, but we are also believing that there is a possibility to monetize radio on the fixed index annuity side, so that's definitely an area where we are taking a look if we can do anything there. So that's something that we might have also some news in the not far future. And then, the other question was on the capital efficiency. Sure, if you go to a CFO, a CFO is always going to be for capital efficiency.

So, the idea clearly it's now [Indiscernible] around with the solvency ratio, which is -- look, if you ask me, I'm really not in the camp of let's advertise the solvency ratio to 20 to 30. I don't think this is healthy. So, I'm not in the competition to have the highest solvency ratio of the industry. There is no other way I think about solvency. I believe, capital [Indiscernible], that you need to have enough capital to be sustainable, to be resilient, but you want to also to add the least amount of capital in order to be as efficient as you can so from that point of view, as we are working to sort of you also want activator the ratio if we can bring these our target level down, or the access that we keep over the target level down.

There is something that's would definitely say will be a success and there's also something we are working on. And some of the volatilization might happen in that direction. Not necessarily any transaction in the U.S. will not necessarily help from a volatility point of view, but transaction in Europe that can bring down the volatility. And then they can also help us to bring down the target level, to bring down the excess that we keep on top of the target level.

William Hawkins : Thanks, Giulio. Would you be able at all to help size your U.S. bank book under review? I think it's been quoted in tens of billions, but that's obviously a pretty wide range.

Giulio Terzariol: No. I don't tell you right now.

Once we have news, I will give you all the details. But as of now you think anyway it's the U.S.. The U.S. you don't speak above 5 billion, you speak about more. But at this point in time, I don't want to go too much into further details.

Sorry for that. William Hawkins : Thank you very much.

Giulio Terzariol: Welcome.

Operator: All right. Then we will take the next question from Dom O'Mahony.

Dom, go ahead, please. Dominic O’Mahony: Hi folks. Thank you for taking questions. A couple for me. 1.

Just turning back to the asset management business and I guess this is a board of point about performance. It might as all from outside that the reduction in bond yields, notwithstanding the recent increase, might make fixed income in a bit more challenging to play as an active manager given that the fees consume more of your yield. That hasn't seemed to happen to you. You have very strong mutual fund flows and fixed income. Is that the pressure that you're seeing across the industry that you were just avoiding to a very good performance of your funds, or are there other factors to think about in terms of why we should think that both flows and revenue margins, they should be sustainable at this level? And then the second question, I hate to ask you a question about Structured Alpha and I understand there's nothing you can say about the specifics.

But I wonder if you could help us understand what the prerequisites would be [Indiscernible] your provision? Are there any technical things that need to happen for you to be able to for such a provision, maybe requirements from an accounting perspective. Thank you.

Giulio Terzariol: From the first question about performance i management, it's an ECA financial performance, clearly. So, when you look at the performance of PIMCO but also the AGI, by the way. It's definitely very good performance, and this is definitely helping to sustain very healthy flows.

You can think also especially when rates are very low, it's very critical to have somebody that can produce some extra yield, is even more relevant. So, from that point of view, that's definitely the component number 1 But then I will not underestimate also the distribution reach. AGI is a very strong distribution, especially in Europe and also in the U.S. The distribution strength of PIMCO is pretty strong. They have also invested in quality distribution.

So, it's a combination of performance and that's the primary driver. But then I will not hand the play also, the distribution expert, but there's also the reason why, as I was saying before, we're not necessarily look into run these companies at the lowest possible cost-income ratio because we want to invest in distribution, we want to invest in technology. So that's part of the equation, that you cannot aspire to have a very strong and positive flows. But then, you are going to be basically keeping these companies under investing. When you put all together anyway, you can see a very strong picture.

On the litigation side, on the stature offer side, the [Indiscernible] or what you need is to have more clarity and time in order to get to better understanding of what the possible range might be. That's what we need. Dominic O’Mahony: Thank you.

Giulio Terzariol: Welcome.

Operator: All right.

We will take the next question from Vinit Malhotra. Vinit, the line is open for you now. Vinit Malhotra : Thank you. I have a -- manage to get my question. So, one question.

Get back to the AGI. It's remarkable we're talking about AGI, it's had €40 billion flows since supposedly this even took place. But going forward, do you think that when you said 60 to 63 [Indiscernible] does that consider the risks of greater compliance costs, or other regulatory potential burdens and I'm just curious as a tortoise, from what the number of should we think about that going forward. Thinking thing is on the life side, blooming in on the capital nutrition products, which obviously the headlines of very appealing 350 range. For a while it used to be 200 plus to [Indiscernible] sort of range of upgrading profit.

But I also know back three tanks, the number isn't bank high, between the capital-efficient product segment. And now it's 2 quarters in a row that feedback was far lower than the headlines. How should we be thinking broadly about calculation products and know that they were now the cost of €333.50 kind of quarterly run rate. Or should I be leading more into this 3 stamp numbers? And then thinking that we had a few lucky quarters in capital-efficient products. Thank you.

Okay. So, the first question was about AGI. And I think that the 62, 63 cost-income ratios could be much different if we have to step up our compliance results, I don't think so, and they're saying so, so I don't believe that we have any particularly compliance issue -- control issue to AGI. So, from there, I can see that maybe, here and there, we need to strengthen a few things. But I don't believe this is going to be a primary driver for the cost-income ratio of AGI moving forward.

So, I will say that a 63 cost-income ratio should be achievable even if we need to step up our compliance effort. Unidentified

Company Representative: Vinit, if I may just add one comment here. I think it would be rather the opposite because one big driver for this cost-income ratio reduction is complexity reduction on the product side, among other things. And with less complexity, it will be much easier to keep things under control. Vinit Malhotra : Okay.

Thanks.

Giulio Terzariol: I think to the question about the CR. First of all, I don't think we had just a few lucky quarters. So, I will say that we should see a good development of our production also our operating profit in CR. One thing to keep in mind is there is a special effect in the way we are calculating operating profit in Germany.

Because basically you need to do -- we do a [Indiscernible] for GAAP and when you do the [Indiscernible] for GAAP, we apply basically 90 % policy holder on the [Indiscernible]. But in reality, when you look at the statutory accounting, we have a 50 % policy holder, second the acquisition costs. So, you'll get basically technically speaking acquisition costs track. And since that's the area where the ancillary business growing then you'll get these acquisition costs track into the numbers of CSO. From that point of view, as these businesses, let's put it this way, is maturing, you're going to see in reality higher growth of even higher growths of the profit in Asia.

But I will say the direction is pretty clear, so from that point of view, you're going to see how the contribution of this business is going to grow also in terms of operating profit over time. Vinit Malhotra : Okay. Thanks.

Operator: I have one last caller here on my screen in the queue. So, Michael, welcome back.

The floor is yours.

Michael Huttner: Thank you very much. And pretty quickly, two questions. One of really, really cheeky one and might contracts for that. And we have another on the seeking one, there was a lovely [Indiscernible].

Yes, they organized by one of your peers extra clearly could interpret that lesson they made during older guys to Kevin London (ph. ), saying that the new Allianz -- is that a potential confirm for you that you know, as a result, trouble leasing rates in my sustainably be lower, which would kind of reduce the approval of deals you can do and most ultimate, especially I don't haven't pulled the consequences on 8-K out. Structured offset and then the kind of deep question is, we are now into the aggregates from that cats have been high this year, is this something where you think, I want to buy more reinsurance and insurance is so expensive on to buy less. Hundreds looks like.

Giulio Terzariol: So, I understood the geek question I do understand the first one.

Can you repeat the first one? The sticky one

Michael Huttner: Access is effectively my interpretation. My interpretation saying we're the new Allianz. We're the new guys are going to deliver. And look at us, we're signing, we're new, everything is going well for us, which basically means that the rating can improve and they can then consider deals which are more expensive. And relative, you might lag a little bit and therefore that will be used the opportunities you might see in terms of deals.

Your cost of capital goes up so your approval of deals reduces a little bit to that broad concern considering the structure of the [Indiscernible].

Giulio Terzariol: Okay. Let's talk about Pierre, so I don't have any comment to make and that we should we buy the well and on, the other question, the [Indiscernible] question, so our reinsurance. I will say the following, we have been looking at our reinsurance structure because clearly we know also there will be an increase in premium in reinsurance premium come our way. So, we have low different reinsurance structures.

But at the end of the day, we achieved a conclusion, our program is pretty good, so we're comfortable with the program. We might be do some tweaking to the aggregate level. So, there's more about attachment point, their capacity but fundamentally, we're not changing our insurance structure. From a pricing point of view, I will say, we are generally a very good account. So, from that point of view, yes, we expect to see some increases.

But in our case, since we are a good account increase should be more moderate, and anyway these are host increases that clearly, we're going to put into our calculation for our premium. So, from that point of view, the answer to your question is we have analyzed different option, but eventually it's going to be pretty much business as usual with respect to our insurance program, just with some tweaking. And right now, we're going by the way through the negotiation, so let's see what comes out of the negotiation. Vinit Malhotra : Fantastic. Thank you very much.

Thank you.

Giulio Terzariol: You're

welcome
Operator: All right, I just got another caller. I don't see a name here. So, wherever you are, we will open your line now. Go ahead, please.

Unidentified Analyst: On one F-150s train will be required to be reported. A lower pricing of 9 % versus 15. I mean, driven by some of the fronting business NOI. Because otherwise in the market everybody is talking about some reduction, but not such a reduction to any comments on that, please. And second thing is just on the P&C ordinary investment income, the private equity continues to be a strong component or [Indiscernible] supporting component.

Is there any better view now, but that's also sustainable what -- how should we think about that?

Giulio Terzariol: So, starting from the AGCS, yes. Okay. The growth rates of AGCS was also partially because of fronting. If you adjust for it anyway, we had a high single-digit growth rate. This is also consistent by the way with a change in renewal that you see.

Your point about people seeing some reduction in pricing strength, that to a certain degree, true. So, if you see our number is 15 % for the change on renewals. That number was, I believe, slightly about 20 last year. So, there is a little bit of decrease, but it's still very healthy environment and you need to think that these rate increases are accumulating, right? So, they accumulate compared to what we got to the end of 2019, what we got throughout the course of 2020, and then you have also, clearly, the rate increases we're getting as we speak. So, there is decreasing rate increases, but still very healthy rate increases.

And think about the accumulation effect, this is definitely very healthy for the combined ratio. Otherwise we can expect to the investment income. What we're seeing right now compared to last year is more dividend coming also from a private equity funds that we had. This is definitely helping the insurance consumer income. As we move forward into 2022, '23, we still expect to see some pressure because of the low interest rate environment.

But clearly these pressures are diminishing over time because positive portfolio is already being turned into the lower interest rate environment. So, from that point of view, I wouldn't say that we have bottom right now, so we still going to see potentially some pressure, but not to the same degree that we saw over the last 3, 4 years. So, if you remember a few years ago, our investment income was also at €3 billion. Now we are closer to €2.5. We're not going to lose for random EMEA of investment income in the next 3 years, so we might be a little bit lower than the €2.5 are now significantly lower than that.

So, I will say that the worst is behind us.

Unidentified Analyst: Okay. Thank you very much.

Giulio Terzariol: Welcome.

Operator: All right.

So, we have no callers left in the queue. Therefore, this concludes today's conference call. Thank you very much for joining this call. We say goodbye to everybody. We wish you a very pleasant remaining afternoon.

Giulio Terzariol: Thank you, guys. Have a good rest of the day.

Operator: Bye-bye.