C _ Group Management Report PROPERTY-CASUALTY INSURANCE OPERATIONS with a strong profitability focus, led to negative volume effects across all lines of business. Key figures Property-Casualty1,2,3,4,5 2021 2020 Delta Operating profit Total revenues2 € mn 62,272 59,412 2,859 Operating profit € mn 5,710 4,371 1,339 Net income € mn 4,113 2,605 1,508 Operating profit € mn 3 Loss ratio % 67.0 69.5 (2.5) %-p 4 2021 2020 Delta Expense ratio % 26.7 26.8 (0.1) %-p Combined ratio5 % 93.8 96.3 (2.5) %-p Underwriting result 3,026 1,639 1,386 Operating investment income (net) 2,642 2,556 86 1 Other result 42 175 (133) Operating profit 5,710 4,371 1,339 6 Total revenues 1_Consists of fee and commission income/expenses and other income/expenses. On a nominal basis, we recorded a strong increase in total revenues of 4.8 % compared to the previous year. We registered a strong increase in our operating profit. While most of This included unfavorable foreign currency translation effects to it was driven by the underwriting result, our operating investment the amount of € 481 mn7, and positive (de)consolidation effects of income also contributed positively. € 904 mn. On an internal basis, our revenues rose by 4.1 %, driven by a The increase in underwriting result was due to a recovery from the positive price effect of 2.2 %, a positive volume effect of 1.4 % and a negative COVID-19 effects that had weighed on our 2020 results, positive service effect of 0.6 %. combined with a higher contribution from run-off – only partly offset by higher claims from natural catastrophes – as well as some The following operations contributed positively to internal growth: improvements on the expenses side. Overall, our combined ratio Allianz Partners: Total revenues were € 6,168 mn, an internal improved by 2.5 percentage points to 93.8 %. growth of 17.2 %: this was largely owed to positive volume effects in our U.S. travel business and higher service fees in our assistance Underwriting result business. € mn AGCS: Total revenues went up 4.2 % on an internal basis, totaling 2021 2020 Delta € 9,510 mn. Key drivers were price increases in our fronting business, Premiums earned (net) 53,054 51,631 1,423 property, and financial lines. Accident year claims (36,938) (36,314) (624) Australia: Total revenues amounted to € 3,659 mn, an internal Previous year claims (run-off) 1,374 431 942 growth of 8.2 %, driven by price and volume increases. Claims and insurance benefits incurred (net) (35,565) (35,883) 318 Acquisition and administrative expenses (net) (14,186) (13,846) (340) The following operations weighed on internal growth: Change in reserves for insurance and United Kingdom: Total revenues went down 3.2 % on an internal investment contracts (net) (without expenses 1 basis, totaling € 4,530 mn. Main reasons were shrinking volumes in our for premium refunds) (278) (263) (15) Underwriting result 3,026 1,639 1,386 SMC (small and medium companies) insurance business, due to the 1_Consists of the underwriting-related part (aggregate policy reserves and other insurance reserves) of “change in COVID-19 pandemic, as well as strong competitive dynamics in our reserves for insurance and investment contracts (net)”. For further information, please refer to note 26 to the motor insurance business. Consolidated Financial Statements. France: Total revenues amounted to € 4,477 mn, an internal decrease of 1.8 %. Much of it was due to a volume decline in our commercial property and liability insurance business. Our accident year loss ratio8 stood at 69.6 %, an improvement of Spain: Total revenues fell to € 2,517 mn, a 3.5 % decrease on an 0.7 percentage points compared to the previous year. Losses from internal basis. Market conditions were difficult overall and, together natural catastrophes were € 1,637 mn, compared to € 880 mn in 2020. This translates into a negative effect of 1.4 percentage points on our 1_For further information on Property-Casualty figures, please refer to note 4 to the Consolidated Financial 6_We comment on the development of our total revenues on an internal basis, which means figures have Statements. been adjusted for foreign currency translation and (de-)consolidation effects to provide more 2_Total revenues in Property-Casualty also include fee and commission income. comparable information. 3_Represents claims and insurance benefits incurred (net), divided by premiums earned (net). 7_Based on the average exchange rates in 2021 compared to 2020. 4_Represents acquisition and administrative expenses (net), divided by premiums earned (net). 8_Represents claims and insurance benefits incurred (net) less previous year claims (run-off), divided by 5_Represents the total of claims and insurance benefits incurred (net) plus acquisition and administrative premiums earned (net). expenses (net), divided by premiums earned (net). 78 Annual Report 2021 − Allianz Group