Munich Allianz closed the crisis year 2022 with a record profit. Europe’s largest insurer achieved an operating result of 14.2 billion euros, 5.7 percent more than in 2021.
Analysts had previously expected an average of over 13.7 billion euros. The group itself had slightly raised its targets in the fall and stated a range of between 13.4 and 14.4 billion euros. The final quarter, in which the insurer earned four billion euros and thus 12.7 percent more than in the same period last year, also contributed to the high result.
“Our performance is the result of a well thought-out approach, reliable implementation, consistent simplification and disciplined capital management,” said CEO Oliver Bäte.
The consequence is a dividend of EUR 11.40 per share, which is to be distributed to the shareholders after approval by the Annual General Meeting at the beginning of May. It would be an increase of 5.6 percent compared to the payment of 10.80 euros in the previous year.
However, the three pillars of the group contributed differently to the record profit. While property and life insurance recorded significant growth, asset managers felt the effects of the turnaround in interest rates. Pimco in particular, the significantly larger of the two asset managers alongside AGI, recorded losses.
>> Read also: Car insurance – More and more drivers are looking for cheaper offers
In addition, the bad speculations in the USA under the name Structured Alpha weighed on the annual surplus. At 6.7 billion euros, it was only slightly above the previous year’s level. Sales across the entire group rose by 2.8 percent to 152.7 billion euros.
Property insurance is booming
Property and casualty insurance in particular drove the profit. Business with motor vehicle, liability and homeowners insurance, among other things, grew at an above-average rate of 12.4 percent to 70 billion euros.
There was a significant increase in operating profit, which rose by 8.4 percent to 6.2 billion euros. This was mainly due to the strong growth of the subsidiaries Allianz Partners, which specializes in travel insurance, among other things, the national company in Turkey and the industrial insurer AGCS.
Profits from property and casualty insurance increased.
(Photo: imago images/McPHOTO)
The Group has only partially achieved the goals of its three-year strategy presented at the end of 2021. Annual sales growth was higher than the targeted three to four percent.
In property insurance, however, the expectations for the property-casualty ratio, for which the target was 92 percent, could not be met. The lower this number is below the 100 percent mark, the more profitable the business is.
At Allianz, however, it was 94.2 percent last year. The trend was upwards, in the final quarter it was 94.7 percent.
Life insurance with a strong final quarter
In life and health insurance, the second most important segment after property insurance, the months from October to December saw earnings surge. Higher investment margins in Germany, a changed product mix in the USA and the takeover of the Aviva portfolio in Poland led to a profit increase of 50 percent to 1.9 billion euros.
>> Read also: Oliver Bäte keeps falling out of character – will he remain CEO?
Analysts had expected an average of 1.3 billion euros here. In 2022 as a whole, the division’s earnings improved by more than five percent to 5.3 billion euros.
The effects of the turnaround in interest rates, however, were felt by Allianz asset management, the smallest of the three corporate divisions. The area in which the two asset managers Pimco and AGI are combined earned 3.2 billion euros last year after 3.5 billion euros a year before.
Assets managed for third parties fell particularly sharply, falling by EUR 331 billion to EUR 1.635 trillion. Major investors withdrew assets worth 81.4 billion euros. In addition, there were losses, especially in fixed-income securities, which particularly burdened the subsidiary Pimco, which specializes in this, and hit a total of 301.1 billion euros.
The transfer of the US portfolio from subsidiary AGI also had a negative effect of more than EUR 30 billion. The company was transferred to the asset manager Voya after the settlement with the US authorities in the dispute over the structured alpha funds.
Together with its own assets, the division invested 2.141 trillion euros last year. Overall, revenues from assets under management decreased. They fell by 1.9 percent to 8.2 billion euros.
Earnings targets missed
The effects of the failed structured alpha funds of the subsidiary AGI in the USA also weigh on the group’s goals. The alliance had reached an agreement with the US authorities in May last year. Compensation to customers and penalties from the judiciary amounted to around six billion euros.
The consequences are reflected in missed strategic goals. The return on equity was 10.3 percent and thus far from the targeted 13 percent. Earnings per share also continue to suffer. It was 16.36 euros and was thus almost 2.5 percent above the 15.96 euros in the same period of the previous year. An annual increase of five to seven percent was planned.
>> Read also: Trend reversal for millions of life insurance policyholders – the year-long decline in interest rates is over
This has no consequences for the shareholders. The Dax group had already decided last year that special effects such as the Structured Alpha problem will have no impact on the dividend payment. Instead, the dividend per share is to increase by at least five percent per year compared to the previous year.
As a profit target for the current year, Allianz traditionally takes the previous year’s profit with a range of one billion euros up or down. This is also the case for 2023. Here the group expects an operating profit of 14.2 billion euros with this range.
More: 31 percent price increase since September, but shares are still cheap – two risks and four opportunities for 2023