Munich In the first quarter, Allianz recorded the highest claims burden from natural catastrophes in ten years. Flooding in Australia and storms Zeynep and Ylenia in Europe weighed heavily on property-casualty, which is usually the largest contributor to overall results. The costs were four times what had to be done in the same period last year, as Allianz announced on Thursday.
Nevertheless, the group still expects an operating profit of 13.4 billion euros for the year as a whole, with a range of one billion euros up or down. “We have achieved around a quarter of our target for the full year and our operational performance remains on track,” said Chief Financial Officer Giulio Terzariol. The asset management sector, of all things, has recently proved to be a stabilizer, and has recently been heavily criticized.
One day after another €1.9 billion provision was formed for failed hedge fund strategies in the US, key figures on the earnings side were already clear.
Europe’s largest insurer had achieved an operating result of 3.2 billion euros in the months of January to March, it said on Wednesday. The expectations of the analysts, who had expected an average of just over three billion euros, were exceeded, but in the same period last year the figure was 3.3 billion euros.
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The result was also clouded by the renewed provision, which burdened the surplus in the first quarter with 1.6 billion euros, which is why only 600 million euros remained at this point. Adjusted for this, it would have been 2.2 billion euros.
Significant increase in sales
Operationally, however, Allianz’s business is still going well. The total turnover of the Allianz Group increased in the first quarter by 6.2 percent to 44 billion euros. All three core areas of the group contributed to the growth. In property and casualty insurance – which is usually the most profitable line – turnover rose by an above-average 9.1 percent to 21.5 billion euros. In most regions, both prices and customer demand for insurance cover increased.
However, there was a nine percent drop in operating profit, which fell to 1.4 billion euros compared to the previous year, which was linked to significant claims payments for storm damage. However, the analysts’ estimates averaged only 1.26 billion euros.
In the life and health insurance business, the group achieved an operating profit of EUR 1.2 billion in the first quarter, which was at the same level as the previous year. Analysts had expected an average of 1.1 billion euros here. While earnings in the important US business declined, the markets in Spain, Taiwan and the home market of Germany surprised positively. New business continued to be pleasing, with the margin rising to 3.5 percent after 2.9 percent in the same period of the previous year. The value of new business even increased by 20 percent to 671 million euros. Business with index-linked products in the USA and France stood out in particular.
In the first three months, the largest increase in earnings was achieved with asset management, of all things, in the area that was most recently criticized. The operating result grew by 11.2 percent to 831 million euros. However, analysts had assumed an average of 841 million euros.
Asset management as a profit driver
Because of the problems surrounding the structured alpha funds, asset management, as the smallest of the three group divisions, has recently been a particular focus. After the two subsidiaries AGI and Pimco had nevertheless continued to record high inflows of funds last year, there was a decline in the first quarter. The total portfolio of assets under management fell to 2.478 trillion euros, which was mainly related to a withdrawal of client funds.
Assets managed for third parties increased by 89 billion euros 1.878 trillion euros back. The largest part, however, was related to the sometimes massive price losses as a result of the Ukraine war.
The loss for the total portfolio managed for third parties was 110 billion. Customers also withdrew nine billion euros in assets. The loss was partially offset by currency gains of 30.1 billion euros.
Allianz developed better than many of its competitors in the first quarter. The largest competitor, Axa, only managed a slight increase in sales of two percent to 313 million euros, mainly due to declining sales of the reinsurance subsidiary Axa XL, while revenues fell by as much as twelve percent to 1.5 billion euros.
More: Hedge fund debacle costs Allianz almost six billion euros