The insurer launches a share buyback program after a strong third quarter.
(Photo: dpa)
Frankfurt, Munich After a strong third quarter, the Munich-based DAX group Allianz announced a share buyback program. From mid-November to the end of 2023 at the latest, the insurer wants to buy back shares worth one billion euros, as the company announced late Wednesday evening. It was well received on the stock exchange: the Allianz share was one of the winners in the leading German index on Thursday.
From July to September, Europe’s largest insurer earned 3.5 billion euros from operations, slightly more than analysts had expected. “This is our highest operating profit in a third quarter,” CFO Giulio Terzariol said in a conference call.
For the first nine months of the year, this results in an operating result of 10.2 billion euros. For the year as a whole, the group is now assuming a profit in the upper half of the target range of 12.4 to 14.4 billion euros.
Analysts highlighted the planned share buybacks in particular. While the program was expected, it is good news, wrote JP Morgan’s Kamran Hossain. Because it shows that Allianz cannot be stopped with repayments to shareholders. UBS’s Will Hardcastle commended that the volume of buybacks was at the high end of expectations.
Top jobs of the day
Find the best jobs now and
be notified by email.
This could give Allianz shares, which are in the red for the year, a tailwind. Because a smaller number of shares increases earnings per share, which tends to lead to higher prices.
Allianz’s major competitors had already announced in the summer that they also wanted to invest in their own shares. Axa announced a buyback program of over one billion euros, Generali over 500 million euros and Zurich even over 1.8 billion Swiss francs.
Property-casualty insurance drives profit
At Allianz, group sales rose by 5.3 percent to 116 billion euros after nine months. In particular, the business with property and casualty insurance went well. In what is usually the most profitable of the three corporate divisions, sales increased by an above-average 12.7 percent to 53.8 billion euros after nine months. There was a clear increase in operating profit, which rose by more than 13.5 percent to 4.7 billion euros.
However, the division’s combined ratio of 94 percent was not well received by UBS analyst Hardcastle. The key figure was higher than expected, which is probably the result of the increased damage costs, particularly in motor vehicle insurance.
>> Read here: High inflation puts pressure on car insurers – car policies are likely to become significantly more expensive
In life and health insurance, the second most important line, the group felt the impact of lower single premiums in Germany. Operating profit fell in the third quarter to one billion euros after 1.3 billion euros in the previous year.
Investors withdraw wealth
Asset management, the smallest of the three Group divisions, has recently suffered from the effects of lower income from assets under management and lower commissions. The area, in which the two asset managers Pimco and AGI are combined, earned 2.4 billion euros after nine months and thus 2.5 percent less than in the same period last year.
Assets under management for third parties fell by EUR 43 billion to EUR 1.726 trillion. However, CFO Terzariol described it as not unusual for investors to initially “wait on the sidelines” in an environment of rising interest rates before investing again. Together with its own investments, the group now manages 2.245 trillion euros.
Return on equity (ROE) in the third quarter was only 9.4 percent due to failed hedge fund strategies in the US, which resulted in Allianz being fined billions in fines and compensation this year. Earnings per share also continue to suffer. It was only EUR 11.37 after EUR 16.64 in the same period of the previous year.
More: Allianz again exceeds expectations – “Results show strength”, says CEO Bäte