November 10, 2017 by Canadian Underwriter
Allianz Group has reported total third-quarter revenues of 28.3 billion euros, up 2.1% from 27.7 billion euros in the prior-year quarter.
Allianz, which offers insurance and fund products to over 86 million customers in more than 70 countries, reported a 2.5 billion euros operating profit in the most recent quarter, the insurer said in a statement on Thursday. It added that it is on track for its full-year target.
The 2.1% total revenue increase occurred despite a series of hurricanes, storms and other nat cats that drove claims higher, mostly due to another strong performance in the Life and Health business segment, the statement said. Operating profit declined to 2.5 billion euros from 3 billion euros, largely due to 529 million euros losses from nat cats. Operating profit also eased in the business segment Life and Health and Asset Management, but remained at an overall high level. Net income attributable to shareholders decreased 17.3% to 1.6 billion euros from 1.9 billion euros, affected by high claims from nat cats and partly offset by lower tax expenses. “Excluding the impact of natural catastrophes, the Group reported a strong performance similar to the preceding two quarters of the year,” the statement said.
In Property and Casualty insurance, gross premiums written (GPW) amounted to 11.5 billion euros in the third quarter of 2017. Operating profit decreased 28% to 1 billion euros in the third quarter compared to the same quarter in the previous year. The underwriting result was pressured by higher claims from nat cats and higher large- and weather-related losses. The P&C insurance combined ratio rose 3.4 percentage points in the most recent quarter to 96.9% in the third quarter compared to the year-earlier period, due to nat cats.
“The Property and Casualty segment held up very well after a series of hurricanes, storms and other events. Natural catastrophes caused 529 million euros in losses,” Dieter Wemmer, chief financial officer of Allianz SE, said in the statement. “This relatively low amount is testimony to the Group’s underwriting skills and risk discipline. Setting aside claims from catastrophes, the segment is on track to meet its 2018 target of a combined ratio of 94 percent,” he suggested.
In the first nine months of 2017, P&C insurance GPW increased slightly to 40.9 billion euros from 40.4 billion euros. Operating profit declined by 6.8% to 3.7 billion euros compared to the same period of the prior year due to a lower underwriting result. The combined ratio for the first nine months of 2017 rose one percentage point to 95.4%.
In Asset Management, third-party assets under management (AuM) grew by 7 billion euros to 1.4 billion euros. High third-party net inflows of 32 billion euros, marking the fifth consecutive quarter with third-party net inflows, and positive market effects, offset negative foreign currency and deconsolidation impacts. In the third quarter, operating profit decreased by 2.7% to 588 million euros from 604 million euros, mainly driven by lower performance fees and negative foreign currency effects.
“The Asset Management segment broke the 100-billion-euro mark for third-party net inflows already in the first nine months, a remarkable achievement,” Wemmer said. “The outstanding investment performance of our actively managed funds is the main reason for these strong inflows.”
In the first nine months of 2017, Asset Management operating profit grew by 11.5% to 1.7 billion euros, mainly due to higher AuM driven fees. Strong third-party net inflows of 106 billion euros and positive market effects outweighed negative foreign currency effects, resulting in 1.9 billion euros of total assets under management – an increase of 51 billion euros compared to year-end 2016.
In Life and Health insurance, statutory premiums in the third quarter of 2017 rose 3.9% to 15.1 billion euros from 14.5 billion euros due to stronger sales of capital-efficient products in Germany and higher unit linked premiums in Italy, Taiwan, Belgium and Luxembourg. “This more than compensated for softer sales of fixed-income annuities in the United States,” the statement added.
L&H insurance operating profit decreased 10.3% to 1.1 billion euros in the third quarter of 2017 from 1.2 billion euros, mainly due to a lower investment margin. This resulted predominantly from a normalized level of realizations in the German life business and last year’s one-off gain from the sale of real estate in France, as well as from unfavourable foreign currency translation effects in the United States. In the first nine months of 2017, L&H operating profit increased nearly 10% to 3.4 billion euros from 3.1 billion euros.
“Third quarter results were robust, given the massive natural catastrophe events that impacted our Property & Casualty segment,” concluded Oliver Bäte, chief executive officer of Allianz SE. “The group absorbed claims stemming from hurricanes, storms and earthquakes in the quarter and still increased operating earnings in the nine-month period. For the year as a whole, Allianz expects to deliver strong financial results with operating profit in the upper half of the target range of 10.8 billion euros, plus or minus 500 million euros.”
As an insurer and asset manager, Allianz Group has more than 86 million retail and corporate customers, who benefit from a broad range of personal and corporate insurance services, ranging from property, life and health insurance to assistance services to credit insurance and global business insurance. In 2016, over 140,000 employees in more than 70 countries achieved total revenue of 122 billion euros and an operating profit of 11 billion euros for the Group.