Munich: Allianz missed analyst estimates for fourth-quarter profit on claims from natural catastrophes.
Net income at Europe’s biggest insurer increased to 1.42 billion euros ($1.6 billion) in the quarter from 1.22 billion euros a year earlier, the Munich-based company said in a statement on Friday. That compares with the 1.56 billion-euro average of six estimates compiled by Bloomberg.
"Allianz steadily delivers strong results in increasingly challenging operating conditions," Chief Executive Officer Oliver Baete, 50, said in the statement. "Our business is healthy and well-diversified. This makes us confident that we will continue to deliver strong earnings."
Insurers in Europe are grappling with stricter regulatory capital requirements, low interest rates that hurt their investment income and subdued prices in some of their markets. Still, Allianz wants to achieve annual earnings per share growth of five per cent on average from 2016 to 2018. It is also targeting a return on equity of 13 per cent, adjusted to exclude unrealized capital gains on bonds and other items, by 2018.
Allianz plans to increase its dividend by 6.6 per cent to 7.30 euros a share for 2015. That’s less than the Bloomberg Dividend Forecast of 7.40 euros.
Some analysts had expected Allianz to announce a share buyback on top of the dividend to help it reach its return on equity and earnings per share targets. The company hasn’t discussed either of those strategies, Chief Financial Officer Dieter Wemmer said in an interview with Bloomberg TV.
"We want to deliver 15 per cent EPS growth over three years," he said. "There might be opportunities in the market, there might be excess capital to be given back to shareholders."
The insurer’s asset management unit, which comprises Pacific Investment Management Co. and Allianz Global Investors, has also seen upheaval after the departure of Bill Gross from Pimco in September 2014. Group third-party net outflows fell to eight billion euros in the fourth quarter compared with outflows of 141 billion euros a year earlier. Outflows at Pimco dropped by almost half last year while the Global Investors unit saw record inflows.
Allianz’s full-year operating profit rose 3.2 per cent to 10.7 billion euros. That compares to a target of 10 billion euros to 10.8 billion euros. For 2016, the company aims for 10 billion euros to 11 billion euros. Fourth-quarter operating profit was impacted by claims from European storms and floods, the company said on Friday.
The property and casualty insurance unit’s spending on claims and other costs as a percentage of premiums, known as the combined ratio, improved to 96.2 per cent from 96.5 per cent, missing the average analyst estimate of 94.4 per cent. A ratio below 100 per cent means an insurer is making a profit from underwriting.
The stock has fallen 17 per cent in Frankfurt this year, valuing the company at about 62 billion euros. The Bloomberg Europe 500 Insurance Index declined 16 per cent over the same time.