Allianz increases operating profit by almost a quarter to €3.7bn
Munich - The Allianz Group, one of the world's leading insurers and asset managers with more than 122 million private and corporate customers in more than 70 countries has today announced that its total business volumes rose by 3.9% to €46.0 billion, driven by the Property-Casualty business segment which benefited from higher prices and volumes. It said this result was partly offset by lower business volumes in the Life/Health business segment, primarily due to softer single-premium volumes, and a decrease in AuM-driven revenues in its Asset Management business segment.
Internal growth, which adjusts for foreign currency translation and consolidation effects, was strong at 3.5%, driven by the Property-Casualty business segment.
Earnings
The Group said its operating profit jumped 24.2% to €3.7 (1Q 2022: €3.0) billion in Q1 of 2023. This, it added, was due to a higher result of its US operations in the Life/Health business segment, and a stronger insurance service result in the Property-Casualty business segment, and partly offset by the Asset Management business segment due to reduced AuM-driven revenues and a higher cost-income ratio.
Shareholders' core net income was strong at €2.2 (1Q 2022: €0.4) billion due to both a higher operating profit and an improved non-operating result. Non-operating result in the prior year was impacted by a provision related to the AllianzGI US Structured Alpha matter.
The net income attributable to shareholders was €2.0 (1Q 2022: €0.5) billion, up substantially in part due to the aforementioned provision, while its Core Earnings per Share (EPS) was €5.43 (1Q 2022: €1.02). Its annualized Core Return on Equity (RoE) was 15.6% (full year 2022: 12.7%), it added.
On May 10, 2023, Allianz announced a new share buy-back programme of up to €1.5 billion, which it said will start at the end of May 2023, and be finalized by December 31, 2023, at the latest.
Solvency II Capitalization Ratio
The Group's Solvency II capitalization ratio was 206% at the end of 1Q 2023 compared with 201% at the end of 4Q 2022. Including the application of transitional measures for technical provisions, Allianz said its Solvency II capitalization ratio was 232% at the end of the first quarter of 2023 compared with 230% at the end of 2022.
Segmental highlights
Giulio Terzariol, Chief Financial Officer of Allianz SE said : "Allianz's first quarter results demonstrated strong performance and proven resilience across all segments. With the first-time application of IFRS 9 and 17, we delivered our results with even more clarity and transparency and proved our ability to create value.
- Our Property-Casualty business showed excellent internal growth, driven by healthy pricing that contributed to offset the impact of inflation. The significant increase in operating profit is due to our strict underwriting discipline and focus on productivity gains.
- Value creation in our Life/Health business is strong. Our profitability is well supported by the solidity of our in-force business as well as the robustness of new business value.
- Our active Asset Management recorded €14.9 billion net inflows and our third-party assets under management reached €1.7 trillion. This bodes well for a solid profitability development.
We confirm our full-year outlook of operating profit of €14.2 billion, plus or minus €1 billion."
Property-Casualty insurance: Dynamic growth
The Group said its total business volume rose by 11.2% to €24.1 (€21.7) billion. Adjusted for foreign currency translation and consolidation effects, internal growth was strong at 11.1% due to a volume effect of 5.0%, a price effect of 5.6% as well as a service effect of 0.5%, with the main contributors to the increase being AGCS, Türkiye, Allianz Partners and Germany. AGCS Total Gross Premium Written (GPW) of €3,736mn is +€618mn/+20% better than prior year (Q1 2022: €3.118 billion).
Its operating profit surged by 22.7% to €1.9 (€1.5) billion, due to a higher operating insurance service result that was partly offset by a slightly lower operating investment result. For AGCS, it added, the operating profit for Q1 2023 of €202 million (Q1 2022: €182 million) is €20 million better than prior year mainly due to a better insurance service result.
Its combined ratio improved by 1.9% points to 91.9% (93.8%), while the loss ratio benefited from a higher discounting effect and lower claims from natural catastrophes. This was partly offset by a lower run-off result, while the expense ratio improved by 0.5% points to 24.9% (25.4%).
Life/Health insurance: Excellent new business margin
PVNBP, the present value of new business premiums amounted to €18.5 (21.1) billion, driven primarily by lower single premium volumes in Germany and Italy, slightly offset by increased volumes in the United States as a result of a fixed index annuities sales promotion. Further decreases in Germany were driven by economic impacts, primarily higher discounting on recurring premiums.
The Group indicated that its operating profit increased to €1.3 (0.8) billion and benefited in particular from a higher result in the United States, and the release of the Contractual Service Margin (CSM) which was stable and in line with expectations.
Contractual Service Margin (CSM) at €52.4 billion, up by €0.2 billion from the end of 2022. Healthy value of new business and the expected in-force return resulted in solid normalized growth of 1.1% in the first quarter.
The new business margin (NBM) increased to 5.5% (4.9%), driven by an improved business mix and higher interest rates. The value of new business (VNB) was stable at €1.0 (1.0) billion, it added.
Asset Management: Positive net inflows
Operating revenues were €1.9 billion, down by 8.1%. Higher performance fees were more than offset by lower AuM-driven revenues.
The Group said operating profit was €723 (€832) million, down 13.2% from the prior-year period. Adjusted for foreign currency translation effects, operating profit decreased by 16.0%, while the cost-income ratio (CIR) rose to 62.0% (59.7%).
Third-party assets under management were €1.668 trillion as of March 31, 2023, up by €33 billion from the end of 2022. Positive net inflows of €14.9 billion and favourable market impacts of €42.2 billion were partially offset by negative foreign currency translation effects of €23.4 billion, the Group pointed out..
Total assets under management were €2.174 trillion at the end of the first quarter of 2023, reflecting the trend in the third-party assets under management.
"We can be proud of our operating profit and bottom line, a reflection of our strength, our skills, and consistent execution of our strategy. We once again benefited from our diversified business mix and delivered particularly strong performance in the Property-Casualty segment, driven by robust pricing, continued underwriting discipline and focus on further productivity gains. Our strong profitability and capitalization underscore our aspiration to remain the trusted partner for our clients to secure their futures as they continue to navigate a time of hesitation and uncertainty," concludes Oliver Bäte, Chief Executive Officer of Allianz SE.
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