DGAP-News: Allianz SE: Allianz reports strong profitability in 2Q 2019. Operating profit outlook for full-year confirmed.
DGAP-News: Allianz SE / Key word(s): Half Year Results/Quarter Results
Management Summary: Strong total revenues and profitability
After a successful start into 2019, Allianz Group continued with a very strong operating performance in the second quarter of the year. At the heart of this result is Allianz' focused strategy, strong execution, and its diversified business portfolio. Internal revenue growth, which adjusts for currency and consolidation effects, was 4.1 percent in the second quarter of 2019. Total revenues increased 6.1 percent to 33.2 (second quarter of 2018: 31.3) billion euros. Operating profit grew 5.4 percent to 3.2 (3.0) billion euros in the second quarter of 2019, largely driven by our Life/Health business segment with a good underlying performance and a one-off profit in the United States. Our Asset Management business segment's operating profit increased mainly as a result of higher assets under management driven revenues. A lower investment result led to a decrease in our Property-Casualty business segment's operating profit.
Net income attributable to shareholders increased 13.1 percent to 2.1 (1.9) billion euros in the second quarter of 2019 due to operating profit growth and an improved non-operating result. The latter improved as the second quarter of 2018 was burdened by a negative impact from the sale of our traditional life insurance portfolio in Taiwan.
Basic Earnings per Share (EPS) increased 10.2 percent to 9.76 (8.86) euros in the first half-year of 2019. Annualized Return on Equity (RoE) amounted to 14.7 percent (full year 2018: 13.2 percent). The Solvency II capitalization ratio decreased from 218 percent at the end of the first quarter 2019 to 213 percent at the end of the second quarter 2019. The decrease was predominantly driven by market movements and capital management actions, which were partially offset by positive operating Solvency II earnings.
In the first half-year of 2019, operating profit grew by 6.4 percent to 6.1 (5.8) billion euros, which is above the mid-point of our full-year target range. Our Life/Health business segment's operating profit increased, supported by a one-off profit in the United States. Property-Casualty business segment recorded an improved underwriting result while our Asset Management business segment operating profit was stable. Our operating profit growth was the main driver for the 7.3 percent increase of net income attributable to shareholders to 4.1 billion euros.
On February 14, 2019, Allianz announced a new share buy-back program of up to 1.5 billion euros.
6.2 million shares have been acquired by June 30, 2019, representing 1.5 percent of outstanding capital.
"I am proud that the Allianz team has once again delivered a healthy performance," said Oliver Bäte, Chief Executive Officer of Allianz SE. "Sustainable performance is the result of our rigorous strategy execution that provides desired solutions for our customers. Our half-year results testify that Allianz is on track to achieve its full-year targets."
Property-Casualty insurance: Strong revenue growth and solid underwriting result
"We are seeing a solid performance in our Property-Casualty segment despite a lower investment result," said Giulio Terzariol, Chief Financial Officer of Allianz SE. "Internal growth, supported by healthy rate changes, shows the strength of our business. Our underwriting remains disciplined while we keep on making progress with our productivity as shown by the improved expense ratio."
In the first half-year of 2019, total revenues increased to 32.9 (30.9) billion euros. Adjusted for foreign exchange and consolidation effects, internal growth amounted to 4.5 percent, mostly driven by AGCS, Germany, and Euler Hermes. Operating profit improved by 4.0 percent to 2.8 billion euros compared to the same period of the prior year due to a higher underwriting result as we recorded lower claims from natural catastrophes, as well as an improved expense ratio. The combined ratio for the first half-year improved by 0.4 percentage points to 94.0 percent.
Life/Health insurance: Double digit profit growth
"Our Life/Health segment continued holding up very well in the low-interest rate environment, as shown by our dynamic sales," said Giulio Terzariol. "We kept on growing across geographies and in our preferred lines of business. Healthy new business margins will support our future operating profitability."
In the first half-year of 2019, the present value of new business premiums increased to 32.9 (29.0) billion euros largely because of the higher sales in the German and U.S. life insurance business. Operating profit went up to 2.3 (2.1) billion euros driven mainly by the favorable effect from the change in DAC amortization period in the United States. The new business margin increased to 3.5 (3.4) percent bringing the value of new business to 1,153 (980) million euros.
Asset Management: Strong net inflows also in the second quarter - assets under management at all time high
"This quarter, Asset Management again delivered strong results," said Giulio Terzariol. "With third-party assets under management at a new record level of 1,591 billion euros, we are on track to reach our operating profit full-year target."
In the first half-year of 2019, operating revenues grew by 1.9 percent to 3.3 billion euros, supported by higher AuM-driven revenues. As performance fees decreased and investments in business growth were made, the cost-income ratio went up by 0.6 percentage points to 62.3 percent. Operating profit rose by 0.4 percent to 1,251 (1,247) million euros. On an internal basis, operating profit decreased by 4.9 percent. Furthermore, favorable market effects, third-party net inflows, as well as the acquisition of Gurtin Municipal Bond Management resulted in third-party assets under management of 1,591 billion euros - an increase of 155 billion euros or 10.8 percent, compared to year-end 2018.
 PVNBP is shown after non-controlling interests, unless otherwise stated.
These assessments are, as always, subject to the disclaimer provided below.Cautionary note regarding forward-looking statements
This document includes forward-looking statements, such as prospects or expectations, that are based on management's current views and assumptions and subject to known and unknown risks and uncertainties. Actual results, performance figures, or events may differ significantly from those expressed or implied in such forward-looking statements. Deviations may arise due to changes in factors including, but not limited to, the following: (i) the general economic and competitive situation in the Allianz Group's core business and core markets, (ii) the performance of financial markets (in particular market volatility, liquidity, and credit events), (iii) the frequency and severity of insured loss events, including those resulting from natural catastrophes, and the development of loss expenses, (iv) mortality and morbidity levels and trends, (v) persistency levels, (vi) particularly in the banking business, the extent of credit defaults, (vii) interest rate levels, (viii) currency exchange rates, most notably the EUR/USD exchange rate, (ix) changes in laws and regulations, including tax regulations, (x) the impact of acquisitions including and related integration issues and reorganization measures, and (xi) the general competitive conditions that, in each individual case, apply at a local, regional, national, and/or global level. Many of these changes can be exacerbated by terrorist activities.No duty to update
The Allianz Group assumes no obligation to update any information or forward-looking statement contained herein, save for any information we are required to disclose by law.Other
The figures regarding the net assets, financial position and results of operations have been prepared in conformity with International Financial Reporting Standards. This Quarterly Earnings Release is not an Interim Financial Report within the meaning of International Accounting Standard (IAS) 34.
This is a translation of the German Quarterly Earnings Release of the Allianz Group. In case of any divergences, the German original is binding.Privacy Note
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02.08.2019 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.The issuer is solely responsible for the content of this announcement.The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.de
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