Allianz Earnings: Delivers Stunning Growth Again

Allianz ALV reported earnings for the first quarter of 2023 above our expectations. The headline is the company delivered an operating profit for the first three months of EUR 3.7 billion. This leaves Allianz on track to hit its full-year target of EUR 14.2 billion. Our full-year 2023 estimate was EUR 10.2 billion. We have now raised this to EUR 11.6 billion. We raise our fair value estimate to EUR 250. We maintain our no moat rating.

Property and casualty reported an operating profit of EUR 1.9 billion. While we haven’t forecast the operating profits of individual divisions for Allianz, this is a 22.7% rise on the same period last year. Comparatively, the combined ratio improved by 1.9 percentage points to 91.9%, both under the new accounting regime. And this unit’s top-line growth was strong as well at 11.1% at constant currency. That strength has come from a combination of a 5-percentage-point volume effect and 5.6-percentage-point pricing. This is not bad for a first-quarter period.

The life and health result is stunning, delivering operating profit of EUR 1.32 billion versus the prior-year period at EUR 806 million. This business has benefited from a rebound in the United States with better sales of fixed index annuities. And a favourable investment result versus an unfavourable one last year. The release of the contractual service margin is in line with this stock, now standing at EUR 52.4 billion.

The asset management division’s results are disappointing. Operating revenue fell by 8.1% though that was better than our expectation of a 9.6% decrease. Total assets under management have grown by 1.5% since the end of last year versus 5.3% growth we forecast over full-year 2023. The cost/income ratio deteriorated by 2.3 percentage points to 62%.

The company has announced another buyback of EUR 1.5 billion.