ALLIANZ 1H2013: The record Central European floods didn't change the upward trend of the group

8 August 2013 — Daniela GHETU
michael_diekmann4"We can look back on a very successful first half year overall," said Michael DIEKMANN, CEO of Allianz SE on the occasion of the half year results presentation. "Although we faced record floods in Central Europe, persistent low interest rates and erratic capital markets, our business continued to grow profitably." Quarterly revenues of EUR 26.8 billion were 6.3% above the EUR 25.2 billion achieved in the second quarter of 2012, while operating profit rose by 5.2% y-o-y, to EUR 2.4 billion.

"In view of our good half-year results, we are maintaining our operating profit outlook for 2013 of EUR 9.2 billion, plus or minus EUR 500 million, although based on our current projections we see the figure more toward the upper end of this range," Michael DIEKMANN added. "As always, this forecast is under the caveat that natural catastrophes and capital market turbulence do not exceed expected levels."

All three business segments of ALLIANZ mastered the challenges in the second quarter of 2013. Property and Casualty insurance produced stable revenues and strong profits despite several natural catastrophes. In the Life and Health insurance segment, revenues grew strongly by nearly 10%, whereas operating profit fell amid the changing interest rate environment. Asset Management remained very strong. Despite high bond market volatility and a sudden uptick in key interest rates, the segment saw net inflows and once again recorded double-digit increases in operating profit for the quarter.

The result from non-operating items improved during the second quarter of 2013 to plus EUR 132 million from minus EUR 151 million the year before due to lower impairments and higher realized gains. Income taxes rose to EUR 824 million from EUR 761 million the year before. The effective tax rate for the second quarter of 2013 was 33%, compared to 36% in the same period the previous year. Net income attributable to shareholders amounted to EUR 1.6 billion in the second quarter of 2013, a year-on-year increase of 26.8% from EUR 1.3 billion.

The combined ratio on P&C segment for the second quarter of 2013 improved to 96.0%, 1.2 pp down from 97.2% the year before. For ALLIANZ, after reinsurance, the net impact of the June floods in Central Europe was approximately EUR 330 million. Together with floods in France and Canada and hailstorms in Germany and Switzerland, the total impact from natural catastrophes on the loss ratio was 5.3 pp. However, the loss ratio ultimately improved to 67.3% from 69.4% for the previous year's second quarter.

The CEE results in 1H2013

Property-Casualty insurance operations - In the CEE markets, ALLIANZ recorded in the second quarter of 2013 gross premiums of EUR 582 million. The gross premiums figures adjusted for foreign currency translation and (de-)consolidation effects show a 5.0% growth - largely due to the strong volume growth in the Group's motor and health business in Russia. For the first half of 2013, the GWP amounted to EUR 1,274 million, remaining at a fairly constant level as compared with 1H2012. Russia remained the largest market for ALLIANZ in the region, with GWP of EUR 400 million (31.4% of the CEE business), followed by Poland, with GWP of EUR 219 million (17.2%) and Slovakia with EUR 177 million (13.9%). Hungary and Czech Republic have an almost equal contribution to the German's group premium production (11.3% of the CEE GWP). In terms of profitability, the best result was achieved in 1H2913 in Slovakia, where the operating profit for the PC lines amounted to EUR 26 million, followed by the Czech Republic, with EUR 12 million. However, in both countries the operating profitability fell in 1H2013 by about 20% as compared with 1H2012. A significant decrease in profitability was recorded in Poland where the operating profit fell from EUR 11 million in 1H2012, to EUR 4 million in 1H2013. On the other hand, the Bulgarian non-life subsidiary of ALLIANZ reported a more than double figure for the operating profit (EUR 9 million in 1H2013, as compared to EUR 4 million in 1H2012). Overall, the CEE non-life business of ALLIANZ provided a positive operating result of EIR 59 million (17% y-o-y).

Life/Health insurance operations - Statutory premiums in the CEE countries decreased to EUR 191 million in the second quarter of 2013, down 36.9% considering the figures adjusted for foreign currency translation and (de-)consolidation effects. According to the group's interim report, the decrease largely relates to the Polish market, where regulatory restrictions led to a significant decrease in premiums from deposit business. The decrease in single premiums investment-oriented business in the Czech Republic was partly offset by growth in the traditional business. In fact, following the above mentioned changes, Poland lost its leading position among the CEE life/health business of ALLIANZ, its share in the regional specialty business decreasing from 30% in 2012 to almost 11% in June 2013. The leading position currently belongs to Slovakia, with EUR 120 million in GWP for 1H2013 and 26.8% share in the groups' CEE life/health GWP, while Hungary accounts for about 24% of the CEE life/health premium production, followed by the Czech Republic with a 16.5% share. In terms of profitability, the German groups' life/health business in CEE witnessed mixed results, with an overall 10% growth of the operational profit.

Download and read the full ALLIANZ interim report here.

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