ALLIANZ, 1Q2021: operating profit up 44.8%, to EUR 3.3 billion

13 May 2021 — Daniela GHETU
Total revenues of ALLIANZ Group declined by 2.6% to EUR 41.4 billion and were flat y-o-y, adjusted for currency and consolidation effects, while the operating profit increased by 44.8% to EUR 3.3 billion, with all business segments contributing. 2021 operating profit target confirmed at EUR 12.0 billion, +/- EUR 1 billion.

In our Property-Casualty business segment, operating profit grew strongly due to a higher underwriting result driven by a normalization of claims from natural catastrophes and lower attritional losses - the latter suffered high COVID-19-related losses in the first quarter of 2020. In the Life/Health business segment, operating profit increased significantly as a result of a recovery of the investment margin. The Asset Management business segment's operating profit growth benefited from higher average third-party assets under management, increased performance fees as well as strong cost discipline.

Net income attributable to shareholders increased by 83.4% to EUR 2.6 billion driven predominantly by operating profit growth and to a smaller extent by a better non-operating result following lower impairments. Higher income taxes had a slightly offsetting effect.

Basic Earnings per Share (EPS) increased by 85.2% to EUR 6.23. Annualized Return on Equity (RoE) amounted to 16.7% (full year 2020: 11.4%). The Solvency II capitalization ratio stood at 210% at the end of the first quarter of 2021, compared to 207% at the end of 2020.

"Allianz started the year with excellent results across all business segments. This is an encouraging kick-off for 2021 and makes us confident to reach our 2021 targets," said Oliver Baete, Chief Executive Officer of Allianz SE.

"We saw a strong set of results in all business segments. As our well-diversified business has managed the challenges of the pandemic very well, I clearly see a return to our normal earnings power," said Giulio Terzariol, Chief Financial Officer of Allianz SE. "With improving operating conditions and a healthy capital position, Allianz is well equipped to grow profitably."

Property-Casualty insurance: Strong profitability with combined ratio at target of 93 percent

  • Total revenues reached EUR 19.7 billion in the first quarter of 2021. Adjusted for foreign currency translation and consolidation effects, internal growth totaled -1.6%, mainly driven by a negative volume effect of 4.8% and a positive price effect of 3.5%. The main contributors to this decline were Allianz Partners, United Kingdom, and Germany; in contrast, particularly AGCS, Euler Hermes, and Turkey recorded positive internal growth.
  • Operating profit rose strongly by 46.6% to EUR 1.5 billion in the first quarter of 2021 compared to the prior year period. A significantly higher underwriting result benefited from a decrease in losses from natural catastrophes and from negligible COVID-19 effects. The expense ratio also improved slightly.
  • The combined ratio improved by 4.7 percentage points to 93.0% in the first quarter of 2021.

"Our Property-Casualty franchise is in good shape as shown by our healthy combined ratio. I see clear progress towards our full-year ambition of 93 percent supported by strong underwriting performance," said Giulio Terzariol. "We stay disciplined in our underwriting and continue to focus on productivity gains."

Life/Health insurance: Strong growth in new business value and operating profit

  • PVNBP, the present value of new business premiums, increased to EUR 19.5 billion in the first quarter of 2021. This was largely attributable to higher sales of unit-linked products in Italy, as well as in the Asia-Pacific region.
  • The new business margin (NBM) increased to 2.9% as the negative effects from the declining interest rates were more than offset by product repricing and an improved business mix, with a continued shift to preferred lines of business. The value of new business (VNB) increased to EUR 558 million in the first quarter of 2021.
  • Operating profit increased to EUR 1.2 billion in the first quarter of 2021, driven predominantly by a recovery of the investment margin. In the United States, positive market developments led mainly to a higher investment income stemming from our fixed index annuity business. In addition, in Germany and in France we saw lower impairments - compared to the high level recorded in the first quarter of 2020. Further contributing factors were the higher unit-linked management fees in Italy.
"The strong new business value and the growth in operating profit clearly show that our Life and Health business segment is in good shape," said Giulio Terzariol. "Our business mix has further improved and contributes positively to our healthy margins. I expect continuing solid operating performance in this business segment."

Asset Management: Third-party assets under management at record level

  • Third-party assets under management (AuM) increased by EUR 63 billion to EUR 1,775 billion in the first quarter of 2021, compared to the end of 2020. The development was driven by positive foreign currency translation effects of EUR 49.6 billion and net inflows of EUR 37.8 billion- the highest quarterly inflows since 4Q 2017. These positive developments were partly offset by opposite market effects of EUR 20.7 billion.
  • Total assets under management increased to EUR 2,432 billion in the first quarter of 2021, a development in line with the third-party assets under management.
  • Compared to the first quarter of 2020, operating profit increased by 10.0% to EUR 747 million in the first quarter of 2021 as revenues grew - mainly driven by higher average third-party AuM, increased performance fees and the integration of Allianz Real Estate. Adjusted for foreign currency translation effects, operating profit increased by 17.9%. The cost-income ratio (CIR) improved 2.4 percentage points to 59.3% at the end of the first quarter 2021 compared to the first quarter of 2020.
"Our Asset Management business continues to grow and to perform very well." said Giulio Terzariol. "Record assets under management and our proven ability to manage our cost base effectively bode very well for a healthy development of our operating profitability throughout the year."

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