DGAP-News: Allianz SE / Key word(s): Quarter Results/Final Results
16.02.2017 / 18:53
The issuer is solely responsible for the content of this announcement.
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Full-year highlights
* 2016 operating profit up 0.9 percent to 10.8 billion euros, near upper
end of target range
* 2016 net income attributable to shareholders up 4.0 percent on year to
6.9 billion euros
* Solvency II capitalization rises to 218 percent at December 31, 2016
compared to 200 percent one year ago
* Board of Management proposes to raise the dividend further to 7.60 euros
per share from 7.30 euros
* Allianz to launch a share buy-back program worth up to 3 billion euros
* Operating profit target for 2017 is 10.8 billion euros, plus or minus 500
million euros, barring unforeseen events
Fourth-quarter highlights
* 4Q operating profit up 9.3 percent on year to 2.8 billion euros
* 4Q net income attributable to shareholders up 23 percent on year to 1.7
billion euros
* 4Q combined ratio improves to 94.0 percent from 96.2 percent year-ago
* New business margin strong at 2.9 percent in 4Q
* PIMCO third-party net inflows at 5.9 billion euros in 4Q
* 4Q cost-income ratio in Asset Management improves by 1.7 percentage
points to 61.4 percent
Allianz 2016: Another successful year
Allianz Group delivered 10.8 billion euros in operating profit in 2016,
near the upper end of its target range and the fifth consecutive increase
in annual operating results. Net income attributable to shareholders rose
4.0 percent compared to 2015, leading Allianz to raise its dividend further
to 7.60 euros. Allianz will also launch a 12-month share buy-back plan
worth up to 3 billion euros, representing around 4.2 percent of its share
capital. Allianz, Europe's largest insurer by market value, saw further
progress in implementing its Renewal Agenda in 2016, putting the company
well on track to achieve its 2018 targets.
The Life and Health segment saw the strongest rise in operating profit - up
9.3 percent to 4.1 billion euros - with rising investment results as the
key driver. The new business margin rose to 2.7 percent in 2016 compared to
2.2 percent in 2015, demonstrating Allianz's ability to implement strategic
changes swiftly and profitably in response to the low interest rate
environment.
The Property and Casualty segment saw operating result ease 4.2 percent in
the year mainly due to weaker investment results, even as its underwriting
performance improved. The segment's combined ratio, which measures
underwriting profitability, improved 0.3 percentage points to 94.3 percent
due in part to lower claims from natural catastrophes.
The Asset Management segment marked an important milestone as PIMCO
generated two consecutive quarters of third-party net inflows in the second
half of 2016. A 6.1 percent increase of total assets under management (AuM)
to 1,871 billion euros at year-end was mainly due to positive market
effects. A decline in AuM driven fees and performance fees, however, led to
a 4.0 percent decrease in operating profit. Cost discipline led to an
improvement in the cost-income ratio to 63.4 percent from 64.5 percent for
the segment.
"Allianz had a great year in 2016, with efforts invested in our Renewal
Agenda starting to bear fruit. All segments delivered well, thanks to the
engagement of our excellent people, and our robust capital base puts us in
a position of strength," Oliver Bäte, Chief Executive Officer of Allianz
SE, said.
"The year was filled with surprises, not all of them welcome, that
challenged many assumptions, fueled geopolitical uncertainty and market
volatility, and that make 2017 difficult to predict. Nevertheless, we feel
confident enough to raise our operating profit target range. The group aims
to achieve an operating result of 10.8 billion euros, plus or minus 500
million euros, in 2017, barring unforeseen events, crises or natural
catastrophes," Oliver Bäte stated.
Allianz returns unused capital to shareholders
Allianz SE has decided to launch a share buy-back program with a volume of
up to 3 billion euros as part of a previously announced plan to return
unused capital from the group's budget for external growth from the period
2014 to 2016. Based on the closing price of 156.85 euros per share on
February, 10, 2017, this would represent approximately 19.1 million shares
or 4.2 percent of share capital.
The share buy-back program is envisaged to start on February 17, 2017 and
last no longer than 12 months. Allianz SE will cancel repurchased shares
and regularly publish updates on the program. The full implementation of
the program as scheduled is subject to a minimum sustainable Solvency II
ratio of 160 percent.
Capital management becomes more flexible
Through capital management, Allianz Group aims for a healthy balance
between an attractive yield and investment in profitable growth. In 2014,
Allianz Group adjusted the payout ratio to shareholders to 50 percent of
net income attributable to shareholders. The Group also set aside 20
percent of net attributable income each year for external growth and aimed
to pay out any unused portion of this budget every three years starting at
the end of 2016.
The Board of Management and the Supervisory Board have now decided to
simplify Group capital management to make it more flexible. In future, 50
percent of Group net attributable income will still be returned to
shareholders in the form of a regular dividend. Allianz also aims to keep
the regular dividend per share at least at the level paid in the previous
year.
However, Allianz no longer intends to link its budget for external growth
to shareholder pay-outs in a three-year cycle. Rather, half of net income
should be used as deemed appropriate to finance growth, or it will be
returned to shareholders on a flexible basis. This remains subject to a
sustainable Solvency II ratio above 160 percent [I].
Group: Life and Health performance drives 2016 income growth
2016 EPS up 4% to EUR15.14
Operating profit in 2016 rose 0.9 percent compared to one year ago to 10.8
billion euros, near the upper end of the target range. Net income growth
was driven by a 9.3 percent improvement in operating profit in the Life and
Health segment, largely due to an increased investment margin.
The non-operating loss was unchanged compared to one year ago, including
the negative impact from the sale of the South Korean business.
Overall, net income attributable to shareholders grew 4.0 percent to 6.9
billion euros. Basic Earnings per Share (EPS) rose 4.0 percent to 15.14
euros.
Return on equity was at 12.0 percent in 2016 (2015: 12.5 percent), as
capital strength grew faster than earnings.
4Q operating profit up 9.3% to EUR2.8bn
Operating profit increased 9.3 percent to 2.8 billion euros in the fourth
quarter, largely due to a stronger underwriting result in the Property and
Casualty segment, where operating profit rose 16.4 percent.
4Q net income up 23.0%
An improved non-operating result also supported the increase in net income
attributable to shareholders, which rose 23.0 percent to 1.7 billion euros
in the fourth quarter. Basic Earnings per Share (EPS) in the quarter
increased to 3.83 (3.12) euros.
Solvency II capitalization ratio 218% at year-end
The Solvency II capitalization ratio rose to 218 percent at the end of 2016
compared to 200 percent on December 31, 2015. This was primarily due to
operating capital generation and the sale of our Korean life insurance
operations.
2016 management assessment
"Allianz enjoyed a stellar finish in 2016 despite tough market conditions,
leading management to propose another dividend increase. The company
recorded its fifth consecutive rise in annual operating profit, supported
by continued positive developments in all business segments and putting the
group on track to meet its 2018 Renewal Agenda targets," said Dieter
Wemmer, Chief Financial Officer of Allianz SE.
Property and Casualty insurance: 2016 internal growth stays strong
Full Year 2016 internal growth at 3.1%
In 2016, gross premiums written held steady at 51.5 (51.6) billion euros.
Adjusted for foreign exchange and consolidation effects, internal growth
was strong at 3.1 percent, mostly driven by positive developments in
Turkey, Germany, and at Allianz Worldwide Partners. Operating profit for
2016 eased 4.2 percent to 5.4 billion euros compared to 2015 due to lower
investment income. The combined ratio for the full year improved by 0.3
points to 94.3 percent.
4Q gross premiums written up 2.4%
Gross premiums written rose 2.4 percent to 11.2 billion euros in the fourth
quarter in the segment. Adjusted for foreign exchange and consolidation
effects, internal growth was 3.6 percent, driven by a positive volume
effect of 2.0 percent and a positive price effect of 1.6 percent.
4Q combined ratio better at 94.0%
Operating profit increased 16.4 percent to 1.4 billion euros in the fourth
quarter compared to the same quarter in the previous year in the segment.
The underwriting result improved, benefiting from lower claims from natural
catastrophes and large losses. The combined ratio improved 2.3 percentage
points to 94.0 percent.
4Q management assessment
"Growth improved in Property and Casualty in the quarter with both volume
and price contributing to a better result. Allianz Worldwide Partners and
Turkey helped to drive growth, as did Germany," said Dieter Wemmer. "We are
moving steadily toward our goal of a 94 percent combined ratio by 2018."
Life and Health insurance: 2016 investment margin drives rise in operating
profit
Full Year 2016 shows sustainable gains in new business margin
In Life and Health insurance, operating profit for the year increased 9.3
percent to 4.1 billion euros. This was driven by a higher investment
margin. The targeted shift toward capital-efficient products was reflected
in the rise of the new business margin to 2.7 percent for the full year. As
a result, the value of new business (VNB) rose 21.7 percent to 1.4 billion
euros compared to 2015.
4Q operating profit EUR1.1bn
Operating profit decreased 1.7 percent to 1.1 billion euros compared to the
prior-year quarter in the segment, partly due to increased policyholder
participation in Germany, offset by the higher investment margin in the
United States.
VNB EUR420mn and NBM 2.9% in 4Q
The value of new business (VNB) increased 6.4 percent to 420 million euros
in the quarter. The new business margin remained stable at 2.9 percent. Due
to changes in strategy, premiums shifted to capital-efficient products, but
lower market yields weighed on results.
4Q management assessment
"Allianz is quickly switching toward Life products that can produce better
returns for customers. This strategic shift has benefited Allianz
shareholders as well, as reflected in a new business margin of 2.9 percent
in the last quarter of 2016," said Dieter Wemmer.
Asset Management: PIMCO flows stay positive in 4Q; efficiency improves
Full Year 2016 sees better cost-income ratio
Third-party assets under management (AuM) increased by 85 billion euros in
2016, mostly due to positive market effects. Operating revenues decreased
7.1 percent to 6.0 billion euros, mainly due to lower AuM driven fees,
primarily affected by decreased fee margins. As expected, operating profit
decreased 4.0 percent to 2.2 billion euros in 2016, as a decline in
revenues could only partially be compensated by a reduction of operating
expenses. Lower personnel costs at PIMCO contributed to an overall drop of
8.7 percent in operating expenses in the segment. The cost-income ratio
(CIR) improved to 63.4 percent from 64.5 percent last year.
4Q operating profit at EUR640mn
Operating profit edged higher in the fourth quarter of the year, amounting
to 640 million euros, as falling operating expenses more than compensated
for lower operating revenues in the segment.
CIR at 61.4% in 4Q
The cost-income ratio (CIR) for the segment improved 1.7 percentage points
to 61.4 percent in the quarter as cuts in operating expenses outpaced the
fall in revenues. At PIMCO the cost-income ratio improved to 56.9 percent
(4Q 2015: 60.2 percent).
3P net inflows at EUR1.7bn in 4Q
Compared to September 30, 2016, third-party AuM rose by 34 billion euros to
1,361 billion euros at the end of the fourth quarter, mostly due to
favorable foreign exchange effects. The quarter saw third-party net inflows
of 1.7 billion euros, driven by net inflows of 5.9 billion euros at PIMCO,
partly offset by net outflows of 4.2 billion euros at Allianz Global
Investors.
4Q management assessment
"The PIMCO turnaround is on track as the fourth quarter was the second
consecutive reporting period with positive third-party net inflows. Cost
cuts, especially in variable compensation, helped to make up for revenue
declines and lift operating profit slightly in the quarter," said Dieter
Wemmer.
[I] This represents the management's current intention and may be revised
in the future. Also, the decision regarding dividend payments in any given
year is subject to specific dividend proposals by the management and
supervisory boards, each of which may elect to deviate if appropriate under
the then prevailing circumstances, as well as to the approval of the annual
general meeting.
Allianz Group - preliminary key figures 4th quarter and fiscal year 2016
4Q 2016 4Q 2015
Total revenues [Euro bn] 30.0 29.7
Property-Casualty [Euro bn] 11.2 10.9
Life/Health [Euro bn] 17.1 17.0
Asset Management [Euro bn] 1.7 1.7
Corporate and Other [Euro bn] 0.2 0.2
Consolidation [Euro bn] -0.1 -0.1
Operating profit / loss [Euro mn] (1) 2,826 2,586
Property-Casualty [Euro mn] 1,421 1,221
Life/Health [Euro mn](1) 1,083 1,101
Asset Management [Euro mn] 640 637
Corporate and Other [Euro mn] -302 -368
Consolidation [Euro mn] -16 -5
Net income [Euro mn] 1,826 1,499
attributable to non-controlling interests [Euro mn] 82 81
attributable to shareholders [Euro mn] 1,744 1,418
Basic earnings per share [Euro] 3.83 3.12
Diluted earnings per share [Euro] 3.83 3.12
Additional KPIs
Group: Return on Equity (3)(4)
Property/Casualty: Combined ratio 94.0% 96.2%
Life/Health: New business margin (5) 2.9% 2.9%
Life/Health: Value of new business[Euro mn](5) 420 395
Asset Management: Cost-income ratio 61.4% 63.0%
12M 2016 12M 2015
Total revenues [Euro bn] 122.4 125.2
Property-Casualty [Euro bn] 51.5 51.6
Life/Health [Euro mn] 64.6 66.9
Asset Management [Euro bn] 6.0 6.5
Corporate and Other [Euro bn] 0.6 0.6
Consolidation [Euro bn] -0.3 -0.4
Operating profit /loss [Euro mn](1) 10,883 10,735
Property/Casualty [Euro mn] 5,370 5,603
Life/Health [Euro mn] (1) 4,148 3,796
Asset Management [Euro mn] 2,205 2,297
Corporate and Other [Euro mn] -867 -945
Consolidation [Euro mn] -23 -16
Net income [Euro mn] 7,250 6,987
attributable to non-controlling interests [Euro mn] 367 371
attributable to shareholders [Euro mn] 6,883 6,616
Basic earnings per share [Euro] 15.14 14.56
Diluted earnings per share [Euro] 15.00 14.55
Dividend per share [Euro] 7.60(2) 7.30
Additional KPIs
Group: Return on Equity (3)(4) 12.0% 12.5%
Property/Casualty: Combined ratio 94.3% 94.6%
Life/Health: New business margin (5) 2.7% 2.2%
Life/Health: Value of new business [Euro mn] (5) 1,448 1,190
Asset Management: Cost-income ratio 63.4% 64.5%
12/31/16 12/31/15
Shareholders' equity [Euro bn](3) 67.3 63.1
Solvency II capitalization ratio(6) 218% 200%
Third-party assets under management [Euro bn] 1,361 1,276
Please note: The figures are presented in millions of Euros, unless
otherwise stated. Due to rounding, numbers presented may not add up
precisely to the totals provided and percentages may not precisely reflect
the absolute figures.
(1) From the classification of our Korean life business as "held for sale"
in 2Q 2016 until its disposal in 4Q 2016, the total result was
considered as non-operating.
(2) Proposal
(3) Excluding non-controlling interests.
(4) Excluding unrealized gains/losses on bonds net of shadow accounting.
(5) Current and prior year figures are presented excluding effects from the
Korean life business.
(6) Risk capital figures are group diversified at 99.5% confidence level.
Allianz Life US included based on third country equivalence with 150%
of RBC CAL since September 30, 2015. Changed regulatory tax treatment
of German life sector reduced year-end SII capitalization ratio from
200% to 196% on January 1, 2016.
Munich, February 16, 2017
These assessments are, as always, subject to the disclaimer provided below.
Cautionary note regarding forward-looking statements
The statements contained herein may include prospects, statements of future
expectations and other forward-looking statements that are based on
management's current views and assumptions and involve known and unknown
risks and uncertainties. Actual results, performance or events may differ
materially from those expressed or implied in such forward-looking
statements.
Such deviations may arise due to, without limitation, (i) changes of the
general economic conditions and competitive situation, particularly in the
Allianz Group's core business and core markets, (ii) performance of
financial markets (particularly market volatility, liquidity and credit
events), (iii) frequency and severity of insured loss events, including
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 including the
euro/US-dollar exchange rate, (ix) changes in laws and regulations,
including tax regulations, (x) the impact of acquisitions, including
related integration issues, and reorganization measures, and (xi) general
competitive factors, in each case on a local, regional, national and/or
global basis. Many of these factors may be more likely to occur, or more
pronounced, as a result of terrorist activities and their consequences.
No duty to update
The company assumes no obligation to update any information or
forward-looking statement contained herein, save for any information
required to be disclosed 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 (IFRS).
Information is based on preliminary figures. Final results for fiscal year
2016 will be released on March 10, 2017 (publication of the Annual Report).
This is a translation of the German Quarterly and Full Year Earnings
Release of the Allianz Group. In case of any divergences, the German
original is binding.
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Language: English
Company: Allianz SE
Königinstr. 28
80802 München
Germany
Phone: +49 (0)89 38 00 - 41 24
Fax: +49 (0)89 38 00 - 38 99
E-mail: investor.relations@allianz.com
Internet: www.allianz.com
ISIN: DE0008404005
WKN: 840400
Indices: DAX-30, EURO STOXX 50
Listed: Regulated Market in Berlin, Dusseldorf, Frankfurt (Prime
Standard), Hamburg, Hanover, Munich, Stuttgart; Regulated
Unofficial Market in Tradegate Exchange
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