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Allianz profit climbs 21%, sending insurer's shares higher

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(Bloomberg) – Allianz SE said first-quarter profit surged 21 percent, beating analysts’ estimates, as Europe’s biggest insurer was helped by gains from selling investments. The shares rose.

Net income climbed to 2.2 billion euros ($2.5 billion) from 1.8 billion euros a year earlier, the Munich-based company said in a statement on Monday. The average estimate of six analysts was for earnings of about 1.55 billion euros, according to data compiled by Bloomberg.

“We had a strong start to 2016, reinforcing our confidence that we will be able to reach our outlook for 2016 despite the fact that this is a challenging year for the financial services industry,” Chief Executive Officer Oliver Baete said.

Baete, 51, has reinforced Allianz’s earnings ambitions by adding two earnings targets even as the insurance industry grapples with stricter regulatory capital requirements, low interest rates and subdued prices in some markets. On Monday the company confirmed its operating-profit goal of 10 billion euros to 11 billion euros this year. The measure slid 3.5 percent in the quarter as sales dropped 6.4 percent. 

The shares extended earlier gains, rising as much as 3.8 percent to 153.95 euros. Allianz was up 3.1 percent to 152.80 euros as of 4:34 p.m. in Frankfurt, topping Germany’s benchmark DAX Index of the country’s 30 biggest stocks.

The rise in net income was “driven in part by non-operating realized gains,” the company said, without providing further details. That contrasts with Munich Re, which said last week that first-quarter profit will be lower than it previously expected after market turmoil caused the world’s second-biggest reinsurer to write down equity investments.

To increase its capital efficiency, Allianz last month agreed to sell its unprofitable operations in South Korea Chinese insurer to Anbang Insurance Group Co.

Allianz’s Solvency II ratio, a measure of an insurer’s ability to absorb losses under rules introduced in Europe this year, fell to 186 percent at the end of the first quarter from 200 percent three months earlier, Allianz said, citing “capital market developments, partly offset by risk-management actions.”

Allianz is due to hold its annual shareholder meeting in Munich on Wednesday.


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