Allianz boss Oliver Bäte wants to spread good news for investors – but the stock market apparently hoped for more and reacted with disappointment.
Germany’s largest insurance group Allianz is reporting record profits despite the weak economy in many parts of the world. The operating result rose last year by 6.7 percent to 14.7 billion euros, as the Munich DAX group announced.
Price increases, with which Allianz passed on the costs of inflation to its customers, played a significant role. The profit attributable to shareholders even increased by a third to 8.5 billion euros. Accordingly, Allianz wants to increase its payout this year by 21 percent to 13.80 euros dividend per share.
CEO Oliver Bäte spoke of a “very, very successful year” and said the group had by far the strongest brand in the industry. The development of the stock market price is one of the board’s priorities. In addition to the dividend increase, Bäte had a second message that should please the financial market: In the future, the group, which employs around 150,000 people worldwide, wants to regularly distribute 60 percent of its profits – instead of half as before.
Share price falls
However, the stock market reacted with disappointment: Allianz shares in Frankfurt fell sharply by midday, although the DAX rose overall. Allianz shares have risen sharply in the past twelve months.
The forecast for this year is rather cautious: Bäte and the new CFO Claire-Marie Coste-Lepoutre predicted an operating profit of 14.8 billion euros, with the usual range of plus-minus one billion. Although the average would be little more than last year, the board is aiming for the upper half: “That leaves a lot of scope for overachievement,” said Coste-Lepoutre.
Nuisance car insurance
Bäte emphasized that all “three cylinders” of Allianz’s business were running well: property and casualty insurance, life and private health insurance, and asset management. The property and casualty division increased its earnings by a comparatively modest 1.6 percent to 1.6 billion euros. This was due, among other things, to inflation, which drove the repair costs for cars and buildings to new heights.
Motor vehicle insurance in particular is currently more of a nuisance than a joy for many insurers: “In car insurance, we had absurd price increases for spare parts and repair costs. We have some workshops that charge 300 euros per hour to repair an electric car,” complained Bäte. “That’s what really drives prices, not insurers’ profits.” In many European markets, motor vehicle insurance is making losses.
2.2 trillion euros invested
The record result was largely due to the life/health division, which alone was able to increase its operating result from 4.2 billion to 5.2 billion euros. Aside from the insurance business, Allianz is also one of the largest international asset managers: at the end of 2023, the group had invested a total of 2.2 trillion euros in third-party and own money. That was a little more than a year earlier, but operating profit fell from 3.2 billion to 3.1 billion. The reason was exchange rate effects. The weaker dollar also clouded the financial investment results of other companies.
Source: Stern
