Earnings Release • Nov 23, 2017
Earnings Release
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Munich, November 9, 2017 [email protected] +49 89 3800 3963
[email protected] +49 89 3800 17224 [email protected] +49 89 3800 3892 [email protected] +49 89 3800 18124
[email protected] www.allianz.com/investor-relations
Allianz Group reported good results for the third quarter of 2017 after a series of hurricanes, storms and other natural catastrophes drove claims higher. Total revenues rose 2.1 percent compared to the third quarter of 2016 to 28.3 (third quarter of 2016: 27.7) billion euros, mostly due to another strong performance in the Life and Health business segment. Operating profit declined to 2.5 (3.0) billion euros, largely due to 529 million euros losses from natural catastrophes. Operating profit also eased in the business segments Life and Health and Asset Management but remained at an overall high level. Net income attributable to shareholders decreased 17.3 percent to 1.6 (1.9) billion euros, affected by high claims from natural catastrophes and partly offset by lower tax expenses. Excluding the impact of natural catastrophes, the Group reported a strong performance similar to the preceding two quarters of the year.
Basic Earnings per Share (EPS) amounted to 3.53 (4.17) euros. Annualized Return on Equity (RoE) was 12.4 percent (full year 2016: 12.3 percent).The Solvency II capitalization ratio strengthened to 227 percent at the end of the quarter, compared to 219 percent at the end of the second quarter of 2017.
The first nine months of 2017 developed positively with all business segments, contributing to a 2.2 percent increase in total revenues. Operating profit increased by 3.5 percent to 8.3 billion euros, driven by the Life and Health and Asset Management segments. The Property and Casualty business saw a decline in operating profit due to claims from natural catastrophes during the third quarter. Net income attributable to shareholders in the nine-month period grew by 4.9 percent to 5.4 billion euros.
"Third quarter results were robust, given the massive natural catastrophe events that impacted our Property and Casualty segment. It was also very good to see how our experts were able to actively support our customers in these difficult circumstances," said Oliver Bäte, Chief Executive Officer of Allianz SE. "The group absorbed claims stemming from hurricanes, storms and earthquakes in the quarter and still increased operating earnings in the nine-month period. Our capitalization also strengthened further, as the rising solvency ratio shows. For the year as a whole, Allianz expects to deliver strong financial results with operating profit in the upper half of the target range of 10.8 billion euros, plus or minus 500 million euros."
"The Property and Casualty segment held up very well after a series of hurricanes, storms and other events. Natural catastrophes caused 529 million euros in losses. This relatively low amount is testimony to the Group's underwriting skills and risk discipline. Setting aside claims from catastrophes, the segment is on track to meet its 2018 target of a combined ratio of 94 percent," said Dieter Wemmer, Chief Financial Officer of Allianz SE.
In the first nine months of 2017, gross premiums written increased slightly to 40.9 (40.4) billion euros. Adjusted for foreign exchange and consolidation effects, internal growth amounted to 1.5 percent, with price and volume effects contributing 1.0 percent and 0.5 percent respectively. Operating profit declined by 6.8 percent to 3.7 billion euros compared to the same period of the prior year due to a lower underwriting result. The combined ratio for the first nine months of 2017 rose 1.0 percentage point to 95.4 percent.
• Statutory premiums in the third quarter of 2017 rose 3.9 percent to 15.1 (14.5) billion euros due to stronger sales of capital-efficient products in Germany and higher unit-linked premiums in Italy, Taiwan, Belgium and Luxembourg. This more than compensated for softer sales of fixed-income
annuities in the United States. Adjusted for foreign exchange and consolidation effects, statutory premiums increased by 8.2 percent.
"The new business margin stayed at the high level of 3.4 percent for the second consecutive quarter, well above the 2.8 percent margin one year ago, partly due to a better business mix. Customers and shareholders are both benefiting from the new products we have generated in response to this very low interest rate environment," said Dieter Wemmer.
In the first nine months of 2017, operating profit increased nearly 10 percent to 3.4 (3.1) billion euros. Statutory premiums rose 2.6 percent to 48.7 billion euros. The new business margin rose to 3.3 (2.6) percent reflecting the targeted shift toward capital-efficient products. As a result, the value of new business (VNB) increased by 29.6 percent to 1.3 billion euros compared to the first nine months of 2016.
"The Asset Management segment broke the 100-billion-euro mark for third-party net inflows already in the first nine months, a remarkable achievement. The outstanding investment performance of our actively managed funds is the main reason for these strong inflows," said Dieter Wemmer.
In the first nine months of 2017, operating profit grew by 11.5 percent to 1,743 million euros, mainly due to higher AuM driven fees. Strong third-party net inflows of 106 billion euros and positive market effects outweighed negative foreign currency effects, resulting in 1,922 billion euros of total assets under management – an increase of 51 billion euros compared to year-end 2016. The cost-income ratio improved by 1.6 percentage points to 62.6 percent.
Technical Notes: Prior-year figures have been adjusted due to an updated operating profit definition and an accounting policy change, as already described in the first quarter of 2017. Annualized figures are not a forecast for full year numbers.
| Allianz Group - key figures 3rd quarter and first nine month of 2017 | |
|---|---|
| -- | ---------------------------------------------------------------------- |
| 3Q 2017 | 3Q 2016 | Δ | 9M 2017 | 9M 2016 | Δ | |||
|---|---|---|---|---|---|---|---|---|
| Total revenues | € bn | 28.3 | 27.7 | 2.1% | 94.5 | 92.4 | 2.2% | |
| - Property-Casualty | € bn | 11.5 | 11.5 | 0.2% | 40.9 | 40.4 | 1.4% | |
| - Life/Health | € bn | 15.1 | 14.5 | 3.9% | 48.7 | 47.5 | 2.6% | |
| - Asset Management | € bn | 1.5 | 1.5 | 0.3% | 4.7 | 4.4 | 6.7% | |
| - Corporate and Other | € bn | 0.1 | 0.1 | 6.8% | 0.4 | 0.4 | 2.8% | |
| - Consolidation | € bn | -0.1 | -0.1 | 14.7% | -0.3 | -0.2 | 10.0% | |
| Operating profit / loss1,2,3 | € mn | 2,477 | 2,995 | -17.3% | 8,337 | 8,058 | 3.5% | |
| - Property-Casualty2 | € mn | 1,039 | 1,443 | -28.0% | 3,744 | 4,016 | -6.8% | |
| - Life/Health1,2,3 | € mn | 1,069 | 1,192 | -10.3% | 3,351 | 3,051 | 9.8% | |
| - Asset Management2 | € mn | 588 | 604 | -2.7% | 1,743 | 1,563 | 11.5% | |
| - Corporate and Other2 | € mn | -211 | -242 | -13.0% | -476 | -565 | -15.9% | |
| - Consolidation | € mn | -8 | -2 | 250% | -26 | -7 | 266% | |
| Net income1 | € mn | 1,670 | 1,986 | -15.9% | 5,683 | 5,411 | 5.0% | |
| - attributable to non-controlling interests | € mn | 104 | 91 | 14.5% | 307 | 285 | 7.5% | |
| - attributable to shareholders1 | € mn | 1,566 | 1,895 | -17.3% | 5,376 | 5,126 | 4.9% | |
| Basic earnings per share1 | € | 3.53 | 4.17 | -15.5% | 11.98 | 11.27 | 6.3% | |
| Diluted earnings per share1 | € | 3.52 | 4.17 | -15.4% | 11.98 | 11.08 | 8.0% | |
| Additional KPIs | ||||||||
| - Group | Return on equity1,4,5 | % | 11.2% | 12.3% | -1.1% -p | 12.4% | 12.3% | 0.1% -p |
| - Property-Casualty | Combined ratio | % | 96.9% | 93.5% | 3.4% -p | 95.4% | 94.4% | 1.0% -p |
| - Life/Health | New business margin6 | % | 3.4% | 2.8% | 0.6% -p | 3.3% | 2.6% | 0.7% -p |
| - Life/Health | Value of new business6 | € mn | 410 | 318 | 28.8% | 1,332 | 1,028 | 29.6% |
| - Asset Management | Cost-income ratio2 | % | 61.9% | 60.8% | 1.2% -p | 62.6% | 64.2% | -1.6% -p |
| 09/30/17 | 12/31/16 | |||||||
| Shareholders' equity1,4 € bn |
– | – | – | 65.0 | 67.1 | -3.1% | ||
| Solvency II capitalization ratio7 | % | – | – | – | 227% | 218% | 9% -p | |
| Third-party assets under management | € bn | – | – | – | 1,413 | 1,361 | 3.8% |
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 Prior year figures have been adjusted in order to reflect the impact resulting from an accounting policy change to measure the Guaranteed Minimum Income Benefit (GMIB) liability at fair value for our life business.
2 In light of the new operating profit definition, restructuring charges are reported outside of operating profit unless shared with policyholders. Prior year figures have been adjusted accordingly.
3 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.
4 Excluding non-controlling interests.
5 Excluding unrealized gains/losses on bonds net of shadow accounting. Return on equity for 3Q 2017 and 9M 2017 is annualized. For 3Q 2016 and 9M 2016, the return on equity for the full year 2016 is shown. Annualized figures are not a forecast for full year numbers.
6 Current and prior year figures are presented excluding effects from the Korean life business.
7 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 (Risk Based Capital Company Action Level) since September 30, 2015.
These assessments, are as always, subject to the disclaimer provided below:
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 forwardlooking 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 EUR/USD 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 maybe more likely to occur, or more pronounced, as a result of terrorist activities and their consequences.
The company assumes no obligation to update any information or forward-looking statement contained herein, save for any information required be disclosed by law.
The quarterly figures regarding the net assets, financial position and results of operations have been prepared in conformity with International Financial Reporting Standards. This Quarterly Earnings Release is not an Interim Financial Report within the meaning of International Accounting Standard (IAS) 34.
This is a translation of the German Quarterly Earnings Release of the Allianz Group. In case of any divergences, the German original is binding.
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