During the third quarter of 2014, Allianz Group reported total quarterly revenues increased 14.5 percent to 28.78 billion euros*, compared to 25.14 billion euros in the third quarter of 2013. Operating profit stood at 2.65 billion euros, up 5.2 percent from 2.52 billion euros in the same period of 2013. Net income attributable to shareholders increased 11.2 percent to 1.61 billion euros, compared to 1.45 billion euros for the third quarter in 2013.
ʺStrong internal growth in the property and casualty segment, continued high demand for life insurance products and good operating profit in the asset management segment show that we are on the right track for 2014,ʺ said Dieter Wemmer, CFO of Allianz SE, in a company statement. ʺOur results confirm our outlook that the upper end of the operating profit target range at 10.5 billion euros is in reach.ʺ
The property and casualty insurance segment marked a strong quarter both in revenues and operating profit. ʺOur property and casualty business has seen a successful quarter following strong results in our core markets, supported by the absence of major natural catastrophes,ʺ Wemmer continued. ʺOur premium growth is mostly volume driven, highlighting good demand for our products.ʺ
P&C operating profit rose 15.2 percent to 1.42 billion euros in the third quarter of 2014, compared to 1.23 billion euros in the same quarter of 2013. Gross premiums written in P&C insurance increased 5.7 percent to 11.25 billion euros in the third quarter, compared to 10.65 billion euros in the same quarter in 2013.
Adjusted for foreign exchange and consolidation effects, internal growth of 4.7 percent was driven in particular by the business development in the UK, by strong growth in global lines as well as in Germany. The acquisition of specific distribution activities from Italian insurer Unipol contributed 0.8 percentage points to total premium growth.
A better underwriting result is reflected in the combined ratio, which improved in the third quarter by 1.3 percentage points to 93.5 percent compared with 94.8 percent last year.
The loss ratio decreased by 1.3 percentage points to 65.9 percent (compared to 67.2 percent in 2013), benefiting from a benign natural catastrophes environment, partially offset by a lower run-off result. At 27.6 percent, the expense ratio is in line with the third quarter of 2013.
Life and Health Segment
In the life and health insurance segment, statutory premiums climbed in the third quarter to 15.85 billion euros, representing an increase of 24.9 percent from the 12.70 billion euros reported during last year’s third quarter.
Effects of Bill Gross Resignation
In the asset management segment, operating profit reached its highest quarterly level in 2014. On September 30, 2014, total assets under management were 1.872 billion euros compared to 1.738 billion euros at the beginning of 2014. At the end of the third quarter, third-party assets under management amounted to 1.411 billion euros, up from 1.329 billion euros at the beginning of 2014.
Strong market movements and favorable currency effects have overcompensated the net outflows, Allianz said.
ʺNet outflow development after the resignation of Bill Gross is within our expectation. PIMCO continues to deliver high performance and customer service at world-class level,ʺ said Wemmer. ʺInvestment performance increased to 93 percent of PIMCO’s assets under management outperforming their benchmark on a three-year basis compared to 89 percent in the previous quarter.ʺ
The third quarter saw third-party net outflows of 47.4 billion euros, compared to net outflows of 27.5 billion euros in the previous year’s third quarter. Net outflows at PIMCO amounted to 49.2 billion euros in the third quarter of 2014. However, a substantial majority of these outflows occurred in the last week of September following the change in investment management leadership, Allianz said.
The PIMCO Total Return Fund assets were USD$170.9 billion as of October 31, 2014. Despite these outflows, the fund remains the largest actively managed bond fund in the world, Allianz said, noting that outflows from the Total Return Fund slowed considerably during the month of October, to approximately USD$27.5 billion. Nearly half of these outflows occurred in the first five trading days of October.
New dividend policy increases pay out
The board of management and the supervisory board of Allianz SE have decided on a new allocation of net income in its dividend policy. Starting with the financial year 2014, the intention is to propose an increased regular pay-out to Allianz shareholders of 50 percent of Allianz Group net income (attributable to shareholders). Until now the dividend policy foresaw a pay-out ratio of 40 percent. In the interest of dividend continuity, the objective is to keep the dividend per share at least at the level paid in the previous year, the company said.
“The dividend policy of Allianz Group continues to aim for a healthy balance between an attractive yield and investments in profitable growth,” the company said in a statement. “To assure capital discipline, the management further intends to evaluate and pay out the unused budget earmarked for external growth every three years. The first evaluation will take place at the end of 2016. The dividend policy is subject to a sustainable Solvency II ratio above 160 percent.”
This dividend policy represents the current intention of the board of management and the supervisory board and may be revised in the future.
*1 euro equals $1.25, as of November 7, 2014
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