Allianz Releases Q3 2021 Result, Delivers Strong Operating Performance
Allianz Group has released its financial result for the third quarter of 2021, delivering a strong operating performance across all business segments for the third consecutive quarter.
The Group said the performance is a demonstration that its business model is well-positioned to leverage the opportunities arising from a recovery in the global economic environment and in financial markets.
Allianz Group in its recent press release made available for this medium stated that “In the first nine months of 2021, the Group has achieved 82 per cent of the operating profit target of 12 billion euros for the year, driven by all three business lines. The Asset Management and the Life/Health business segments reported their best-ever third-quarter operating results; the Property-Casualty business segment maintained its strong underlying profitability, even in an environment marked by intense natural catastrophes.
“These were contained in the recent press release by Allianz Group made available for this medium.
“Internal revenue growth, which adjusts for currency and consolidation effects, was 9.0 per cent in the third quarter of 2021, driven by all business segments.
“Total revenues increased 9.5 per cent to 34.4 (3Q 2020: 31.4) billion euros. Operating profit grew 11.3 per cent to 3.2 (2.9) billion euros, driven by our Asset Management and Life/Health business segments.
“In the Asset Management business segment, operating profit increased due to higher assets under management driven revenues and an improved cost-income ratio.
“Our Life/Health business segment recorded an increase in operating profit, to a significant extent due to a higher investment margin.”
The Property-Casualty business segment operating profit, the press release stated, was largely stable as the improvement in the underwriting result was offset by a lower investment result, stating that net income was attributable to shareholders increased 2.3 per cent to 2.1 (2.1) billion euros in the third quarter of 2021 showing that strong growth in operating profit was offset to a major extent by a decrease in the non-operating investment result.
“Basic Earnings per Share (EPS) increased 37.8 per cent to 16.64 (12.07) euros in the first nine months of 2021. Annualized Return on Equity (RoE) was 14.8 per cent (full-year 2020: 11.4 per cent). The Solvency II capitalization ratio was at 207 per cent at the end of the third quarter of 20213, compared to 206 per cent at the end of the second quarter 2021.
“In the first nine months of 2021, operating profit increased by 27.2 per cent to 9.9 (7.8) billion euros. Our Life/Health business segment’s operating profit grew due to an improved investment margin and higher loadings and fees. The Property-Casualty business segment operating profit rose due to a higher underwriting result. In our Asset Management business segment, an increase in operating revenues and continued cost efficiency resulted in operating profit growth. There was a double-digit increase of 38.3 per cent in net income attributable to shareholders, driven by the operating profit.
“On August 5, 2021 Allianz announced a new share buy-back program of up to 750 million euros. 3.8 million shares have been acquired by October 22, 2021, representing 0.93 per cent of outstanding capital,” the Group stated in the statement.
Chief Executive Officer of Allianz SE, was quoted as saying“This was our strongest-ever third quarter. I see this as a confirmation of our ability to serve customers and investors alike. Extreme weather events and rapid macroeconomic shifts highlight the important contribution that insurers and asset managers can make to society. And our solid numbers prove that we can do so with a healthy financial performance.”
Chief Financial Officer of Allianz SE, Giulio Terzariol, also stated in the press release that “These results demonstrate the good momentum in all our business segments. Our franchise is in excellent shape. “I see Allianz as being on track to reach an operating profit at the higher end of our target range.”
Below is the breakdown of the report segment by segment:
Property-Casualty insurance
Total revenues rose by 9.0 per cent to 14.1 (12.9) billion euros in the third quarter of 2021. Adjusted for foreign currency translation and consolidation effects, internal growth was 7.2 per cent, mostly driven by a positive volume effect of 5.0 per cent and a positive price effect of 1.5 per cent. The main contributors to the increase were Allianz Partners, Allianz Global Corporate & Specialty (AGCS) and Euler Hermes.
Operating profit was broadly unchanged at 1.3 (1.3) billion euros in the third quarter of 2021. The slight rise in underwriting result was offset by a lower operating investment result. Higher claims from natural catastrophes were mostly compensated by a higher contribution from run-off and a lower level of attritional losses. The expense ratio was stable at 26.7 per cent (26.7 per cent).
The combined ratio increased slightly by 0.2 percentage points to 94.7 (94.5) per cent in the third quarter of 2021.
“I am proud of our ability to provide considerable financial support to our customers affected by the extreme weather events this year even while delivering a good operating performance,” said Giulio Terzariol. “Our Property-Casualty franchise is strong and we continue to focus on underwriting discipline and productivity to remain on our growth and margin trajectory.”
In the first nine months of 2021, total revenues increased to 47.7 (46.7) billion euros. Adjusted for foreign currency translation and consolidation effects, internal growth was 2.3 per cent, driven by Allianz Partners, AGCS and China. The operating profit jumped by 19.2 per cent to 4.2 (3.5) billion euros compared to the same period of the prior year. The underwriting result rose significantly, even after taking into account higher claims from natural catastrophes. This was mostly due to negligible COVID-19 related losses and a considerably better run-off result. Overall, the combined ratio for the first nine months improved by 2.1 percentage points to 93.9 (96.0) per cent.
Life/Health insurance
PVNBP4, the present value of new business premiums, jumped to 19.7 (12.9) billion euros in the third quarter of 2021. Positive impacts came from a recovery in sales in the United States, back-book management in France and continued higher sales of unit-linked products in Italy.
The new business margin (NBM) expanded to 3.4 (2.9) per cent in the third quarter of 2021 due to an improved business mix in Germany and France as well as a better economic environment. The value of the new business (VNB) surged to 665 (371) million euros in the third quarter of 2021.
Operating profit increased to 1.3 (1.1) billion euros in the third quarter of 2021, driven by a rise in investment margin and improved technical margin. Higher loadings and fees from the unit-linked business in Italy contributed further to this result.
“Our Life and Health business is showing dynamic growth and margins continue to expand as we efficiently manage our business in an improving economic environment,” said Giulio Terzariol. “This bodes well for a sustainable and strong contribution to our Group results.”
In the first nine months of 2021, the PVNBP increased to 58.9 (42.5) billion euros, driven by a recovery in sales and back-book management in France and Italy. Operating profit leaped to 3.7 (2.9) billion euros, largely due to an improved investment margin and higher loadings and fees. The new business margin increased to 3.2 (2.9) per cent, boosting the value of the new business to 1.9 (1.2) billion euros.
Asset Management
Third-party assets under management (AuM) increased by 51 billion euros to 1,881 billion euros at the end of the third quarter of 2021, compared to the end of the second quarter of 2021. This development was predominantly due to strong net inflows of 25.7 billion euros and favourable foreign currency translation effects of 29.5 billion euros. Market effects of 4.7 billion euros had an offsetting impact.
Total assets under management rose to 2,548 billion euros at the end of the third quarter of 2021, in line with the growth in third-party assets under management. Growth was driven by all regions and asset classes.
Operating profit surged by 30.2 per cent to 882 (677) million euros in the third quarter of 2021 compared to the prior-year period. Revenue growth was mainly due to higher average third-party AuM and was supported also by the integration of Allianz Real Estate. Adjusted for foreign currency translation effects, operating profit increased by 31.0 per cent. The cost-income ratio (CIR) improved by 4.2 percentage points to 57.7 per cent in the third quarter of 2021 compared to the third quarter of 2020.
“Both PIMCO and Allianz Global Investors are recording strong net inflows while assets under management have reached another record level,” said Giulio Terzariol. “Continuously improving investment performance, strong revenue growth and productivity gains support the earnings power of our asset management business.”
In the first nine months of 2021, operating revenues grew by 12.3 per cent to 5.9 billion euros, as a result of higher AuM-driven revenues as well as higher performance fees. Our cost-income ratio improved to 58.5 (62.1) per cent. Operating profit rose by 23.0 percent to 2,454 (1,996) million euros. Adjusted for foreign currency translation effects, operating profit increased by 28.9 per cent. Third-party assets under management rose by 9.9 per cent, or 169 billion euros, from the end of 2020 to 1,881 billion euros, driven by high net inflows as well as favourable foreign currency translation effects and market effects.
