Management Summary: All segments record strong internal revenue growth
After a successful start into 2018, Allianz Group continued to achieve good performance in the second quarter. Indicators remained close to or exceeded the second-quarter 2017 levels, despite burdens from geopolitical instabilities and currency fluctuations. Internal revenue growth, which adjusts for currency and consolidation effects, was 6.5 percent with all business segments recording strong growth. Total revenues grew 2.9 percent to 30.9 (second quarter of 2017: 30.0) billion euros. Operating profit increased 2.3 percent to 3.0 (2.9) billion euros. In the Asset Management business segment the operating profit grew due to higher revenues, which were driven by higher assets under management (AuM) and improved margins. This more than compensated for the decline in operating profit from our Life/Health business segment. Our Property-Casualty business operating profit was stable. Net income attributable to shareholders decreased slightly to 1.9 (2.0) billion euros: a negative impact from the sale of our traditional life insurance portfolio in Taiwan was only partially offset by lower income taxes.
Basic Earnings per Share (EPS) increased by 5 percent to 8.86 (8.45) euros in the first half-year of 2018. Annualized Return on Equity (RoE) increased to 13.8 percent (full year 2017: 11.8 percent). Allianz maintained its strong capitalization, with the Solvency II capitalization ratio of 230 percent at the end of the quarter compared to 225 percent recorded at the end of the first quarter of 2018.
In the first half-year of 2018 operating profit decreased 1.8 percent to 5.8 (5.9) billion euros, mostly driven by our Life/Health business segment due to a normalization of the investment margin and due to unfavorable foreign exchange. Operating profit in the Asset Management business grew thanks to higher AuM-driven revenues. The Property-Casualty operating profit increased slightly compared to prior year results. Overall, the operating profit for the first six months is slightly above the mid-point of our full-year target range. Lower income taxes compensated for the lower operating profit and non-operating result: net income attributable to shareholders was therefore stable at 3.8 (3.8) billion euros.
On July 2, 2018, Allianz Group announced a new share buy-back program, with a volume of up to 1.0 billion euros. The program shall be finalized by September 30, 2018 and all repurchased shares will be cancelled.
“We remain on track to meet our 2018 operating profit target. I am thankful for everyone on the Allianz team for making this happen across countries and companies. This makes me confident that we will achieve our three-year Renewal Agenda targets,” said Oliver Bäte, Chief Executive Officer of Allianz SE.