Earnings Release: 3Q and 9M 2022
Operating profit grows by 7.4 percent to 3.5 billion euros in 3Q
November 10, 2022, 11:00 AM CET
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3Q 2022: Total revenues increased 1.3 percent to 34.8 (3Q 2021: 34.4) billion euros, driven by the Property-Casualty business segment, with positive price effect and volume growth. This was partially offset by the Life/Health business segment, primarily due to softer sales in Italy and Germany. The Asset Management business segment was slightly down as a result of lower assets under management (AuM)-driven revenues and performance fees.
Internal revenue growth, which adjusts for foreign currency translation and consolidation effects, was minus 3.7 percent.
9M 2022: Total revenues increased 5.3 percent to 116.0 (9M 2021: 110.1) billion euros, largely driven by the Property-Casualty business segment due to positive price and volume effects. This was supported further by the Asset Management business segment as a result of higher AuM-driven revenues, while the Life/Health business segment remained stable.
Internal revenue growth was 1.6 percent, driven by the Property-Casualty business segment.
3Q 2022: Operating profit increased 7.4 percent to 3.5 (3.2) billion euros, driven by improved investment and underwriting results in the Property-Casualty segment. This was partially offset by the Life/Health business segment, impacted by variable-annuity products in the United States as well as a softer net harvesting result in Germany. Operating profit from the Asset Management business segment was also impacted by market developments.
Net income attributable to shareholders grew to a notable 2.5 (2.1) billion euros, as a result of operating profit growth and higher realized gains, primarily driven by the Voya transaction.
Annualized Return on Equity (RoE) was 9.4 percent (full year 2021: 10.6 percent). Excluding the impact of the provision related to the AllianzGI U.S. Structured Alpha proceedings, the annualized RoE was 12.0 percent (full year 2021: 14.9 percent). Basic Earnings per Share (EPS) was 11.37 (9M 2021: 16.64) euros.
On November 9, 2022, Allianz has announced a new share buy-back program of up to 1 billion euros. The program shall start mid-November 2022 and be finalized by December 31, 2023, at the latest.
9M 2022: Operating profit increased 3.2 percent to 10.2 (9.9) billion euros, driven by higher operating profit in the Property-Casualty business segment. Operating profit growth was driven by a strong rise in the investment result and further improvement in the underwriting result. Growth was partially offset by the impact of unfavorable market developments on the Life/Health and Asset Management business segments.
Net income attributable to shareholders was 4.7 (6.9) billion euros, reflecting the provision booked in the first quarter in relation to the AllianzGI U.S. Structured Alpha proceedings and a lower non-operating investment result.
Solvency II Capitalization Ratio
"Our strong set of results highlight the underlying operational strength of Allianz’s business model, which has the ability to deliver sustainable value even in a rapidly-evolving economic and geopolitical environment.
- Our Property-Casualty business had a record third-quarter operating profit, marked by an increase in premium and in underwriting and investment results. Also, thanks to our focus on productivity, we have reduced the expense ratio once again.
- In Life/Health segment, the expansion in new business margin shows our future profitability remains strong. Although customers are cautious in these economic conditions, their interest in Allianz’s preferred lines of business is robust.
- In Asset Management we have again achieved a solid operating result in a very challenging environment.
Allianz’s resilient earnings power bodes well for our long-term growth trajectory. We expect our full-year operating profit to reach the upper half of the target range of 13.4 billion euros, plus or minus 1 billion euros.”
3Q 2022 Analyst Call
Property-Casualty insurance: Strong operating profit
3Q 2022: Total revenues jumped 14.2 percent to 16.1 (14.1) billion euros. Adjusted for foreign currency translation and consolidation effects, the internal growth was 8.8 percent due to a strong price effect of 6.7 percent, a volume effect of 1.7 percent and a service effect of 0.4 percent.
Operating profit surged 32.0 percent to 1.7 (1.3) billion euros, due to strong growth in the operating investment result, driven by inflation-linked bonds and higher interest rates. A further rise in the underwriting result, mainly due to growth in premiums, lower claims from natural catastrophes and a favorable contribution from the run-off result, also contributed to growth. These developments more than offset higher attritional losses, largely due to higher claims inflation as well as higher large and weather-related losses.
In line with these developments, the combined ratio improved by 0.7 percentage points to 94.0 percent (94.7 percent). The expense ratio improved slightly to 26.6 percent (26.7 percent), driven by a lower administrative expense ratio.
9M 2022: Total revenues jumped 12.7 percent to 53.8 (47.7) billion euros. Adjusted for foreign currency translation and consolidation effects, internal growth was strong at 8.8 percent, supported by a price effect of 5.3 percent, a volume effect of 2.9 percent and a service effect of 0.6 percent.
Operating profit surged 13.5 percent to 4.7 (4.2) billion euros, mostly driven by a significantly higher operating investment result and further improvement in the underwriting result.
The combined ratio was 94.1 percent (93.9 percent) as the impact of higher attritional losses related to claims inflation as well as higher weather-related losses was partially offset by a favorable run-off result. The expense ratio rose slightly to 26.8 percent (26.7 percent) due to higher acquisition costs.
Life/Health insurance: New business margin expansion continues
3Q 2022: PVNBP3, the present value of new business premiums, was 13.7 (19.7) billion euros, mainly due to the absence of a one-off reinsurance treaty worth 3.7 billion euros at Allianz Reinsurance in the prior year. Softer sales of unit-linked products in Italy and single premium business in Germany also had an impact.
Operating profit was 1.0 (1.3) billion euros, as the impact of traditional and non-traditional variable-annuity products in the United States as well as lower net harvesting results in Germany more than offset the positive contribution from the acquired Aviva operations in Poland.
The new business margin (NBM) jumped to 4.0 percent (3.4 percent), driven by an improved business mix, particularly in Germany, and positive changes in our fixed index annuities business in the United States. Higher interest rates also contributed to the margin expansion. The value of new business (VNB) was 550 (665) million euros, reflecting the impact of a large reinsurance treaty at Allianz Reinsurance in the prior year.
9M 2022: PVNBP was 49.6 (58.9) billion euros, reflecting the impact of two events – a group contract renegotiation in Italy and a one-off reinsurance treaty at Allianz Reinsurance – in the prior year as well as lower single premium business in Germany.
Operating profit was 3.4 (3.7) billion euros, mainly due to the reasons mentioned above.
The new business margin increased to 3.8 percent (3.2 percent), driven by a better business mix across entities. The value of new business was unchanged at 1.9 (1.9) billion euros, as the positive effect of a better business mix was offset by softer volumes.
Asset Management: Results resilient amid market volatility
3Q 2022: Operating revenues were 2.1 billion euros, down 1.4 percent, reflecting the impact of lower AuM-driven revenues and performance fees. Operating profit was 792 (882) million euros, down 10.2 percent from the prior-year period. Adjusted for foreign currency translation effects, operating profit was down 19.8 percent. The cost-income ratio (CIR) rose to 61.5 percent (57.7 percent).
Third-party assets under management4 were 1.726 trillion euros as of September 30, 2022, a decrease of 43 billion euros from the end of the second quarter of 2022. A positive impact of 99.6 billion euros from favorable foreign currency translation effects was more than offset by an unfavorable market impact of 97.0 billion euros, Voya partnership-related adjustments of 26.1 billion euros and net outflows of 19.9 billion euros.
Total assets under management4 were 2.245 trillion euros at the end of the third quarter of 2022, reflecting the trend in the third-party assets under management.
9M 2022: Operating revenues increased 3.7 percent to 6.1 billion euros as a result of higher AuM-driven revenues. Operating profit was 2.4 (2.5) billion euros, down 2.5 percent from the prior-year period. Adjusted for foreign currency translation effects, operating profit was down 10.4 percent. The cost-income ratio (CIR) rose to 61.0 percent (58.5 percent). Third-party assets under management4 were 1.726 trillion euros as of September 30, 2022, down by 241 billion euros from the end of 2021.
1 Excluding the application of transitional measures for technical provisions.
2 Natural catastrophes and adverse developments in the capital markets, as well as factors stated in our cautionary note regarding forward-looking statements may severely affect the operating profit and/or net income of our operations and the results of the Allianz Group.
3 PVNBP is shown after non-controlling interests, unless otherwise stated.
4 Please refer to footnote 6 in the 3Q & 9M results table.
** As of September 30, 2023.
*** As reported – not adjusted to reflect the application of IFRS 9 and IFRS 17.