Allianz SE (ALV), Europe’s biggest insurer, said fourth-quarter net income more than doubled after profit from property and casualty insurance unexpectedly rose and year-earlier writedowns weren’t repeated.
Net income advanced to 1.22 billion euros ($1.6 billion) from 492 million euros in the fourth quarter of 2011, the Munich-based company said in an e-mailed statement today. Allianz was expected to earn 1.15 billion euros, according to the average estimate of 11 analysts in a Bloomberg survey.
“I am encouraged by our healthy growth in premiums, especially by recoveries in key European markets,” Chief Financial Officer Dieter Wemmer said in the statement. “This development shows that we are an attractive risk partner.”
European insurers such as Allianz, Axa SA (CS) and Prudential Plc (PRU) benefited from higher prices for some of their products last year after earnings in 2011 were hurt by record losses from natural catastrophes. A recovery in financial markets also helped bring an increase in investment income, outweighing the impact of lower interest rates.
Operating profit in property and casualty insurance rose to 1.26 billion euros in the fourth quarter from 1.09 billion euros a year earlier, beating the 941 million-euro median estimate of 11 analysts surveyed by Bloomberg. Gross written premiums increased 4.7 percent in 2012 as a whole.
The company will propose paying a dividend of 4.50 euros a share from last year’s profit, Diekmann said.
Allianz expects to have an operating profit of 9.2 billion euros this year, plus or minus 500 million euros. Operating profit was 9.5 billion euros last year, which matched a target for more than 9 billion euros, the company said.
“I am confident that again in 2013 Allianz will maintain its profitability,” Chief Executive Officer Michael Diekmann said in the statement.
The firm had operating profit of 2.28 billion euros in the fourth quarter alone compared with 2 billion euros in the same period a year previously, it said.
Allianz fell 0.6 percent to 103.70 euros at 9:18 a.m. in Frankfurt. Losses this year were 1.1 percent after the share climbed 37 percent in 2012. The 28-member Bloomberg Europe 500 Insurance Index (SXIP) dropped 1 percent to 177.42 today, crimping gains in 2013 to 0.2 percent.
“We are positively surprised by the relatively optimistic outlook,” Thorsten Wenzel, an analyst with Frankfurt-based DekaBank who recommends buying the shares, said in an e-mailed report to clients. “The operating profit in the fourth quarter was better than expected due to very strong results in property and casualty and asset management while the quarterly result in life and health was relatively weak.”
Net income in the whole of last year rose to 5.49 billion euros from 2.8 billion euros in 2011, when Allianz booked 1.9 billion euros of non-operating impairments on Greek sovereign debt and investments.
Allianz’s asset-management unit, comprised of Pimco and Allianz Global Investors (AUSHYAM), reported operating profit rising to 917 million euros in the three months to December from 663 billion euros a year previously. Operating profit was expected to be 770 million euros, the median estimate of 11 analysts showed.
Profit in asset management in the year as a whole climbed 34 percent to 3 billion euros, it said.
Total assets under management grew an annual 12 percent to 1.85 trillion euros at the end of December, with third-party assets advancing to 1.44 trillion euros from 1.28 trillion euros in 2011.
Pimco, which managed 1.23 trillion euros of assets from third parties at the end of December, attracted 114 billion euros in net new money from clients during last year. Allianz Global Investors managed 178 billion euros of assets from third parties down from 217 billion euros at the end of 2011 due to changes in the structure of the company, Allianz said.
Property and casualty insurance claims and other costs as a percentage of premiums, known as the combined ratio, fell to 95.4 percent in the fourth quarter from 97.6 percent a year earlier. A level below 100 percent means an insurer’s claims and costs are lower than premium income, giving it a profit from underwriting.
Operating profit at Allianz’s life insurer was 486 million euros in the fourth quarter compared with 519 million euros a year ago. That missed the 697 million-euro median estimate of 11 analysts surveyed by Bloomberg.
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