Allianz SE, Europe’s biggest insurer, raised its operating profit target after third-quarter earnings were boosted by better-than-expected performance at its Pacific Investment Management Co. unit. The shares rose.
Allianz expects full-year operating profit to exceed 9 billion euros ($11.6 billion), assuming “normal business development” during the rest of the year, the Munich-based company said late yesterday as it reported preliminary third-quarter figures. The new target surpassed the 8.57 billion-euro average estimate of 19 analysts surveyed by Bloomberg and the company’s previous upper estimate of 8.7 billion euros.
While the insurer cited “better-than-expected performance across all segments,” it said its asset-management arm, which includes Newport Beach, California-based Pimco, contributed “especially” well during the quarter as Bill Gross and Mohamed El-Erian’s funds attracted more deposits. Insurance companies have also benefited from the relative lack of natural catastrophes this year and higher pricing.
“2012 is undisputedly an excellent year for insurance companies,” Fabrizio Croce, a Zurich-based insurance analyst at Kepler Capital Markets, wrote in a note to clients today. “A 9 billion-euro operating profit is good news, but not a huge surprise.”
Allianz shares climbed 2.9 percent to 95.79 euros at 1:30 p.m. in Frankfurt. The shares have gained 30 percent this year, valuing the insurer at about 44 billion euros. The Bloomberg Europe 500 Insurance Index rose 22 percent over the same period.
In August, the insurer, led by Chief Executive Officer Michael Diekmann, had confirmed its previous full-year target of operating profit between 7.7 billion euros and 8.7 billion euros, “despite the challenging environment.” Allianz had achieved 7.2 billion euros in earnings on that basis in the first nine months of the year, including 2.5 billion euros in the third quarter alone.
Third-quarter net income rose to 1.4 billion euros from 196 million euros reported a year ago, while operating profit climbed 31 percent to 2.5 billion euros, Allianz said in its preliminary results. The company plans to publish full figures for the third quarter on Nov. 9.
Full-year net income will be “comparatively lower because of further balance sheet strengthening, including investment de-risking and restructuring activities,” as already seen in the first nine months of 2012, Allianz said yesterday.
Allianz said earlier this month that asset management inflows remain “strong.” The insurer plans to expand the unit’s operating profit, excluding currency movements, by 5 percent to 10 percent “over a full cycle.” Asset management’s contribution to Allianz’s operating profit has almost tripled to 27 percent over the past five years.
Gross’s Total Return Fund attracted $2.8 billion in September, the ninth straight month of net deposits into the mutual fund. Pimco’s flagship fund has gathered $12.1 billion in new cash for the year through Sept. 30, bringing assets to $278 billion, according to Morningstar Inc.