It’s been a busy week of earnings reports from several major insurers including
AXA and
Aviva. Now it is
Allianz’s to take the spotlight – and the international insurance giant has suffered a significant 17% profit slump.
The company, which offers financial services across Europe and is based in Munich, delivered 2.4 billion euros of operating profit through the second quarter of the year – but this represented a 17.2% fall, largely due to the impact of natural catastrophe losses and other exceptional effects. Overall, its total revenues were down 2.5% to stand at 29.4 billion euros for the second quarter.
The focus of the difficulties was the company’s property and casualty segment. In the first six months of 2016, gross premiums written declined slightly to 28.9 billion euros compared to 29.2 billion euros previously. Adjusted for foreign exchange and consolidation effects, internal growth was 3.1%, with Turkey, Germany and Allianz Global Corporate & Specialty (
AGCS) driving the majority of this increase.
More notably, however, operating profit fell by 16.2% to 2.5 billion euros compared to the first half of 2015, due to a lower underwriting result and lower investment income. The prior-year result was also supported by the net gain from the sale of the Fireman’s Fund personal insurance business. The combined ratio worsened by 0.8 percentage points to 94.9%. Meanwhile, gross premiums written decreased by 2.0% to stand at 11.6 billion euros in the second quarter of 2016 – this was largely due to negative foreign-currency effects. Operating profit fell by 37.0% to 1.1 billion euros in the second quarter of 2016. The underwriting result was negatively impacted by a strong increase in claims from natural catastrophes as well as higher large and weather-related losses, partly offset by elevated run-off.
There was better news in its life and health insurance business, however, with operating profit increasing by 18.3% to 1.0 billion euros compared to the prior-year quarter.
Speaking about the results, Oliver Bäte, CEO of Allianz SE, described the performance as solid highlighting a successful shift in its life insurance segment to capital efficient products, which led to a decline in total revenues but marked a rise in profitability in new business.
“Allianz is transforming itself into an organization that is closer to its customers, is more capital efficient, enjoys higher profitability, and we’re doing this in a difficult environment,” he said. “The second quarter in particular was shaped by markedly higher damages from heavy floods and storms in Europe this spring. We were happy to support our customers in those difficult times.”
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