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The value of the day in Europe – Allianz: the litigation in the United States weighed on the profit, but it should be quickly settled

(AOF) – Allianz fell 2% to 201.50 euros per share in a market that was certainly degraded, but also penalized by the publication of results in sharp decline. The insurer thus recorded a profit of 600 million euros for the first quarter of 2022, a decrease of 78.1%. This includes a provision of 1.9 billion, corresponding to the estimate of its remaining exposure to compensation payments and the resolution of government proceedings in the United States. It contains both the additional costs of settlements, as well as potential DoJ and SEC fines.

“Although there is no fixed consensus on this, our feeling is that this provision is slightly higher than investors’ expectations, perhaps only in the region of 0.5 billion euros (0. 6% of market cap),” UBS wrote in a note.

“But the key information suggests that Allianz is now much closer to a full resolution with the DoJ and SEC, adds the analyst. This is the main hurdle and should reassure investors that this matter should not drag on for several quarters, but rather be settled more quickly”.

For its part, operating income was down 2.9% to 3.2 billion euros, but remained above expectations (consensus at 3 billion euros). It was penalized by claims related to natural disasters which almost quadrupled, leading to a drop in the underwriting result in the Property and Casualty business (-9%). This decline was partially offset by a strong operating result in the asset management sector (+11.2%), due to the increase in the average of assets managed by third parties. In the Life/Health segment, the operating result remained stable.

Turnover increased by 6.2% to reach 44 billion euros. The Property & Casualty business sector (+9.1% to 21.5 billion) benefited from higher prices and volumes, while the Asset Management sector (+12.5 to 2.1 billion) recorded an increase in income related to assets under management. Increased sales in the United States and Germany contributed to revenue growth in the Life/Health segment.

In Life/Health, the present value of new business premiums remained stable at €19.4 billion. Germany saw lower sales volumes for high-yield products, while Italy saw lower sales of unit-linked products. Higher sales volumes for fixed index annuities in the United States and for hybrid products in France more than offset this development.

For 2022, the insurer confirmed its operating profit target of 13.4 billion euros, more or less 1 billion.

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