Posted on Feb 28, 2011 by Sergio Ulloa
The multi-national German insurer the Allianz Group - Europe's largest insurer by gross premium income - reported that annual net income in 2010 increased by 22.4 percent to total €5.2 billion (US$6.94 billion), driven by substantial growth in Allianz's life and health insurance businesses.
Allianz's year-on-year net profit rose by 11 percent in the fourth quarter of 2010 to reach €1.13 billion (US$1.54 billion) on the back of improved business in the property-casualty sector, together with the life and health insurance segments against the background of tough global trading conditions.
Revenues for Allianz reached €106.5 billion (US$145.9 billion) in 2010 - the first time in 5 years that the German insurer's yearly income has surpassed €100 billion (US$137 billion). Operating profits totaled €8.2 billion (US$11.23 billion), an increase of 17 percent over 2010. The German's insurer's yearly profits were partly influenced by favorable foreign currency fluctuations.
Speaking on Allianz's annual results, the CEO of Allianz, Michael Diekmann said: "We are proud of having achieved substantial growth in 2010. Revenues were above our historical best and our operating profit exceeded our own expectations. Allianz has managed its risks well and emerged highly profitable and financially stronger from the financial crisis years 2008 and 2009. This is the foundation for the resilience and stability our customers, investors and employees expect from us."
One of Allianz flagship health insurance brands - Allianz Worldwide Care
- which has over 75 million customers globally - helped the German insurer's total life and health insurance premiums to reach €57.1 billion (US$78.2 billion) in 2010, reflecting a 12.5 percent increase year-on-year. The high demand for investment-oriented and traditional life insurance products helped operating profit in this segment to grow by 7.4 percent to €2.9 billion (US$3.97 billion) in 2010 despite prevailing low interest rates.
"Our strong performance in Life/Health exceeded our expectations. Increasing customer demand for Allianz products and solutions fueled double-digit growth in revenues. This shows that our customers want the attractive returns and stability Allianz can offer. Operating profit beat our annual target. Our new business value and margins also improved, despite the tough low interest rate environment," said Oliver Bäte, member of the Allianz Board of Management.
There was improved business in Allianz's property and casualty line, with total gross premiums reported at €43.9 billion (US$60.1 billion) - a 3.2 percent increase on results achieved in 2009. The rise in this category was partly down to positive pricing trends in Allianz's core markets, coupled with efficient underwriting practices during the year.
Operating profits jumped by 5.9 percent to generate €4.3 billion (US$5.9 billion) for the property and casualty business, which was due to improved results despite some exposure to a high volume of natural catastrophe claims in 2010. However there was a significant increase in new business and renewals of contracts, especially among customers in Australia, France, Italy and the UK.
Allianz's Asset Management business grew by 26.2 percent to reach a record of asset values amounting to €1,518 billion (US$2,079 billion ) in 2010. Allianz's operating profit from asset management jumped by 47 percent in 2010 to report a record total of €2.1 billion (US$2.8 billion) up from 2009's total of €1.4 billion (US$1.9 billion). Allianz's asset management business has become more profitable as the inflow of business increased and higher margins were achieved.
However, while Allianz were able to report strong profits in 2010, the impact of the new regulations being introduced by the European Union for capital requirements to protect company solvency is expected to impact on insurers operating in this major sector of business activity from 2013. While uncertainties exist surrounding how capital requirements under the European Solvency II regulations will influence insurers in Europe, Allianz has stated that it will not be entering into large acquisitions until they know the full extent of the impact of the new regulatory requirement.
While multi-national insurers have been reporting mixed financial results for 2010, with Allianz's European rival, AXA recording a 24 percent decline in profits, Allianz has been able to overcome the tough market conditions reporting profits in all segments of insurance activity. This has been achieved by applying strict underwriting practices to business transactions, with relatively minimal exposure to losses for claims arising from natural disasters.
Allianz has a global presence stretching from the mature markets of Europe and North America to the emerging markets in the Middle East, North Africa, Latin America, and Asia, which are presenting the best opportunities for new premium growth in the future.
The Allianz group's presence in key developing Asian economies exists through joint ventures such as Ayudhya Allianz in Thailand, PT Asuransi Allianz Utama Indonesia, Allianz China Life and Bajaj Allianz in India. These networks offer Allianz prime access to rapidly expanding Asian economies which are driving, in particular, the demand for protection and saving products as the wealth of the massive populations in these nations increases.
Insurance Company Mentioned:
Allianz Group is one of the leading global services providers in insurance and asset management. With approximately 153,000 employees worldwide, the Allianz Group serves approximately 75 million customers in about 70 countries. On the insurance side, Allianz is the market leader in the German market and has a strong international presence.