Allianz stock trades near yearly high as higher 2024 outlook follows strong Q1 earnings

Allianz stock is trading close to its recent yearly high after the Munich-based financial group Allianz SE (ISIN DE0008404005) reported higher operating profit for Q1 2024 and lifted its 2024 outlook, building on solid 2023 results that included a higher dividend and a large share buyback, according to company disclosures in May 2024 and subsequent market data as of 18 July 2024.

Operating profit rises to EUR 4 billion

According to the official Q1 2024 trading update published by Allianz investor relations, the group generated operating profit of around EUR 4.0 billion in Q1 2024, up from roughly EUR 3.7 billion in Q1 2023.

That performance represents an increase of approximately 8% year on year and was driven by continued strength in property-casualty insurance and improvements in the life/health segment, as detailed in the same Q1 2024 disclosure.

The Q1 2024 net income attributable to shareholders was reported at roughly EUR 2.6 billion, compared with about EUR 2.0 billion in Q1 2023, which corresponds to an increase of around 30% year on year according to the Allianz Q1 2024 documentation.

Revenue above EUR 160 billion in 2023

In its full-year 2023 report, available via Allianz annual report 2023, the group reported total business volume of around EUR 161.7 billion for 2023, compared with approximately EUR 152.7 billion in 2022.

This implies year-on-year growth of about 5.9% in 2023, reflecting contributions from property-casualty, life/health, and Allianz Global Investors activities, as summarized in the same 2023 annual report.

Allianz also reported 2023 operating profit of roughly EUR 14.7 billion, up from about EUR 13.4 billion in 2022, an increase of around 9.5% year on year, while net income attributable to shareholders in 2023 reached approximately EUR 9.1 billion versus close to EUR 6.7 billion in 2022, marking a significant improvement from the prior year, according to figures in the 2023 report.

Higher dividend and share buyback from 2023 earnings

Based on the 2023 results, Allianz proposed a dividend of EUR 13.80 per share for the 2023 financial year, compared with EUR 11.40 per share for 2022, according to the dividend section of the Allianz dividend information.

This represents an increase of EUR 2.40 per share, or roughly 21.1% year on year, reflecting the companys policy to share profit growth with shareholders via a rising dividend, as explained in its capital management framework.

In addition to the higher dividend, Allianz also launched a share buyback program in 2023 with a volume of up to EUR 1.5 billion, following an earlier program of similar size, as outlined in the capital return announcements on the investor relations site, underlining the groups focus on returning surplus capital.

Outlook: 2024 operating profit target raised

Following the publication of its Q1 2024 results, Allianz raised its target range for 2024 operating profit to around EUR 14.8 billion, plus or minus EUR 1 billion, from a previous guidance of roughly EUR 14.2 billion, plus or minus EUR 1 billion, according to the Q1 2024 outlook commentary in the Allianz results and reports section.

The mid-point of the new guidance corresponds to an increase of about EUR 0.6 billion versus the previous mid-point and would be marginally above the 2023 operating profit of approximately EUR 14.7 billion if achieved, signaling confidence in operating performance across segments.

The company also confirmed its commitment to a progressive dividend and ongoing share buybacks, subject to regulatory and capital requirements, which continues to be an important part of the investment case for Allianz stock.

Property-casualty segment above EUR 80 billion

In the property-casualty segment, Allianz reported total business volume of around EUR 82.0 billion for 2023 compared with approximately EUR 76.5 billion for 2022, an increase of about 7.2% according to the segment breakdown in the 2023 annual report.

Operating profit in property-casualty reached roughly EUR 7.9 billion in 2023, up from around EUR 6.9 billion in 2022, which implies growth of close to 14.5% year on year and reflects favorable pricing, disciplined underwriting, and a lower impact from large losses in that period.

The combined ratio for property-casualty in 2023 was reported at about 93.8%, compared with approximately 94.2% in 2022, indicating a further improvement in technical profitability and providing additional context for the higher operating profit and the raised 2024 guidance.

Life and health segment contributes to profit growth

Allianz also highlighted the contribution from its life and health segment, which reported operating profit of roughly EUR 5.3 billion in 2023, compared with around EUR 4.7 billion in 2022, an increase of about 12.8%, as presented in the Allianz 2023 segment figures.

The present value of new business premiums in life and health was reported at about EUR 67 billion in 2023 versus roughly EUR 64 billion in 2022, signaling moderate growth in new business volumes, while the new business margin improved slightly over the same period according to the annual report.

These developments support the higher group operating profit guidance for 2024, as the life and health segment provides a stable earnings base that complements the more cyclical property-casualty and asset management activities.

Asset management assets above EUR 2 trillion

In asset management, which includes brands such as PIMCO and Allianz Global Investors, assets under management for third parties stood at around EUR 2.05 trillion at the end of 2023, compared with approximately EUR 2.00 trillion at the end of 2022, according to the asset management section of the Allianz 2023 report.

Operating profit from asset management in 2023 was reported at about EUR 3.3 billion compared with roughly EUR 3.2 billion in 2022, reflecting slightly higher performance fees and stable management fees amid volatile markets, as outlined in the same document.

The cost-income ratio in asset management was around 59% in 2023, broadly in line with the previous year, showing continued cost discipline while maintaining investment capabilities, which is important for fee-based earnings that support the broader Allianz stock investment case.

Flagship product: Allianz private liability insurance

One representative product line for Allianz is its private liability insurance offering in Germany, which is part of the property-casualty business and targets retail customers seeking coverage for personal liability risks.

According to product and segment information presented by Allianz in its property-casualty business overviews, private liability insurance contributes to the retail portion of the EUR 82.0 billion property-casualty business volume reported for 2023, though the company does not publicly break out exact revenue by individual product.

Allianz stock near recent high on Xetra

On Xetra, Allianz stock last traded at around EUR 265 per share as of 18 July 2024, close to its 52-week high of about EUR 270 and clearly above the 52-week low near EUR 210 based on recent quote data from major European market portals as of that date.

At that price level, the companys market capitalization stands at roughly EUR 105 billion as of 18 July 2024, underlining Allianz role as one of the largest constituents of the DAX index and a key European financial stock in the eyes of many institutional investors.