Allianz raises dividend sharply but warns outlook is difficult

The world’s largest insurance group said revenues rose 10.4% to €122b, the highest level in its history

Allianz raised its dividend by nearly a third but struck a cautious note on the outlook for the coming year, warning that the economic environment would be “challenging”.

The world’s largest insurance group changed its payout policy in November saying it would return 50 per cent of its net earnings to shareholders, up from a previous policy of 40 per cent.

The €6.85 per share payout, up 29 per cent from last year, was slightly lower than analysts had forecast, as earnings fell marginally below market expectations. Net income was €6.22 billion (Dh25.9 billion) — or €13.71 per share — in 2014, up 3.8 per cent from a year earlier. Analysts had expected €6.45 billion, according to a Reuters poll.

The German insurer said that revenues rose 10.4 per cent to €122 billion (Dh508.9 billion), the highest level in its history, despite a 10.8 per cent decline in revenues at its asset management arm, which houses Pimco, the US bond specialist.

Allianz’s Californian subsidiary endured a turbulent year, with chief investment officer Bill Gross departing abruptly in September, prompting investors to withdraw billions of euros from Pimco funds. Allianz said that outflows had peaked in the weeks after Gross’ departure, and had reached a total of €236 billion in the year as a whole.

Decline in Allianz’s revenues in asset management arm.

Clear trend

“After weekly net outflows at Pimco peaked around the end of the third quarter of 2014, we saw a clear trend of receding outflows that has continued in 2015,” said Dieter Wemmer, Allianz’s chief financial officer.

“Pimco’s strong and stable investment management team and their continued excellent investment performance will be the basis for further stabilisation in 2015 ... We are on the right track.”

Pimco’s woes contributed to a 17.6 per cent decline in operating profit at Allianz’s asset management division to €2.6 billion in 2014.

The decline was offset by a strong performance from Allianz’s life and health insurance division, which posted a 22.8 per cent rise in earnings to €3.3 billion, helped by strong growth in the US, Germany and Italy.

Michael Diekmann, Allianz’s chief executive, said that despite the “challenging” economic environment, he expected Allianz to manage an operating profit of about €10.4 billion — the same as in 2014 — with a margin of error of €400 million.