Allianz warns of uncertain year ahead

German insurance giant Allianz said Friday it aims to boost profits this year in the face of expected political and economic risks, after reporting strong results for 2016. The group had faced a "difficult environment" last year, chief executive Oliver Baete told a Munich press conference, with "market volatility, political volatility, Brexit, the elections in the US, the referendum in Italy."
"All of that left its mark on us," he said, pointing as well to low interest rates that have burdened banks and insurers' traditional business. Despite the headwinds, Allianz increased net profit by 4.0 percent to 6.9 billion euros ($7.4 billion) in 2016, slightly overshooting analysts' forecasts.
The firm notched up 122 billion euros in revenues last year, down 2.2 percent from 2015, but still beating its own forecast. Operating, or underlying profit edged up 0.9 percent 10.8 billion euros. In the fourth quarter alone, Allianz booked a 23-percent increase in net profit to 1.7 billion euros. The life and health insurance unit put in the best performance among the group's divisions, with operating profit there growing by 9.3 percent. By contrast, operating profit at the property and casualty insurance arm fall back 4.2 percent and underlying earnings in its asset management division were down 4.0 percent.
Allianz plans to pay shareholders an increased dividend of 7.60 euros, up from 7.30 euros paid out for 2015. The insurer will also buy back up to three billion euros of its own shares. "The combination of a dividend increase and a share buy-back probably both at the upper end of market expectations is a sign of strength," DZ Bank analyst Thorsten Wenzel commented.