Allianz Raises Dividend, Shrugs Off Hurricane Claims

A record year for natural disaster insurance claims worldwide and a decline in fourth quarter profit wasn’t enough to stop Allianz SE from raising its dividend.

Europe’s biggest insurer will increase the dividend for 2017 by 5.3 percent to 8 euros ($10) a share, the company said in a statement Friday. Analysts expected a payout of 7.9 euros, according to the Bloomberg Dividend Forecast.

Like other insurers, Allianz had to contend with one of the worst Atlantic hurricane seasons in history last year and California’s wildfires in the fourth quarter. Claims arising from the wildfires, Hurricanes Harvey, Irma and Maria and other natural catastrophes rose to 1.1 billion euros for the firm last year, up from 700 million euros a year earlier.

Allianz reported decreased net income of 1.4 billion euros in the last three months of 2017, a 22 percent decline from a year earlier after the one-time impact of U.S. tax changes and a write down following the sale of Oldenburgische Landesbank. The insurer fell as much as 1.2 percent, the most in a week, and was down 0.4 percent at 10:39 a.m.

“The group entered 2018 at cruising speed, placing our three-year performance targets within reach,” Chief Financial Officer Giulio Terzariol said in the statement. Allianz “aims to achieve an operating profit of 11.1 billion euros in 2018, plus or minus 500 million euros, barring unforeseen events.”

Pimco Turnaround

Allianz’s asset-management unit, comprised of Pimco and Allianz Global Investors, had a record 150 billion euros of third-party net inflows last year, lifting third-party assets under management to 1.45 trillion euros.

Pimco, which struggled with outflows before and after co-founder Bill Gross departed the firm in 2014, had net inflows of 144 billion euros last year, driven by strategies including income, long duration, enhanced cash and investment-grade credit. The money manager’s turnaround has now been completed, Chief Executive Officer Oliver Baete said at a press conference on Friday.

M&A Hunt

Baete, 52, in November pledged to carry out a share buyback in the first half of 2018, after announcing the Munich-based firm’s first ever stock-repurchase program a year ago. The insurer remains interested in buying firms in property & casualty and asset management and will return any unused parts of its M&A budget to investors.

Allianz has been scouting for deals for months. Baete last year said his priority was to purchase a P&C business, particularly in the U.S. The company is looking at Bermuda-based insurer XL Group Ltd. as a potential target, people with knowledge of the matter said earlier this month. In a Bloomberg TV interview on Friday, Allianz’s Chief Financial Officer Giulio Terzariol declined to say whether the firm is interested in XL.

“We’re going to stay disciplined” when it comes to acquisitions, Baete said at the conference.