By Oliver Suess
(Closes shares in seventh paragraph.)
Feb. 24 (Bloomberg) -- Allianz SE, Europe?s biggest insurer, raised its dividend after fourth-quarter profit climbed 11 percent and the company exceeded its full-year forecast.
Net income in the three months ended December increased to 1.14 billion euros ($1.6 billion) from 1.02 billion euros in the year-earlier period, the company said today. That was in line with the 1.15 billion-euro average estimate of eight analysts surveyed by Bloomberg. Allianz proposed paying a dividend of 4.50 euros a share, up from 4.10 euros for 2009.
Allianz forecasts operating profit of 7.5 billion euros to 8.5 billion euros this year, Chief Executive Officer Michael Diekmann, 56, said at a press conference in Munich today. That compares with 8.2 billion euros in 2010, which topped the upper end of the insurer?s targeted range.
?The key question is, if earnings are so strong, at what point will they say more about capital returns and plans for acquisitions,? said Ben Cohen, a London-based analyst at Collins Stewart with a ?hold? recommendation on the shares.
Allianz?s solvency ratio, a measure of the insurer?s ability to absorb losses, rose to 173 percent in the quarter from 164 percent at the end of 2009. That?s above the company?s target range of 150 percent to 170 percent, indicating Allianz has excess capital for possible takeovers or increased payouts to shareholders.
The insurer is ?still cautious regarding acquisitions? before new Solvency II capital rules for the industry are introduced in Europe, Diekmann said today.
Property and Casualty
Allianz shares fell 2.8 euros, or 2.7 percent, to 101.8 euros at the 5:30 p.m. close in Frankfurt. They have gained 14.5 percent this year, beating the Bloomberg Europe 500 Insurance Index, which is up 11 percent over the period.
Solvency II, scheduled to be introduced in 2013, is ?developing into a threat to traditional retirement provision,? and regulators ?should not lose sight of the fact that our business model has been operating without any hitches during the crisis,? Diekmann said, echoing previous comments by industry groups.
Allianz?s property and casualty insurance unit reported a 1 percent increase in net income to 804 million euros in the fourth quarter. The unit?s spending on claims and other costs as a percentage of premiums, also known as the combined ratio, improved to 94.9 percent from 95.3 percent a year earlier. A ratio above 100 percent means an insurer?s claims and costs exceed premium income, giving it a loss from underwriting.
Life Insurance
Profit at the life- and health-insurance division declined 29 percent to 268 million euros after a one-time tax refund wasn?t repeated. That missed the 461 million-euro average analyst estimate.
Allianz?s asset-management unit, which includes Newport Beach, California-based Pacific Investment Management Co., posted a 51 percent profit gain to 292 million euros. For the full year, total assets under management grew 26 percent to a record 1.52 trillion euros, Allianz said.
The insurer held 8.1 billion euros in sovereign debt from Spain, Greece, Ireland and Portugal at the end of last year, representing about 2 percent of its fixed-income investments. Holdings in Italy, where the insurer has a subsidiary, accounted for 20 percent of Allianz?s 142.3 billion-euro portfolio of government and government-related securities, the company said.
--Editor: Christiane Lenzner
To contact the reporter on this story: Oliver Suess in Munich Bureau at osuess@bloomberg.net
To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net; Edward Evans at eevans3@bloomberg.net
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