Allianz, Dividend Appeal as a Bonus Amid Strong Performance Streak

[Asia Economy Reporter Park Jihwan] Hana Financial Investment evaluated on the 12th that Germany's leading global insurance company Allianz Group appears to be an investment destination that is sufficient in terms of enhancing shareholder value through stable performance, high dividends, and share buybacks.

Allianz has a stable insurance portfolio ranging from property and casualty insurance (P&C), which accounted for 39% of the group's pre-tax profit on an annual basis last year, to life and health insurance (L&H), which accounted for 51%. The asset management (AM) division also continued to grow, expanding its profit contribution to 28%.

Lee Hongjae, a researcher at Hana Financial Investment, said, "Allianz has very high earnings visibility in each division. The combined ratio (C/R) in the P&C division has been consistently maintained below 100%, underwriting profit is solid, and the value of new business (VoNB) in the life insurance division has rebounded significantly since the COVID-19 shock last year. The assets under management (AUM) in the asset management division are trending upward, while the cost-income ratio (CIR) is declining, indicating improved profitability."

The cumulative net income attributable to controlling shareholders for the third quarter was 6.9 billion euros, exceeding last year's annual profit of 6.81 billion euros. Looking at the third quarter alone, earnings slightly slowed with a 2.3% increase year-on-year and a 5.2% decrease quarter-on-quarter. This was mainly due to the P&C division recognizing losses related to natural disasters and COVID-19 amounting to 100 million euros, causing the C/R to rise by 0.2 percentage points year-on-year and 0.8 percentage points quarter-on-quarter.

Additionally, the VoNB in the L&H division improved by 79.5% year-on-year and 5.1% quarter-on-quarter, and the AUM in the AM division continued to grow while the CIR recorded 57.7%, indicating favorable indicators beyond surface-level earnings.

This stable performance and improvement in capital indicators have led to enhanced shareholder value. Allianz's average dividend payout ratio over the past five years is 51.4% (five-year average dividend yield of 4.7%), and it recently announced a mid-to-long-term dividend policy to pay the higher of a 50% payout ratio of ordinary profit or a 5% increase in DPS compared to the previous year. Researcher Lee Hongjae stated, "This policy is expected to be applied starting this year, and from this perspective, this year's DPS will exceed at least 10 euros (2020 DPS was 9.60 euros)." He emphasized, "Not only dividends but also share buybacks have been steadily ongoing over the past five years, making it an investment destination that is not lacking at all in terms of enhancing shareholder value."

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