Allianz Q4 net profit down 22 percent on US tax hit, weak dollar

  • Earnings were impacted by the U.S. tax overhaul, a weak U.S. dollar, other one-off costs, and natural disasters.
  • Last year, insurers had to pay claims of around $135 billion for 2017, the most ever, following a spate of hurricanes, earthquakes and fires in North America.

The German insurer Allianz said on Friday that it posted a 22 percent decline in net profit in the fourth quarter of 2017 after a U.S. tax overhaul, a weak U.S. dollar, other one-off costs, and
natural disasters weighed on earnings.

The profit of 1.427 billion euros ($1.79 billion) fell short of expectations. Analysts forecast a net profit of 1.587 billion euros, according to a Reuters poll.

For the full year, Allianz posted operating profit of 11.1 billion euros, in line with analysts' expectations of 11.04 billion and the company's own target.

"The group met its performance targets, maintained an extraordinary level of capital strength and returned 3 billion euros to shareholders through share buybacks in 2017," said Allianz Chief Executive Oliver Baete.

"Allianz also made important strategic strides."

Last year, insurers had to pay claims of around $135 billion for 2017, the most ever, following a spate of hurricanes, earthquakes and fires in North America.

The logo of German insurer Allianz stands on the company's office buildings at Treptowers in Berlin, Germany.
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The logo of German insurer Allianz stands on the company's office buildings at Treptowers in Berlin, Germany.

The series of natural disasters has rocked the insurance industry after years of muted losses, compounding pressure from low prices caused by fierce competition and low interest rates.

In November, Allianz forecast operating profit in the "upper half" of its target range of between 10.3 billion euros and 11.3 billion euros.

Allianz said its combined ratio, a closely-watched measure of expenses to premium income, rose 0.9 percentage points to 95.2 percent in 2017 for its property and casualty division.

Baete said Allianz would aim to reduce the combined ratio to 94 percent "by the end of 2018."
In the fourth-quarter, Allianz took a charge of 210 million euros from the sale of Oldenburgische Landesbank.

A change in U.S. tax reform cost the company about 100 million euros in profit in 2017, but will add about 300 million euros in 2018, according to a slide presentation.