Allianz: An Insurance Giant

Founded in 1890, Allianz is a German multinational financial services company with its core business being insurance and asset management. It describes itself as “a company that is there for people through thick and thin…” You can find the company in more than 70 countries worldwide and offers products ranging from property and casualty, to health and life insurance for corporate and individual customers.

Fundamental analysis

Allianz has market cap of $89.15 billion at time of writing. It has an EPS of €22.94 and book value per share of €166.59. It’s P/E ratio stands at 7.9, which is higher than rivals AIG and AXA have ratios of 6.5 and 6.9 respectively. This means you would by paying a higher premium for a share of Allianz, a premium I believe is well worth it.

In 2019 Allianz had a total revenue of €116.5bn with a net profit of €8.3bn. This is substantially better than both AIG and AXA who had profits of $0.9bn and €4.2bn each. The company has managed to increase their net income for the last 3 years, €6.8bn in 2017, €7.46bn in 2018 and now €8.3bn in 2019. This shows that Allianz is a reliable and stable company.

allianz 5yr

Over the last 5 years the Allianz share price has returned 17.9% or 27.46 per share. This is despite it having not get recovered from March’s stock market crash. In March Shares fell from a peak of 231.55 on 18th February down to 120.50 on 18th March. However since March it has had an amazing 49.4% rise. It is very possible that we could see a return to new highs before the end of this year.

2020 a lost year for insurance

Economists working for Allianz forecast that insurance premiums income globally will fall 3.8% in 2020; and 4.7% in Western Europe. That being said they are optimistic on 2021 saying that the company’s growth could return to 2019 levels of 4.4%, but this will be driven in Asia.

But it has not been all bad news, as with many other industries the coronavirus pandemic has increased the speed of digitization and made sustainability a key factor. Allianz has also said that the pandemic has accelerated the shift in insurance power to Asia from the West.

allianz-global-insurance-report2-2020 The company has projected that Asia (ex. Japan) is set to become the biggest insurance market by 2030 with a share of 35% compared to 24% currently.

Allianz has recognised the need to keep up with growing global trends in insurance. They realise that environmental, social and governance (ESG) strategies are an accelerating trend with people becoming for outspoken on these matters.

Solid dividend income

Allianz is a great dividend payer. The only downside is that they have one dividend payment per year due to German dividend payment laws. That being said, it is a hefty dividend of €9.60 per share which gives a great yield of 5.3%. Allianz typically aims to pay out 50% of group net income.

So while it’s not a regular income payer, you will get a really nice chunck of cash every year.

I do personally hold shares of Allianz in my stock portfolio. It is deffinately one which I would like to add to for a long time to come. Despite the short term challenges it faces in relation to the pandemic, I see the company having a great future as it keeps up with insurance trends.

 

 

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