German insurer Allianz has reported a 2.9% dip in net income for 2021 to €6.6 billion as the group-wide performance included a €3.7 billion charge related to the Structured Alpha Funds, which reduced income for the year by €2.8 billion.
For the fourth quarter of 2021, Allianz has fallen to a net loss of €292 million as a result of the Structured Alpha charge.
In 2020, the SEC launched an investigation into the Structured Alpha Funds after pension funds said Allianz had failed to safeguard their investments throughout the financial volatility caused by the pandemic.
With a court case pending and with respect to government proceedings in the U.S. in relation to the funds, Allianz says that it expects to reach settlements with major investors in those funds shortly.
“In anticipation thereof and in light of current discussions with U.S. governmental authorities, Allianz today decided to book a provision of 3.7 billion euros in the financial statements 2021,” says the firm.
Adding that “The anticipated settlements are an important step towards a resolution of the various proceedings.”
Excluding this one-off charge, Allianz’s net income for the fourth quarter of 2021 actually increased by over 38% to €2.5 billion.
Turning back to the full year performance and the carrier recorded a 5.7% rise in revenues to €148.5 billion, and a rise in operating profit of almost 25% to €13.4 billion.
Within its property and casualty (P&C) business, Allianz produced revenue growth to €62.3 billion, as the operating profit swelled by more than 30% to €5.7 billion. The underwriting result reflected a recovery from the impact of COVID-19 in 2020, while lower attritional losses and a better run-off result offset higher claims from natural catastrophes.
The P&C combined ratio strengthened by 2.5 percentage points, year-on-year, to 93.8% in 2021.
In its Life and Health (L&H) business, PVNBP increased by almost 80% to €78.7 billion in 2021, driven by higher sales volumes for fixed index annuities in the U.S. and improvements in Italy and France through back-book management.
Operating profit in this part of the business increased from €4.4 billion in 2020 to €5 billion in 2021, which Allianz attributes to higher reserve loadings, an improved investment margin, and the previous year’s loss recognition in the U.S.
The L&H new business margin benefitted from a better business mix in 2021, increasing by 3.2%.
In its asset management business, Allianz has reported that operating revenues grew by 14.3% to €8.4 billion on the back of higher AuM-driven revenues and higher performance fees. The segment’s operating profit jumped by over 22% to €3.5 billion, while third-party assets under management increased by almost 15% to €1.966 trillion.
Oliver Bäte, Chief Executive Officer of Allianz SE, commented: “In spite of challenges in 2021, Allianz proved its resilience and adaptability. With record-high operating profit, strong value growth in life, health and asset management businesses and strongly improved P/C margins and productivity, we are scaling the power of our global franchise.”
