Allianz: Solid Results But Equity Payouts Rising, SII Ratio Lower

Allianz (ALV GY) 4Q23 results which were operationally solid but the FY24 profit guidance is a little light, the SII ratio slipped and payout to equity holders is rising. Much as this is a very high-grade issuer, these are minor credit negatives, we feel.

• Key credit metrics: solvency II ratio fell slightly and missed consensus (to 206% from 212% at Sep-23, consensus: 213%) but nominal equity grew 5% in the quarter.
• Operating profit is broadly in line (life and asset mgmt offsetting weakness in non-life) and third-party net flows are a reasonable positive (EUR6.5bn inflow) against expectations of a small outflow, press is reporting this powered by PIMCO. Net profit beat expectations, too.
• FY24 outlook on operating profit looks marginally below current consensus. Dividend is up 21% and well above consensus (EUR13.80 vs. 12.05 expected) and a new payout ratio is being set at 60% (from 50%) alongside an additional EUR1bn in equity buyback. So capital allocation towards equity is rising, a minor credit negative.