Allianz SE share price up, Q3 income tops forecasts, lifts payouts as Pimco struggles

Allianz SE, the worlds largest insurer, increased its dividend payouts as third-quarter results overtook analysts expectations despite outflows from its Pacific Investment Management Co. unit.

The Munich-based company reported a 14.5% increase in revenue for the third quarter to €28.78 billion versus last years result of €25.15 billion.

Operating profit rose 5.2% to €2.65 billion in the recent quarter, compared with €2.51 billion from a year earlier, including a 15.2% increase in operating profit to €1.42 billion from its Property-Casualty business unit.

Operating profit at the companys Life/Health division grew at a slower rate of 2.8% to €790 million in the quarter. However, Allianzs asset management unit stated a decrease in operating profit of 8.1% to €694 million. The company said Pimco accounted for nearly €50 million in outflows from the division, which were a result of the surprise departure of Bill Gross at the end of September, the subsidiarys chief investment officer.

“Net outflow development after the resignation of Bill Gross is within our expectation,” Allianz Chief Financial Officer Dieter Wemmer said in the statement.

Pimco announced a €225-million award program to retain talent and secure performance as it took action to inspire confidence into its clients who were scared by Grosss exit. The company hired back key high-profile money managers and offered to cut fees in the past few weeks.

Meanwhile, Allianzs corporate division also declined 8.1% and reported an operating loss of €248 million.

Nevertheless, net income rose 11.2% to €1.6 billion compared to the €1.45-billion result of last year. Analysts surveyed by Bloomberg had projected net income of €1.57 million. Earnings per share rose to €3.52 from €3.14.

Starting this year, Allianz said it would raise dividends to 50% of net income, up from the 40% payout ratio since 2008.

ʺStrong internal growth in the Property and Casualty segment, continued high demand for life insurance products and good operating profit in the Asset Management segment show that we are on the right track for 2014,ʺ said CFO Dieter Wemmer. ʺOur results confirm our outlook that the upper end of the operating profit target range at 10.5 billion euros is in reach.ʺ

Allianz SE lost 0.04% on Thursday and closed at €126.65 in Frankfurt. On Friday the stock jumped 4.9% to trade at €132.85 at 10:28 GMT, marking a one-year increase of 8.01%. The company is valued at €57.88 billion. According to the Financial Times, the 32 analysts offering 12-month price targets for Allianz SE have a median target of €142.50, with a high estimate of €160.20 and a low estimate of €114.00. The median estimate represents a 12.51% increase from the previous close of €126.65.