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Allianz may slow share buybacks in 2019 to finance acquisitions: CFO


(Reuters) — Allianz SE may slow its share buyback program after the one announced this week to allow the German insurer to make small acquisitions, the group’s finance chief said on Friday after reporting a 19% rise in 2018 fourth-quarter profit.

Allianz this week announced it would buy back shares for up to €1.5 billion ($1.69 billion) this year. But Chief Financial Officer Giulio Terzariol suggested the company may slow the pace of additional buybacks.

“I can never give a definitive answer, but if you ask me, I wouldn’t necessarily expect another new buyback in 2019,” Mr. Terzariol told Reuters.

Allianz embarked on buybacks for the first time two years ago under Chief Executive Oliver Baete as he sought to spend cash amid a dearth of alternatives. The Munich-based insurer bought back €3 billion in 2017, and again in 2018.

Shares were up 1.2% midday in Frankfurt, outperforming the benchmark DAX index, which was unchanged.

Allianz reported net income rose 19% in the fourth quarter from a year earlier, in line with expectations, and said it was aiming for a larger operating profit target in 2019.

Net income attributable to shareholders of €1.697 billion compared with the €1.715 billion profit forecast by analysts in a Reuters poll and was up from €1.427 billion a year earlier.

For 2018, Allianz earned €11.5 billion in operating profit, at the upper end of its targeted range of €11.1 billion, plus or minus €500 million. The insurer had already flagged that it was highly likely to come in above the midpoint of the range.

For 2019, Allianz said it is aiming for operating profit of €11.5 billion, plus or minus €500 million.

“Our healthy and well-diversified business makes us confident that we will continue to deliver a strong financial performance again this year,” Mr. Terzariol said in a statement.

Allianz and the insurance sector are bouncing back from losses incurred by hurricanes, fires and earthquakes in North America in 2017 — the industry’s costliest year ever.

Allianz’s combined ratio in its property/casualty division, a key measure of profitability, was 94.1% in the fourth quarter, down 0.4 of a point from a year earlier. Readings below 100% indicate profitability.

The jump in quarterly profit was marred by weakness in its asset management division, which includes PIMCO, due to higher costs. The division had net outflows of €31 billion.

Allianz proposed a dividend of €9 per share, above expectations of €8.84 and the €8 payout last year.



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