Allianz SE could exceed its €4.9 billion first-half operating profit in the final six months of 2020 if the current environment persists, CFO Giulio Terzariol said Aug. 5, while cautioning that much depends on whether there is a second wave of infection in the coronavirus pandemic.
Speaking to journalists about Allianz's first-half earnings, Terzariol said that assuming the coronavirus situation remains stable, "I would expect that the second half of the year is better than the first half of the year."
Terzariol noted that the life and health insurance business's operating profit increased to €991 million in the second quarter of 2020 from €819 million in the first quarter because "the markets were more stable."
He added, however, that it was unclear whether there was going to be a second wave of the coronavirus pandemic, and that Allianz had not given an outlook because "the uncertainty as to what's going to happen for the next six months is still too high."
One area of uncertainty is business interruption claims, which have become a prominent feature of the pandemic for insurers — not least because of claims disputes with policyholders.
Terzariol said that if there is no second wave, "then I'd say we will certainly have reflected in our figures what we expect" for business interruption claims. But he also said the test cases designed to solve some of the policyholder disputes, which are playing out in the U.K. and Australia, were making the picture unclear to an extent.
"There is a certain uncertainty in terms of the burdens that we might face and also in terms of what we've already seen, but I wouldn't expect massive distortions," he said.
A further area of uncertainty is whether Allianz will resume share buybacks, having suspended the second €750 million tranche of its €1.5 billion buyback as the crisis unfolded. Terzariol said the company would make a further decision after the summer break, but that there was a higher likelihood of the company continuing with the suspension than resuming buybacks.
He noted the "strong recommendation" from regulators against buybacks in the current environment and said "that is something we will have to consider."
Allianz shares were effectively flat as of about 11 a.m. Munich time, trailing a roughly 1% rise in the DAX 30 German benchmark and a 0.3% increase in the STOXX Europe 600 Insurance index.