By Agency Reporter

Munich: Allianz SE, Europe’s biggest insurer, raised its dividend after fourth-quarter profit climbed 11 per cent and the company exceeded its full-year forecast.

Net income in the three months ended December increased to ¤1.14bn ($1.6b) from ¤1.02bn in the year-earlier period, the Munich-based company said in a statement on Thursday. That was in line with a ¤1.15bn average estimate of eight analysts surveyed by Bloomberg.

The insurer, led by Chief Executive Officer, Mr. Michael Diekmann, 56, proposed paying a dividend for 2010 of ¤4.50 a share, compared with ¤4.10 a year earlier. Allianz, which sought to reach the “upper end” of its target range of ¤6.7bn to ¤7.7bn in operating profit, increased the measure by 17 per cent to ¤8.2bn last year, citing a “strong contribution” of investment gains.

“Allianz has managed its risks well and emerged highly profitable and financially stronger from the financial crisis years 2008 and 2009,” Diekmann said in the statement.

Allianz’s property and casualty insurance unit reported a one per cent increase in net income to ¤804m in the fourth quarter. The unit’s spending on claims and other costs as a percentage of premiums, also known as the combined ratio, improved to 94.9 per cent from 95.3 per cent a year earlier.

A ratio above 100 per cent means an insurer’s claims and costs exceed premium income, giving it a loss from underwriting.

Profit at the life- and health-insurance division fell 29 per cent to ¤268m after a year-earlier one-off tax refund wasn’t repeated. That missed the ¤461m average analyst estimate.

Allianz’s asset-management unit, which includes Newport Beach, California-based Pacific Investment Management Company, posted a 51 per cent profit gain to ¤292m. For the full year, total assets under management grew 26 per cent to a record ¤ .52tn, Allianz said.

“Third-party net inflows came from both retail and institutional clients and grew at a double-digit rate for the second year in a row,” Allianz Chief Financial Officer, Mr. Oliver Baete said in the statement.

Allianz’s solvency ratio, a measure of the insurer’s ability to absorb losses, rose to 173 per cent in the quarter from 164 per cent at the end of 2009. That’s above the company’s target range of 150 per cent to 170 per cent, indicating Allianz has excess capital for possible acquisitions or increased payouts to shareholders.

European insurers are facing pressure on earnings as low interest rates hurt investment returns and demand for life insurance. Reduced prices in property and casualty coverage such as motor insurance are also weighing on profits in the industry.

Source: Punch