Advert

Allianz shares – A stock for the long term!

About the Company

Allianz SE is a German financial services company headquartered in Munich, Germany. Its core businesses are insurance and asset management. As of 2014, it is the world's largest insurance company, the largest financial services group and the largest company. The company is a component of the Euro Stoxx 50 stock market index.

Investment Rationale

We increased our price target on Allianz from €170 to €190 per share.

The increase in price target came about after forecasting an improvement in growth, a reduction in accident frequency and attractive pricing in its non-life business.

We also like the shares because they are trading on an indicative gross yield of 4.50% and is well positioned to benefit from future growth.

Investment Rationale

We rate Allianz OW with a €190 price target for the following reasons:

1) Growth - The company is focused on growth, unlike peers, which we believe should help offset the negative impact from low interest rates
2) Accident Frequency - We believe that reduction in accident frequency will drive an improvement in motor insurance profitability
3) Non-life insurance - Allianz benefits from one strong trend, which is continuing attractive pricing in nonlife in Europe, particularly in personal and small commercial lines. Non-life insurance in German core market performing well. Non-life in French and Italian markets is expected to increase contrition to revenue going forward
4) Life insurance - Life segment outperforming expectations
5) Pimco - High net inflows into Pimco. Allianz saw its biggest third-party inflows in four years in the first quarter as clients flocked to Chief Investment Officer Dan Ivascyn’s Pimco Income Fund. We expect this trend to persist.
6) Solvency Ratio – this ratio is at a comfortable level of 212%
7) Conservative estimates – We have adopted conservative estimates
8) Analyst upgrades – We expect further upgrades going forward

Concerns

Slow down in global growth, an increase in equity frequency, greater competition and PIMCO not being able to retain and grow its assets under management.

Conclusion

We are comfortable holding Allianz in a well-diversified portfolio. It is well positioned to continue to benefit from further growth as global economic growth continues to remain supportive.

Allianz has a strong set of financial statements and we expect the company to continue strengthening its position in years ahead.

We hold a 6% exposure in Allianz in the equity fund.

Disclaimer
This article was issued by Kristian Camenzuli, Investment Manager at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.

 

Advert
Advert
Advert