Allianz SE (AZSEY) shares rose to the highest in more than a year after Europe's largest insurance company said it would launch its first-ever share buyback and boost its annual dividend after better-than-expected full year earnings.
Allianz said it would buyback €3 billion ($3.2 billion) in shares and increase its dividend by 4.1% to €7.60 per share after it posted a 23% increase in fourth quarter net profit and said its full-year figure came in at a forecast-beating €6.9 billion.
"We had another very good year," CFO Dieter Wemmer told Bloomberg television. "The share buyback is something we have put into the room three years ago; our strong balance sheet allows a lot of flexibility going forward and that is not yet set that we do the next buyback soon, but we have the flexibility to do so it we want, even though we will also look at strategic opportunities."
"The determination of Allianz is to deliver on our 2018 strategic targets," "We have it completely within our hands to do it in-house organically," Wemmer added. "If on the way any opportunistic deal could help us deliver even more to our shareholders, 'why not'? But it's not a 'must' on our list."
Allianz shares rose more than 3.3% in early Frankfurt trading to change hands at €163.42 each, the highest since December 2015, giving the company a market value of just under €74 billion.
Wemmer also said that inflows into Pimco, the world's biggest bond fund, were "getting pretty close to what we saw in the fourth quarter" of 2016.
"We see still an uprise in inflows, around €6 billion in Q4, which was more than Q3," Wemmer said "Actually, I think it's a very good time for active-managed credit; the market volatility and the steepness of the interest rate curve play very much into Pimco's strengths."
Allianz set its target range for 2017 operating profit at between €10.3 billion and €11.3 billion after a full-year 2016 tally of €10.8 billion.
"In future, 50% of group net attributable income will still be returned to shareholders in the form of a regular dividend," Allianz said in a statement. "However, Allianz no longer intends to link its budget for external growth to shareholder pay-outs in a three-year cycle. Rather, half of net income should be used as deemed appropriate to finance growth, or it will be returned to shareholders on a flexible basis."