Allianz’s 2025 Performance: A Reliable Standard Amid a Loosening Insurance Market

Allianz Achieves Record Results and Strengthens Capital Base in 2025

In 2025, Allianz surpassed its own ambitious goals, delivering robust capital generation and reinforcing its financial position. The company reported a record operating profit of 17.4 billion euros, marking an 8.4% year-on-year increase. This outstanding performance, which spanned all business divisions, further established Allianz as a reliable financial leader during a challenging insurance market. Shareholders also benefited from a 10.9% rise in core net income, reaching 11.1 billion euros.

Allianz’s earnings quality is highlighted by its exceptional capital generation. The Solvency II ratio climbed to an unprecedented 218%, up 10 percentage points, thanks to strong post-tax capital generation before dividends. This capital strength not only acts as a safeguard against industry volatility but also enables Allianz to seize opportunities when competitors may be limited. For institutional investors, the 18.1% core return on equity stands out—well above the 17% target—demonstrating effective capital utilization and reinforcing Allianz’s reputation for quality.

While many insurers are challenged by pricing pressure and investment obstacles, Allianz’s blend of revenue growth, cost discipline, and superior capital generation provides a structural advantage. Rather than simply weathering the market cycle, Allianz is actively fortifying its financial foundation, setting itself apart as a benchmark for quality in the sector.

Sector Landscape and 2026 Guidance: Prioritizing Stability in a Softer Market

Although 2025 closed on a high note, Allianz’s outlook for 2026 is shaped by a more competitive and less robust market. The company’s guidance emphasizes stability rather than aggressive growth. In the fourth quarter, operating profit reached 4.30 billion euros, a 3% increase driven primarily by the Property-Casualty division. Business volume also grew by 6.51%, reflecting ongoing demand. However, this expansion occurred in a global insurance environment characterized by abundant but fragmented capital and buyer-friendly conditions.

For 2026, Allianz has set an operating profit target of 17.40 billion euros, plus or minus 1 billion euros, signaling a commitment to steady performance. This approach reflects the reality of a market where pricing trends vary by product, sector, and region. While property insurance rates continue to decline, other lines such as directors and officers or cyber insurance require a focus on sustainable pricing amid increasing claims complexity.

RSI Oversold Long-Only Strategy Backtest Summary

• Entry Criteria: Buy ALV when RSI(14) is below 30 and the closing price exceeds the 20-day simple moving average.
• Exit Criteria: Sell when RSI(14) rises above 70, after 15 trading days, or if a 10% gain or 5% loss is reached.
• Risk Controls: Take-profit at 10%, stop-loss at 5%, maximum holding period of 15 days.
• Backtest Period: Last 2 years.

Focusing on Quality and Capital Efficiency

Allianz’s ability to maintain a stable profit target is rooted in its core strengths: strong capital generation, ongoing productivity improvements, and strategic investments in technology. The record Solvency II ratio gives Allianz the flexibility to uphold underwriting discipline without sacrificing growth. The company is shifting its emphasis from expanding market share in a soft market to maximizing returns on invested capital. This approach prioritizes consistent, high-quality earnings over sheer volume, even as industry pricing remains under pressure.

For institutional investors, Allianz’s strategy is clear: it is focused on allocating capital efficiently rather than chasing growth for its own sake. In a competitive environment, the capacity to deliver stable profits through operational excellence and capital strength is a significant differentiator. This positions Allianz to weather the current cycle and emerge even stronger in the next.

Capital Allocation and Valuation: Strong Signals for Investors

Allianz’s disciplined approach to capital allocation reinforces its reputation for quality and offers clear benefits to shareholders. The Board has proposed a 2025 dividend of 17.10 euros per share, an 11% increase over the previous year, reflecting confidence in the company’s earnings power. Additionally, a new share buyback program of up to 2.5 billion euros has been announced, underscoring Allianz’s commitment to returning value to investors through both dividends and share repurchases.

From a valuation perspective, Allianz trades at a Price-to-Earnings ratio of 14.5x, higher than the European insurance industry average of 12.7x. This premium is justified by Allianz’s superior financial metrics, including its record Solvency II ratio of 218% and an 18.1% core return on equity. The market is rewarding Allianz’s consistent performance and strong capital base with a quality premium.

The real advantage for investors lies in the safety margin provided by Allianz’s capital allocation. The buyback program, funded by internal resources, directly supports earnings per share growth. The dividend increase signals management’s confidence in achieving stable profits in 2026, backed by a balance sheet that continues to strengthen. In a soft market, this disciplined approach to capital returns and financial resilience makes Allianz an attractive, risk-adjusted investment opportunity.

Key Drivers and Risks: Maintaining Quality Through Market Cycles

Allianz’s ability to outperform will depend on successful execution of its 2026 strategy in a market where pricing cycles are increasingly fragmented. The main catalyst is Allianz’s capacity to leverage its capital strength and underwriting expertise to navigate these shifts. As the global commercial insurance market remains competitive, Allianz’s focus on data-driven risk selection and productivity improvements sets it apart. Deploying capital effectively in diverse regions, such as Latin America and the Pacific, while maintaining discipline in more challenging segments, will be crucial. The record Solvency II ratio of 218% gives Allianz the flexibility to maintain pricing discipline without sacrificing business volume.

However, a significant risk is the potential for higher-than-expected claims in casualty insurance, particularly due to adverse litigation trends in the U.S. This could challenge Allianz’s ability to meet its 2026 operating profit target of 17.4 billion euros (plus or minus 1 billion euros). If claims costs in complex lines rise unexpectedly, margins could be squeezed, potentially requiring a reassessment of profit guidance.

For investors, the key question is whether Allianz can sustain its high-quality earnings and capital strength. While the stock commands a premium valuation, this is supported