With the end of 2018 we concluded the first phase of our Renewal Agenda. We are happy and proud to present the results of our efforts. When embarking on the Renewal Agenda in 2015, we had set ourselves ambitious targets building on our strong heritage. We were determined to improve both the performance and the organizational health of Allianz. And we have made significant progress on both dimensions.
Our current financial performance is strong: In 2018, we achieved the highest operating profit in the history of Allianz: € 11.5 bn, a 3.7% increase compared to 2017. Furthermore, we generated record revenues of € 130.6 bn. Our net income attributable to shareholders grew by 9.7% and reached € 7.5 bn. This allows us to propose the highest dividend of our history: € 9.00 per share. We also withstood the beginning turmoil in the capital markets, once again recording a strong Solvency II capitalization ratio of 229% as of 31 December 2018. Last but not least, we outperformed our 3-year targets for both earnings per share and return on equity: The former grew 6.2% per annum, the latter reached 13.2% in 2018.
These achievements are results of a healthy organization. Customers are more satisfied with us than they used to be, as indicated by their greater willingness to recommend Allianz to family and friends – which, in turn, is reflected in the so-called Net Promoter Score. When we started the Renewal Agenda, less than half of our businesses reported Net Promoter Scores above market average, by 2018 it was 74% of them. Our people and leaders are on board for the cultural change we seek, as indicated by the rise in our Inclusive Meritocracy Index from 68 to 71. We trust that you, our investors, are as satisfied with this development as we are.
Taking a closer look back at the past business year, there are a series of achievements we are particularly proud of. Let me name a few:
- For the first time in years, we’ve managed to significantly reduce the expense ratio in our Property-Casualty business segment. We intend to eliminate whatever doesn’t add value for our customers.
- We continue the exceptional growth in our life insurance’s value of new business. Customers all around the globe trust Allianz to secure their future wealth. In particular our entities in Germany, the USA, and Asia contribute to this growth.
- We have received approval for the preparatory establishment of the first-ever insurance holding company in China that is 100 percent owned by a foreign insurer.
- We have invested in preparing our employees for the transformation. 40,000 employees have registered for LinkedIn Learning to develop the new skills and knowledge required for the digital world.
- We have taken another big step towards a sustainable future: Allianz has set itself long-term climate goals which are linked to the two-degree target of the Paris Climate Agreement. By 2040 we will have phased out coal-based business in our proprietary investments and insurance activities. Our achievements have been very positively acknowledged. Allianz has gained leading positions and high scores in key sustainability ratings.
All these successes are the result of a team effort. I am grateful to all our employees and partners – it is they who have brought our Renewal Agenda to life. Every day they work to provide the best possible service to our customers: They offer expert advice. They give comfort in the uncomfortable situation around an accident. They carefully and expertly invest the money our customers entrust us with. They bring their hearts and minds to work.
Gratified by our customers’ trust, economically successful, and financially solid, we are now ready to take the next steps. As we implement our Renewal Agenda 2.0, we will move up a gear. The next chapter of our strategy will be launched with the motto “Simplicity wins”. Simplicity is key, as it enhances customer and employee satisfaction and increases our productivity and flexibility. Our goal is for Allianz to become a simple, digital, and scalable organization that is fully customer-centric.
- Simple – We are going to reduce the complexity of our products and processes. This will make our offerings more intuitive, and it will free up more time to serve our customers. Furthermore, it will increase customer loyalty and fuel growth also in highly competitive markets.
- Digital – We are going to digitalize products and processes and use data analytics to improve product design as well as pricing and claims, and win new customers.
- Scalable – We are going to harmonize products and processes across our businesses. By using knowledge, best practice, and technology assets at scale, we continuously aim to become faster and more productive
We have already prepared for this next phase in 2018 and have established the new position of Chief Business Transformation Officer. We also developed the Allianz Customer Model as our common standard to achieve simplicity and digitization. In addition, we are redesigning our direct-to-consumer processes and building a highly efficient and scalable platform from scratch which will give us higher flexibility and speed to react to changing customer demands.
Motivated by these successes, we feel confident in committing to ambitious targets for the upcoming years. Our three-year plan is to increase our earnings per share by a minimum of 5% on average per annum and to achieve a return on equity of 13% or higher. At the same time, we will not compromise on our balance sheet strength and keep the target Solvency II capitalization ratio above 180%. The basis for those financials is customer satisfaction and employee commitment. We aim to achieve an above-market Net Promoter Score for 75% or more of our businesses and to grow the number of markets where we are loyalty leader. We want to further improve our global Inclusive Meritocracy Index to 73% or higher. We know we still have some homework to do, if we want to mobilize our employees even more and effectively prepare them for the transformation ahead.
Even if the current volatility in the capital markets and political instability were to continue in 2019, our dive rsification, our disciplined capital management, and the expertise and dedication of our people provide a robust base for both resilience and profitable growth. We will remain a solid and trusted partner at our customers’ side and a strong value creator for our investors.
Thank you for your continuous support – and we look forward to the joint path ahead.