Allianz Is Our Top Pick in Insurance

We are adding Allianz to the Best Ideas list with a EUR 210 fair value estimate; the shares are currently trading in 4-star territory. The company has no moat, a stable moat trend, medium uncertainty, and Exemplary capital allocation, in our view. We believe the unraveling of the Allianz Global Investors U.S. Structured Alpha Funds has led to a bit of a smear on the name. Concerns around inflation and travel insurance have also resulted in a bit of a hangover on the price of its shares. While we went through the events surrounding the collapse of the Structured Alpha Funds we were frequently shocked by the turns of events, but we believe the outcome is relatively settled and contained. Our belief is that it is the Allianz Global Investors U.S. mutual funds that have been affected by the ban by the Securities and Exchange Commission, and this will lead to a less than EUR 500 million reduction in fees. While we are concerned about inflation, we have incorporated a deterioration in underwriting with a lagged improvement in pricing, and we think the disruption in travel will improve.