Investing.com -- HSBC Global Research in a note dated Friday has downgraded Allianz (ETR: ALVG ) to “hold,” citing easing pricing tailwinds in its Property and Casualty (P&C) segment and limited upside with the stock trading near the top end of guidance expectations. The target price was cut slightly to €370 from €372.

While Allianz continues to deliver steady performance across business lines, HSBC analysts pointed to signs of moderation in the P&C segment and premium valuation levels relative to the sector.

Shares now trade at 12.3x 2026e earnings, around 15% above the one-year average and a 3% premium to the sector, compared with a historical discount of 4%.

In the first quarter of 2025, Allianz reported a 6% increase in group operating profit year-over-year, with P&C up 5%, Life and Health (L&H) up 8%, and Asset Management up 5%.

Core net income rose just 1%, or 5% excluding restructuring and tax items, but still fell 6% short of consensus.

The Solvency II ratio slipped to 208% from 209% at the end of 2024, missing consensus by three percentage points.

P&C operating profit reached €2.17 billion, with the combined ratio improving to 91.8% from 93.0% in the retail line, helped by past pricing actions.

However, commercial lines deteriorated to 91.7% from 89.9%, impacted by weaker pricing in financial, cyber, and property lines, as well as higher natural catastrophe losses.

The undiscounted attritional loss ratio stood at 71.5%, in line with the prior year but 0.7 points weaker than consensus.

In L&H, operating profit rose to €1.43 billion, slightly ahead of expectations. New business value grew 14% year-over-year to €1.44 billion, exceeding forecasts. Contractual service margin rose 3% over the period, though normalized CSM growth remained modest at around 2% due to lower in-force returns.

Asset Management posted €811 million in operating profit, 3% below consensus despite stronger-than-expected net inflows of €28.7 billion.

The cost-income ratio edged higher to 61.3%, while assets under management were marginally lower year-over-year at €1.91 trillion.

Shareholders’ equity rose 4% year-over-year to €62.4 billion, while annualized return on equity reached 16.6%, or 17.2% excluding one-offs.

Allianz reiterated its 2026 group operating profit target of €16 billion ± €1 billion, with consensus already leaning toward the top end of that range.

HSBC trimmed its earnings estimates by around 2%, driven by revised expectations for L&H and Asset Management.

Dividend forecasts were also lowered by 2%, reflecting the firm’s 60% payout ratio. The reduced target price of €370 reflects these updated estimates and market adjustments, though the valuation framework remains unchanged.