THIS WEEK · EUROPE

Co-owners,

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We've spun the wheel for the Europe bucket. A month after PZU, it hands us another insurer, but this one plays on a different scale entirely.

Picture a rugby crowd pouring into Twickenham, renamed Allianz Stadium in 2024. Somewhere in the stands, a fan's travel cover for next month's ski trip is underwritten by the same company. If she breaks a wrist on the slopes, the voice on the emergency line works for it too. And the pension fund her employer pays into may well hold bonds picked by its asset managers in California. You own a slice of all of it.

Before we dive in, a reminder of what the index itself has delivered over time.

Allianz is the world's most valuable insurance brand, according to Interbrand, and its name is stamped on stadiums in eight countries, from Munich, Turin and Vienna to Sydney, São Paulo and Minnesota. Since 2021 it has also been the official insurer of the Olympic and Paralympic Games, a deal now running through Brisbane 2032.

But the logo is the visible tip. Underneath sits a company that insures cars, homes and factories in almost 70 countries, sells pensions to Americans and private health cover to Germans, and manages more than €2 trillion for other people.

Allianz began in 1890 as a transport and accident insurer, founded by Carl von Thieme, who a decade earlier had co-founded the reinsurer Munich Re, and the banker Wilhelm von Finck. It insured goods moving across oceans and workers injured in Germany's new factories, and expanded abroad within three years.

The 20th century was not kind. Allianz was Germany's largest insurer when the Nazis came to power and has acknowledged its role in that period, later settling claims through the international commission on Holocaust-era insurance. After the war, with Berlin carved up, it moved its headquarters to Munich, where it has stayed.

Allianz runs three engines, and the split of its record €17.4 billion operating profit in 2025 shows how they compare.

Property and casualty (50% of profit). This is car, home and business insurance, and by Allianz's own reckoning it is the largest such insurer in the world. Germany is the biggest market, followed by France, Italy, Australia and the UK. It also runs Allianz Direct, an online insurer for drivers who would rather never speak to an agent.

Life and health (31%). Retirement savings and life cover across Europe and Asia, private health insurance in Germany, and in the US, Allianz Life sells annuities, contracts that turn a lump of savings into a guaranteed income for retirement.

Asset management (19%). The two fund houses, PIMCO and Allianz Global Investors. More on those below.

Tucked inside the insurance business are three specialists that most people never notice.

Allianz Partners is the company behind travel insurance, roadside assistance and international health plans, mostly sold through airlines, car makers and banks rather than directly. It brought in €10.6 billion in 2025 and employs around 40,000 people. In 2024 its teams handled roughly 95 million cases, more than 260,000 a day: lost luggage in Lisbon, a broken-down car outside Lyon, a burst appendix in Bali.

Allianz Trade insures companies against the risk that their customers never pay. A Finnish sawmill shipping timber to a German builder can insure that invoice, and Allianz Trade decides how much cover to give by tracking the finances of some 83 million companies worldwide. It is the world leader in this little-known corner of finance, which sits behind a surprising share of global trade.

Allianz Commercial insures the big, awkward risks: ships, factories, construction projects, and the venues and athletes of the Olympic Games. At Paris 2024, Allianz ran medical assistance for 155,000 athletes, staff and volunteers.

Here is the twist for passive investors. Your index fund, the ultimate low-cost, don't-pick-winners product, co-owns one of the most famous active managers in the world.

PIMCO, based in Newport Beach, California, built its name on bonds and today manages more than US$2 trillion. Together with Allianz Global Investors, Allianz looks after €2.7 trillion, of which €2.2 trillion belongs to outside clients. Business is strong: in the first half of 2026, clients handed over a record €84 billion of new money, and both PIMCO and AllianzGI posted their best second quarter ever.

Allianz wants more of it. It already owns about 90.6% of PIMCO and is now buying out the remaining stake held by PIMCO staff.

It is also shopping in Asia. In August 2026, AllianzGI agreed to buy UOB Asset Management, the fund arm of Singapore's UOB, a bank we co-own and wrote about a few months ago. Two companies from the same index, one selling a piece of itself to the other.

2025 was a record year. Operating profit rose 8.4% to €17.4 billion, and net profit for shareholders reached €10.8 billion. Shareholders received a dividend of €17.10 per share, up 11%, and Allianz is buying back up to €2.5 billion of its own shares in 2026.

The first half of 2026 kept the pace, with operating profit up 8.6% to €9.4 billion, another record. One quarterly number looked worse: second-quarter net profit fell 12.7%. The main reason was €643 million of restructuring costs, including the early retirement of old IT systems as Allianz rolls out AI tools across the business. That was a choice, funded largely by a one-off gain from selling its stakes in two Indian joint ventures earlier in the year.

The balance sheet is robust. Allianz's Solvency II ratio, the European regulator's measure of whether an insurer can survive a very bad year, stood at 225% at the end of June, its highest level since 2018.

Size has not made Allianz immune to embarrassment. In 2022, its US asset management arm pleaded guilty to securities fraud after a family of hedge funds called Structured Alpha collapsed in the March 2020 market crash, costing the group around US$6 billion. In 2025, hackers stole data on a majority of Allianz Life's 1.4 million US customers.

There are slower pressures too. Allianz's internal growth in the first half of 2026 was a solid 4.3%, but this is a mature giant, not a rocket. Natural catastrophes, inflation in repair and medical costs, and choppy markets can all bite. And a large part of its future rests on PIMCO continuing to attract money in a world drifting steadily towards passive funds like the ones we hold.