(Bloomberg) -- Allianz SEreported a 23 percent increase in fourth-quarter net income andannounced its first-ever share buyback as Europe’s biggestinsurer makes good on a promise to return excess cash toshareholders.

Net income rose to 1.74 billion euros ($1.86 billion) inthe fourth quarter from 1.42 billion euros a year ago, the insurersaid late Thursday in a statement from Munich. Analysts hadexpected earnings of 1.62 billion euros, according to the averageof seven estimates compiled by Bloomberg. The company plans tospend as much as 3 billion euros to repurchase shares over thenext 12 months.

“What’s fantastic is the solvency ratio driven by disposals,capital generation and management measures,” said MichaelHaid, an analyst at Commerzbank AG with a buy rating on the stock.“The good capital ratios mean that future buybacks are becomingmore likely.”

Scouting acquisitions

Allianz, led since May 2015 by Chief Executive Officer OliverBaete, had promised investors to pay out the company’s unusedacquisition budget if it couldn’t find suitable deals. The51-year-old CEO has been scouting for acquisitions over the past months,exploring a purchase of Australian insurer QBE Insurance Group Ltd.as well as parts of Assicurazioni Generali SpA, Italy’s biggestinsurer, people familiar with the matter have said.

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