Allianz profit down 46 percent in 2nd quarter

[August 06, 2010]  BERLIN (AP) -- German insurer Allianz SE said Friday that its net profit dropped 46 percent in the second quarter as losses on assets and investments outweighed an improvement in business and revenues.

Allianz, based in Munich, earned euro1.02 billion ($1.34 billion) in the April-June period, down from euro1.87 billion a year earlier. Revenues rose 14.5 percent to euro25.4 billion from euro22.2 billion.

Operating earnings were up 22.7 percent to euro2.19 billion from euro1.79 billion, but income tax expenses rose and gains on investments slumped compared with a year earlier.

The company's investment in Hartford Financial Services Group Inc. led to a euro167 million loss as Hartford's share price declined, while Allianz's gains from selling shares of the Industrial and Commercial Bank of China sank to euro115 million from euro666 million a year earlier.

Allianz noted that this year so far has been heavy in natural disaster losses. Claims from natural catastrophes -- including flooding in eastern Europe and in Tennessee -- totaled euro255 million.

They accounted for 2.6 percentage points of the property and casualty business's combined ratio, compared with 1.1 a year earlier. However, the ratio improved to 96.3 percent from 98.9 percent -- a lower ratio means a business is more profitable.

Chief financial officer Oliver Baete said that "soft market conditions persisted in many insurance markets" but there were "positive price effects" in several core markets.

Allianz's first-half net earnings were up 35 percent to euro2.57 billion from euro1.9 billion a year earlier.

Revenues advanced 12.2 percent to euro56 billion from euro49.9 billion, while January-June operating profit was up 21.7 percent to euro3.9 billion from euro3.21 billion.

"Based on this very good result, we are confident that we can achieve our outlook for operating profit for the entire year of around euro7.2 billion, with a fluctuation range of plus or minus euro500 million," CEO Michael Diekmann said.

Allianz shares were up 0.9 percent at euro90.98 in morning Frankfurt trading, outpacing the DAX index's overall rise of 0.5 percent.

[Associated Press]

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