(Updates with details on segments)
MUNICH (Thomson Financial) - Allianz SE confirmed its outlook of achieving
adjusted average growth of 10 percent in operating profit up to 2009, but said
the longer the current market conditions persist, the more difficult it will be
to reach these goals.
"While 2008 will remain a challenging year, the longer this environment
persists the harder it will also be to achieve our medium term outlook," chief
financial officer Helmut Perlet said in a statement.
The group said first-quarter operating profit fell 35.3 percent to 1.856
billion euros, as growth from its property/casualty insurance segment was offset
by a steep loss at its Dresdner Bank unit.
Group net profit in the first quarter was down 64.6 percent to 1.148 billion
euros, as total revenues declined to 27.7 billion from 29.3 billion.
Dresdner Bank posted a 453 million euros operating loss compared to a gain
of 677 million a year earlier as mark-downs on its ABS trading book came to 845
million in the first quarter. In the full year 2007, the bank had booked
mark-downs of about 1.5 billion euros.
Dresdner's first-quarter net turned to a loss of 513 million euros, compared
to a gain of 612 million a year earlier as its operating revenues declined 64.5
percent to 719 million.
The bank's ABS trading assets amounted to 10.1 billion euros as of March 31,
after write-downs, the net exposure stood at 8.1 billion. Thereof "critical"
collateralised debt obligations and U.S. residential mortgage backed securities
make up 1.8 billion euros.
Allianz did not confirm its target of 15 percent average return on risk
adjusted capital for its banking operations in the years up to 2009 due to the
uncertainty of future development of the credit markets and the high volatility
of market prices.
"We do not expect that the years 2008 and 2009 will make up for the
shortfall in 2007," the insurer said in its quarterly report.
It added that it is nevertheless sticking to its ambition of annual RoRac of
at least 15 percent for its banking segment in future.
The company had already announced on April 29 that it expects first-quarter
operating profit to decline to 1.8 billion euros and net to fall to 1.1 billion.
Fist-quarter operating profit at the property and casualty segment rose 16.7
percent to 1.479 billion euros as the combined ratio improved to 94.9 percent
from 96.8 percent. Allianz confirmed its target of an average annual combined
ratio below 94 percent up to 2009.
Gross premiums in property/casualty declined to 2.8 percent to 13.710
billion euros due to negative currency exchange effects.
In life and health operating profit declined 21.5 percent to 589 million
euros due to lower investment income as gross premiums were stable at 12.327
billion.
Asset management also saw operating profit decline 22.8 percent to 241
million euros due to the weak capital markets.
Perlet said he expects the segment to return to growth "as markets go back
to normal".
judith.csaba@thomsonreuters.com
jcs/slj/jcs/ra/jcs/ra
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