Allianz Nearly Triples 4Q Profit

March 17, 2006

Insurer Allianz Group said Thursday its fourth-quarter profit nearly tripled as earnings in its banking and asset-management units and improved investment income protected it from losses related to last year’s hurricanes.

The Munich-based company, Europe’s biggest insurer by gross premiums, earned 872 million euros ($1.05 billion) in the quarter that ended Dec. 31, compared with 296 million euros a year earlier. Total premiums rose to 25.2 billion euros ($30.3 billion) in the quarter from 24.3 billion euros a year earlier.

The company said investment income, along with money earned by selling off stakes in MAN AG, Bayer AG, Eurohypo AG and Sued-Chemie AG, resulted in a gain of 684 million euros ($822.5 million) in the fourth quarter.

Looking ahead, the company predicted that its profit this year would likely grow by 10 percent.

For 2005, the company posted a net profit of 4.38 billion euros ($5.3 billion), or 11.24 euros ($13.51) a share, compared with 2.27 billion euros, or 6.19 euros a share, while revenue rose to 100.9 billion euros ($121.3 billion) from 96.9 billion euros in 2004.

“The financial results speak for themselves,” Chief Executive Michael Diekmann said in a statement. “We are implementing our big agenda without neglecting our actual business. We can promise that too for 2006.”

The company’s banking unit, Dresdner AG, also performed well, posting a profit for just the second time since the company acquired it in 2001 for 25 billion euros.

Earnings at the bank rose to 1 billion euros ($1.2 billion) in 2005, up from 164 million euros in 2004, and were helped along by the sale of non-performing and problem loans.

“Allianz’s strong results are attributed to the turnaround of Dresdner Bank but this somewhat masks the success of its insurance business,” said Catherine Schmitt, senior insurance analyst at financial research and consulting firm Celent in New York.

Despite its exposure to the series of raging hurricanes last year in the Gulf of Mexico, Allianz said its premium income in its property and casualty business climbed to 3.5 billion euros ($4.2 billion) for the year, up from 3.4 billion euros the year before, while its life and health insurance operations saw net income of 1.3 billion euros ($1.5 billion), compared to 867 million euros in 2004.

“With strong underwriting discipline, Allianz kept their costs in line with last year despite the catastrophes of 2005. High levels of demand drove the growth in the life business specifically in Germany and France. Allianz’s results today are a testament to their focus on sustainable growth,” Schmitt said.

Allianz also restructured its German insurance operations to cut costs and combine activities and converted its legal form to a so-called European Company, or Societas Europaea, designation. The move was done, in part, to ease any potential cross-border mergers.

Shares of Allianz were down 2.3 percent to 134.50 euros ($161.74) in Frankfurt trading.

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