Allianz Posts $934 Million Q3 Profit Despite Hurricane, Flood Losses

Germany’s Allianz had a very successful third quarter with net income up 70 percent to €794 million ($934 million) and €1.7 billion (2 billion) operating profit,” despite,” said the company’s bulletin “a net burden arising from natural catastrophes amounting to €753 million [$885.5 million),” from the U.S. hurricanes and European floods.

For the first nine months of 2005, total revenues improved by 5.2 percent to €75.7 billion ($89 billion), while Allianz’ operating profits rose by16.2 percent to €5.9 billion ($6.94 billion) and net income grew to €3.5 billion ($4.12 billion), 25.4 percent more than the comparable result in the same period of 2004. “In spite of the high net burden, we will outperform the group’s operating targets in 2005”, announced Helmut Perlet, Member of Allianz AG’s Board of Management.

The report also noted the following highlights:
— In the Property and Casualty business, natural catastrophes caused an increase in, the combined ratio to 97 percent for the third quarter. The combined ratio was 93 percent for the first nine months (compared with 93.2 percent a year earlier) and is therefore substantially better than the full year target.
— In the core European markets of Germany, France and Italy, there was double-digit growth in premium income for the Life business.
— Dresdner Bank increased its operating profit by almost 81.9 percent to €231 million [$271.6 million] compared with the previous year. The third quarter trading result showed a notable improvement, rising by 43.2 percent to €358 million [$421 million]. Dresdner Bank is on track to earn its cost of capital.
— Asset Management recorded high net inflows totaling €16 billion [$18.82 billion] in the third quarter. The operating profit rose by 37.8 percent to €299 million {$352 million]
— Shareholders’ equity after minorities rose by 32.7 percent to €39.8 billion [$46.2 billion].

Commenting on the Groups’s P/C operations, which include U.S. subsidiary Fireman’s Fund, Allianz said it “increased its business only in those markets that offered risk adequate prices. Total premium income grew in the third quarter by 2.6 percent to €10.5 billion ($12.35 billion). “In Property and Casualty business, there is clear evidence that our operating discipline is paying off, particularly in such a difficult market environment,” Perlet commented.

Although Allianz P/C combined ratio rose to 97 percent during the third quarter, the combined ratio for the first 9 months was 93 percent, an improvement compared with the 95 percent ratio in the same period last year.

P/C operating profit fell by 38.8 percent in the third quarter to €696 million ($818.5 million), but nine-month operating profit rose by 6.6 percent to €3.1 billion ($3.65 billion), compared with the prior year period. Net income in the third quarter fell by 12.1 percent to €408 million ($480 million). However, the bulletin said it increased by 3.1 percent to €2.7 billion ($3.18 billion) in a nine-month comparison.

Allianz outlook for all of 2005 remains decidedly positive. The company said it “will outperform its group operating targets for 2005.” In addition the bulletin indicated: “For 2005 Allianz continues to anticipate revenue growth in the order of magnitude of the previous year and is focusing on a sustainable improvement in operating profit. However, natural catastrophes or adverse developments in the capital markets could always exert a significant negative effect on the result. Allianz intends to maintain the combined ratio at a level below 95 percent for Property and Casualty insurance. In Life and Health insurance, the goal remains to achieve an operating profit totaling at least €1.5 billion [$1.764 billion]. Dresdner Bank is well on its way to earning its cost of capital in 2005. The intention is to improve the operating profit in Asset Management by ten percent compared with 2004.

The entire report, further comments as well as a recording of the analysts’ earnings conference may be obtained on the Group’s Website at: www.allianz.com.