Allianz bank to miss goal
FRANKFURT, Germany (Reuters) -- German insurance giant Allianz AG posted quarterly profits in line with market expectations on Friday but said its stricken banking arm will miss its break-even goal this year and return to profit in 2004.
The group, Europe's second biggest insurer by premium income behind France's AXA, confirmed it expected to end this year in profit after last month's sale of its biggest investment, a stake in Nivea-maker Beiersdorf AG. It will book profits from that deal in the fourth quarter.
Allianz posted a third quarter net profit of 372 million euros ($435 million), slightly higher then the average forecast of 338 million in a Reuters poll of 19 analysts.
The group's shares, which have outperformed rising stock markets this year with a near 140 percent gain since their March low at 40.27 euros, traded down 0.7 percent at 94.60 euros by 0942 GMT, compared to a flat European insurance sector
"That banking will miss the break even goal doesn't come entirely unexpected,'' said BNP Paribas analyst Tom Bennett. "Otherwise the results are also pretty much in line with what we expected.''
Banking has been a drag on Allianz's results ever since its decision to acquire Dresdner Bank in a 24-billion-euro deal in 2001 to create a powerful bancassurance giant.
"Overall, we will not quite reach our objective of achieving a balanced operating result for the full year 2003 (in the banking division),'' Allianz said in its nine-month report.
It said it now aimed to end next year with a net profit in banking, which is made up largely of Frankfurt-based Dresdner and has suffered under years of poor markets and a stalling economy. The banking arm ended the quarter with a net loss of 17 million euros.
In August, the group dramatically stepped up cost-cutting measures at the division, axing another 4,700 jobs by 2005 and cutting costs by one billion euros.
Dutch rival's banking recovery
Allianz's Dutch rival ING, Europe's number three insurer, ventured a 2003 profit forecast on Friday after reporting a rise in its net operating result for the third quarter amid a strong recovery at its banking division.
Allianz said the positive trend in property and casualty insurance continued, with the combined ratio -- a key gauge of non-life underwriting profitability that measures costs and claims against premiums -- at 96.9 percent at the end of September. A figure below 100 percent is profitable.
"Assuming there will be no excessive burdens resulting from natural catastrophes or major claims before the end of 2003, the combined ratio for the entire year should remain below 98 percent,'' Allianz said.
BayernLB analyst Christian Hamann said the combined ratio was better then expected: "The outlook is also quite positive.''
With a net profit of 663 million euros, the property and casualty business made the biggest contribution to net profits in the third quarter.
Its life and health insurance operation made a profit of 64 million, while asset management suffered a loss of 102 million euros.
Net premiums earned -- revenue from selling insurance policies to clients -- came in at 13.9 billion euros in the quarter.
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