Allianz unveiled forecast-beating quarterly earnings on the back of strong performances in life insurance and asset management, boosting its shares by more than 5.5 percent.
Europe’s biggest insurer said it was well positioned to take advantage of improvements in the economy after posting a 23 percent rise in operating profit in the third quarter.
However, it shied away from giving a forecast for 2009 — even though the year’s end is just weeks away — or for 2010, citing financial market volatility and the risk of big damage claims from winter storms as reasons for prudence.
This circumspection contrasted with French rival AXA, Europe’s second-biggest insurer, which late last month said the outlook for its business had improved, in spite of slightly weaker than expected quarterly sales.
Allianz said economic weakness was still hitting demand in the broader insurance market, a trend underscored by a drop in operating profit of nearly a fifth in its main business of property and casualty insurance.
“Property-casualty as well as life insurance face markedly weaker demand due to the economic downturn with rising business insolvencies and rising unemployment,” its quarterly report said.
“Prices are moving upward only slowly — if at all — and only in specific areas of business,” it added.
Analysts said Allianz had delivered a solid set of figures and hailed the insurer’s ability to pad its capital cushion in the third quarter. “Allianz is currently one of the best capitalised insurers with a significantly reduced risk profile,” WestLB analyst Andreas Schaefer wrote in a note to clients.
“In terms of earnings development, we believe, non-life should have seen the worst in the second quarter 2009 while we regard the life and health results in the second and third quarter as unsustainably good,” Schaefer added.
Allianz had no plans for acquisitions
Chief Financial Officer Oliver Baete said Allianz had no plans for either acquisitions or a capital hike, adding that it planned to stick to its policy of paying out 40 percent of net profit in dividends.
It also planned to keep its stake of more than 10 percent in Germany’s second-biggest lender, Commerzbank, Baete said.
Operating profit in Allianz’s life and health insurance segment nearly quadrupled in the third quarter, while that in financial services doubled, but the insurer remained cautious on the outlook for property and casualty insurance.
“While pricing is on an upward trend, our volumes remain challenged due to weaker demand, the effects of our portfolio cleaning measures and selective underwriting,” Allianz said of the segment, which normally accounts for 60 percent of group operating profit but in the third quarter contributed little more than half.
Allianz reported quarterly operating profit of 1.929 billion euros ($2.9 billion), above the average forecast of 1.804 billion in a Reuters poll of 18 analysts.
It also swung to a quarterly net profit of 1.3 billion euros, above the 1.2 billion expected in the poll, from a 2 billion euro loss in the third quarter of 2008, when it sold its unprofitable Dresdner Bank unit to Commerzbank.
For further details on Allianz’s 3rd quarterly result click here
With Reuters
