Allianz Releases 2007 Earnings Figures

Germany’s Allianz SE has released its official earnings report for 2007, which shows some declines from the preliminary earnings announcement it released last month (See IJ web site – https://www.insurancejournal.com/news/international/2008/01/25/86706.htm).

Net income for the fourth quarter of 2007 fell 51.5 percent to €665 million ($979 million), compared to €1.372 billion ($2.02 billion) in the same period of 2006. Full year net income rose, however, by 13.5 percent to €7.966 billion ($11.73 billion) – more or less what it had indicated in January – from €7.021 billion ($10.33 billion) in 2006.

Full year operating profits, while down for the fourth quarter, rose 5.1 percent to €10.915 billion ($16.07 billion). Allianz suffered from the general downward economic trend in the fourth quarter of 2007, caused by global constrictions on credit, which began with the U.S. subprime mortgage crisis.

The biggest drain on its performance was its Dresdner Bank operation which lost €461 million ($679 million) in the fourth quarter, compared to a €196 million ($288.56 million) profit in Q4, 2006. Dresdner’s profits for the year were off 46.1 percent to €730 million ($1.075 billion).

Allianz said, “all business segments contributed to the successful overall results. However, parts of the investment banking business were significantly impacted by the credit crisis. Both Life and Health insurance and Asset Management generated profitable growth, while operating profit in Property and Casualty insurance remained strong. Total revenues of the Allianz Group increased to €102.6 billion ($151 billion) from €101.1 billion ($148.8 billion) in the previous year.

CEO Michael Diekmann stated: “Despite challenging conditions in 2007, we were able to further improve our operating efficiency and profitable growth, and to achieve a record result for the year. Thanks to the well-diversified business activities of the Group, we were less vulnerable to shocks and cycles in individual markets and segments,” he added.

In the P/C sector Allianz reported that premium income increased from €43.7 billion ($64.34 billion) in 2006 to €44.3 billion ($65.2 billion). Operating profits at €6.299 billion ($9.27 billion) were up slightly from €6.269 billion ($9.23 billion) in 2006.

The combined ratio reached 93.6 percent in 2007 compared to 92.9 percent in 2006, but “remained under the 94 percent target level, and despite €774 million [$1.095 billion] in claims from natural catastrophes,” said the bulletin.

“Sustainable profitable growth remains our focus. We achieved high growth rates in Central and Eastern Europe, Asia-Pacific and South America in 2007, while maintaining our position in mature markets and without compromising profitability,” explained Helmut Perlet, CFO of Allianz SE.

Diekmann added: “In 2007 we achieved high quality results despite a turbulent financial markets environment, which demonstrates our sustainable underlying profitability. Allianz is well positioned to also master the challenges in 2008 and again deliver on its medium term targets. However, financial markets and their future development will have a stronger impact on our business results than usual.

The full report and further details including access to the earnings conference replay, may be obtained on the Allianz web site at: www.allianz.com.

Source: Allianz SE