Allianz 1Q Net Profit Falls 98 Percent

FRANKFURT_German insurance company Allianz SE said Wednesday net profit fell 98 percent in the first quarter, due mostly to charges on the sale of its Dresdner Bank unit and weaker business at its main insurance divisions.

The Munich-based company said net profit in the January-March period was euro29 million ($40 million) compared with a profit of euro1.15 billion in the first quarter of 2008. It booked a loss of euro395 million for the quarter on its the sale of Dresdner bank to Germany's Commerzbank in January.

Total revenues for the period fell 36 percent to euro1.4 billion from euro2.2 billion a year earlier.

The company did not provide a detailed outlook for the current quarter or full year, but said it saw the first signs of recovery in its life and health insurance business during the first quarter.

"Allianz continues to cope successfully with the impact of the ongoing financial markets crisis on our business," said Helmut Perlet, the chief financial officer of Allianz in the company's report.

Perlet said the company is strongly capitalized, the investment portfolio is of high quality and liquid, and that Allianz' operating profitability proves resilient.

"There is a mix of goods and bads in the Q1 results released today by Allianz, but there is certainly no surprise," said Nicolas Michellod an analyst at Celent insurance consultants in Paris.

"Unsurprisingly the Dresdner Bank sale has hurt, but Allianz has managed to stay in the black numbers. Like its peers, the insurer can hope now that some stability will prevail in the international financial markets if it wants to post better results in the coming quarters," Michellod said.

Investors however, weren't convinced by the report and sent Allianz shares nearly 7 percent lower to euro70.69 in Frankfurt trading.

Allianz said first quarter premium revenues in the life and health insurance business rose nearly 6 percent, to euro13 billion from euro12.3 billion, as consumers returned to buying insurance.

Operating profit for the life and health insurance business fell, to euro400 million from euro600 million a year earlier. However, the first quarter result is much better than in the fourth quarter of 2008, when life and health insurance posted a euro300 million operating loss as customers avoided buying insurance as the economic downturn gathered pace.

Allianz said first quarter property and casualty insurance gross written premiums increased 1.5 percent to euro13.9 billion from euro13.7 billion in the first quarter of 2008. Operating profit fell to euro1 billion from euro1.5 billion the year before.

The property and casualty combined ratio increased to 98.5 percent, compared to 94.8 percent in first quarter 2008. Combined ratio reflects the level of claims paid out and costs versus premiums paid in; a level under 100 indicates an underwriting business is profitable.

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