Allianz content with earnings despite difficult first half

ALLIANZ FOLLOWED other leading holders of Greek bonds yesterday in writing down its holdings as Europe’s biggest insurer by market capitalisation said it was satisfied with earnings that were narrowly short of last year’s levels.

The Munich-based insurance group revealed €644 million of gross impairments on its Greek sovereign debt, triggering a €326 million charge to second-quarter net income.

It follows the decision by European leaders last month to involve private bondholders in a rescue for Greece.

Michael Diekmann, chief executive, said Allianz remained confident of meeting its annual operating profits target, set at between €7.5 billion and €8.5 billion, after what he called “one of the most difficult half-years” during more than eight years as chief executive, marked by natural disasters and the European debt crisis.

“Markets are sending a clear message,” said Mr Diekmann of the debt crisis. “Problems that have built up over decades cannot be solved over a few months ... [but] we are convinced that all players have clearly understood the urgency.”

Allianz had some €1.3 billion of Greek sovereign debt. Mr Diekmann said: “We believe in the measures taken for Greece.”

He said Allianz, which has backed a financial sector agreement to participate in Greek debt restructuring, had not yet decided which particular option it would support.

Mr Diekmann said there was “no reason for the deep mistrust” of markets in Italy’s economic prospects, which has added to market turbulence over recent days.

In the second quarter, Allianz increased operating profits from its general insurance operations by almost 16 per cent compared with the same period last year, while revenues grew 2.4 per cent. Allianz said it made €910 million of pay-outs to customers in the first six months as a result of natural catastrophes in Japan, New Zealand, Australia and elsewhere.

Revenues were down by 8.1 per cent in life and health insurance, attributed by Allianz to one-off effects in Italy and Germany. Life and health operating profits fell 17.6 per cent.

Assets under Allianz management at the end of June were 5.4 per cent higher than a year previously. – (Copyright The Financial Times Limited 2011)