Allianz profit hit by higher damage claims

German insurer Allianz’s net profit fell by half in the second quarter, hit by higher damage claims, the sale of its South Korean business and weaker investment performance.

The owner of Pimco said on Friday that outflows at the bond manager had slowed, but there was still work to do at the unit. Quarterly net profit was €1.1 billion, compared with an average forecast of €1.53 billion in a Reuters poll and €2 billion in the year-earlier quarter, which was favoured by realised gains on equity and debt investments. Allianz shares were indicated to open 2 per cent lower.

Europe’s largest insurer took a €352 million hit to net profit from the expected sale of its businesses in South Korea, which was performing below Allianz’s target.

Revenue down

Nevertheless, Allianz confirmed it would reach its target operating profit of €10.5 billion this year, plus or minus €500 million, with the range reflecting uncertainty about natural catastrophe and financial market developments. Group operating profit fell 17 per cent to €2.4 billion in the second quarter, with revenue down 2.5 per cent.

Like other insurers, Allianz’s property and casualty business was hit hard by European floods and storms in the second quarter, contributing to a 37 per cent drop in operating profit drop in that business. Operating profit fell slightly in asset management, where Allianz is struggling to stem investor withdrawals and bring down costs at bond manager Pimco.

“Net outflows at Pimco have slowed, but we have not yet reached our goals,” Allianz chief executive Oliver Baete said in a statement. – (Reuters)