Allianz dragged down by Dresdner - ResearchInChina

Date:2008-04-30liaoyan  Text Size:

ALLIANZ SE, Europe's biggest insurer, said yesterday that its first-quarter profit fell 66 percent on writedowns at the Dresdner Bank unit tied to the credit-market collapse.

Net income declined to about 1.1 billion euros (US$1.7 billion) from 3.2 billion euros a year earlier, the Munich-based insurer said in a statement.

Last year's earnings were swelled by 2 billion euros from selling stakes in companies. Allianz dropped as much as 2.2 percent in Frankfurt trading.

Allianz's earnings have been eroded by Dresdner since its 23.5-billion-euro purchase in 2001. The Frankfurt-based banking division marked down almost 900 million euros on credit securities in the first quarter related to the US subprime mortgage market meltdown, adding to the 1.3 billion euros it wrote down last year.

"It's time for them to get rid of Dresdner," said Juergen Meyer, who helps oversee 1.2 billion euros at SEB Asset Management in Frankfurt, including Allianz shares. "This shows once more that Dresdner Bank is Allianz's Chrysler," he said, referring to the German unit that Daimler AG shed last year, severing a nine-year tie that cut the US auto maker's market value by US$12.6 billion.

Earnings missed the 1.32-billion-euro median estimate of 12 analysts surveyed by Bloomberg News. The banking division, mainly consisting of Dresdner, is set to report a loss of 470 million euros, reversing a 625 million-euro profit, analysts estimate.

Reaching the 2009 target of 10 percent operating-profit growth is "still feasible, even though this will become harder, the longer the financial crisis will last," Allianz Chief Financial Officer Helmut Perlet said in the statement. The insurer will report final first-quarter figures on May 9.

Allianz fell 0.9 percent to 129.65 euros. The company has lost 12 percent this year, valuing it at 58.6 billion euros. The drop compares with a 10-percent decline in the 28-member Bloomberg Europe 500 Insurance Index.

First-quarter operating profit fell to 1.8 billion euros from 2.9 billion euros a year ago, Allianz said. That missed analysts' 1.89-billion-euro median estimate. It previously said it expected as much as 400 million euros in further writedowns in the quarter, based on market prices at the end of January.


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