ALLIANZ POSTS $2.52B Q3 NET LOSS, $933M 1st NINE MONTHS

Germany’s Allianz announced that it would report a net loss for the third quarter of 2.5 billion Euros ($2.525 billion) and a net loss of 924 million Euros ($933 million) for the first nine months of 2002 due to a number of exceptional events. Allianz results were heavily affected by losses at its subsidiary Dresdner Bank, which contributed 972 million Euros ($981 million) to its parent’s losses. Even Allianz admits Dresdner will not begin earning any money until next year at the earliest. During the third quarter Allianz also increased reserves at its Fireman’s Fund subsidiary by $750 million, mainly due to higher provisions for asbestos related liabilities, and set aside 664 million Euros ($670 million) to handle flood losses in Germany and Eastern Europe. Writedowns in the value of investments in what Allianz characterized as “the extremely weak capital markets” amounted to 1.9 billion Euros ($1.92 billion) during the period. The huge losses should be viewed in light of the overall weakness of the German economy which continues to experience high unemployment, falling investment values and company failures. These in turn have caused banks, insurers and other financial providers to make higher porovisions for bad loans and has decreased the overall value of their investment portfolios. The poor quarterly performance obscures the real growth in the company’s insurance operations. Excluding the 3.5 billion Euros Allianz booked earlier in the year from the unwinding of its investments with Munich Re, P/C net grew from 2.276 billion Euros ($2.3 billion) for the first 9 months of 2001 to 2.886 billion Euros ($2.91 billion) this year. Overall, P/C premium income for the first 9 months rose 4.6 percent to 33.6 billion Euros ($34 billion). Allianz remains the world’s largest P/C insurer measured by sales.