Allianz 2004 Profits up 16.4% to $2.93 Billion

Germany’s Allianz reported net 2004 profits of 2.2 billion euros ($2.93 billion), despite last year’s spate of natural catastrophes and continued problems at its Dresdner Bank subsidiary. The group’s net rose 16.4 percent above the nearly 1.9 billion euros ($2.53 billion) it earned in 2003.

Rating agencies Standard & Poor’s and A.M. Best both commented that the results were in line with their expectations (See following article).

Operating profit rose by 2.8 billion euros ($3.73 billion) to 6.9 billion euros ($9.19 billion), a 68.6 percent increase compared to 2003. The Group’s total revenues increased by 3.1 billion euros ($4.13 billion) to 96.9 billion euros ($129 billion), a 3.3 percent gain. Allianz noted that “adjusted for consolidation and currency effects the increase was 6.0 percent.”

“Allianz has regained its status as a company with a solid capital base and sound earnings,” commented CEO Michael Diekmann, “We now wish to set the bar even higher: In 2005 we want to see a further increase in group earnings.” All four business segments contributed to the strong performance. The Allianz Group achieved its goal of 15 percent return on risk adjusted capital.

While Dresdner remains a problem – it posted a 218 million euro ($290 million) fourth quarter loss, exceeding forecasts, – it has made significant progress. Following some radical restructuring and cost cutting, Allianz said Dresdner “successfully achieved earnings after taxes and before goodwill amortization of 449 million euros [$598 million].” Net income after the restructuring costs was 142 million euros ($189 million), compared with a loss of 1.305 billion euros ($1.738 billion) in 2003.

Other financial figures included the following:
— Earnings before taxes and minority interests were 5.2 billion euros ($6.927 billion), compared to 2.9 billion euros ($3.86 billion) in 2003.
— The balance of net capital gains, including non-operating trading income, and impairments on investments decreased by 1.6 billion euros ($2.13 billion) to 1.3 billion euros ($1.73 billion) in 2004.
— Taxes and minority interests rose significantly: the tax charge was 1.7 billion euros $2.26 billion) – 2003 = 1 billion euros ($1.332 billion); while minority interests increased to 1.3 billion euros ($1.73 billion) from 800 million ($1.065 billion) in 2003.
— Shareholders’ equity increased by 2.2 billion euros ($2.93 billion) to 30.8 billion euros ($41 billion).

Allianz combined ratio in its core P/C business decreased by 4.1 percentage points to 92.9 percent, “due,” said the bulletin, “to a tightly disciplined price and underwriting policy and strict cost control.” P/C premium income rose by 0.8 percent to 43.8 billion euros ($58.35 billion), “reflecting internal growth of 2.1 percent (adjusted for consolidation and currency effects).”

P/C operating profit was up 63.3 percent, from 2.4 billion euros ($3.2 billion) to 4 billion euros ($5.328 billion). “However,” the company noted, “net income fell from 4.7 billion euros [$6.26 billion] to 3.3 billion euros [$4.4 billion] due to non-operating items as, for example, less capital gains were realized compared with 2003. As a result significantly less profit from the disposal of investments was realized compared with the previous year.”

“In Property & Casualty, the positive trend, particularly the substantially lower combined ratio, shows we are definitely on track in concentrating on operating profitability and tight risk management,” stated Helmut Perlet, Allianz AG board member responsible for controlling and accounting. “Let’s not forget that 2004 was a year of major natural catastrophes for the insurance industry, with large-scale damages reaching record levels.”

The full report, comments and analysts’ presentations are available on the Allianz Website at: www.allianz.com.

Topics Trends Profit Loss Property Casualty Allianz