German insurer Allianz expects its net profit to rise by about a third over the next three years as it integrates Italian unit RAS to boost growth in its second-largest European market.
Allianz plans to fully take over RAS, of which it owns just over 76 percent now, by mid-2006. The merger is part of a wider restructuring of Allianz that will allow it to streamline operations across Europe and open the door to cost cuts.
In a presentation on its Web site on Thursday, Allianz said its merger plans assumed a net profit of 4.92 billion euros ($5.9 billion) for 2006, of 5.37 billion euros for 2007, and of 5.91 billion euros for 2008.
It is also projecting a dividend of 2 euros per share on 2005 results, up from the 1.75 euros it paid for 2004. It is assuming that its dividend will rise by 10 percent each year from 2006 to 2008.
Allianz said it expected its combined ratio, a key measure of profitability in its non-life business, to improve this year from last year's 92.9 percent, despite some 900 million euros in damages suffered from US hurricanes and other disasters. Over the next three years this ratio -- the lower, the better -- was projected roughly stable at around 93 percent.
"Overall the results projections are slightly above expectations, based mainly on the upbeat outlook in the non-life insurance business," said WestLB analyst Andreas Schaefer.
Earlier on Thursday, Allianz published an invitation to an extraordinary shareholders meeting on February 8, 2006 as part of its buyout of RAS, which it has controlled since the mid-1980s.
An accompanying report contained the earnings outlook, which is based on projections by the company's accountants. Allianz said the projections assumed its current level of ownership of RAS at 76.3 percent -- implying that actual profit levels could be higher once Allianz has fully taken over RAS.
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