Germany's biggest insurer, Allianz, reported a 30 percent jump in first-quarter net profit thanks to a boom in life insurance and pensions and a solid performance across the group. Allianz said on Wednesday it made a net profit of more than 1.1 billion euros ($1.4 billion) in the first quarter of 2005, beating the 954 million average estimate in a Reuters poll of 12 analysts.
The preliminary results, announced at Allianz's annual general meeting, pleased investors. The company's stock pared early gains and was trading up 0.5 percent to 94.73 euros at 1311 GMT, stronger than the DAX index of Germany's 30 biggest companies.
The profit jump was driven by a 10 percent leap in sales at its life and health and fund management businesses, fuelled by demand for private pensions. "The results are fantastic," said Thomas Kuerfgen, head of equity fund management at SEB Invest, an Allianz shareholder.
"Net income is very good," he said. "The combined ratio is very good. At the moment, I don't see anything to find fault with. Michael Diekmann (Chief Executive) seems to be doing a good job."
"On first glance they are very, very good figures," said Dieter Ewald, a fund manager with Frankfurt Trust, an Allianz investor. "That goes for the insurance as well as the positive predictions for the future for Dresdner. It is a positive picture."
Analysts also gave the news an enthusiastic reception.
"These are enormously strong results," said Lucio Di Geronimo, an analyst with HVB Group. "The net profit is higher than expected. But much more importantly, the operating business is going well."
Much of the profit swing was due to a scrapping of tax breaks at the end of last year in Allianz's most important market, Germany, which led to a rush to buy life insurance. The premiums on many of those policies are filtering through now.
Speaking at the annual general meeting, Diekmann told shareholders that state pension schemes were at breaking point. "The growth potential in our main markets is huge," he said.
But Allianz's other businesses also thrived. In its property and casualty insurance arm, the group cut the combined ratio - a measure of how much of premiums are eaten by claims and costs - by more than 3 percentage points to 92 percent.
Its Dresdner Bank, a long-time drag on earnings, appeared finally to be putting a troubled past behind it.
Allianz said the Frankfurt-based bank had contributed 230 million euros to profit and was well on the way to hitting its goal for the year of earning its cost of capital - equivalent to a net profit of 700 million euros.
"The bank has also done well but I would like to know if like their rivals it is dependent on trading income," said Konrad Becker, an analyst with Merck Finck. "I suspect that cost cutting and lower provisions for bad debts will have a lot to do with it.
Allianz, once a powerhouse of financial stability with a share price more than four times that of today, has been dragged down in recent years by the 24 billion euro Dresdner take-over.
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