A calm hurricane season helped German insurer Allianz more than double net profit in the third quarter, prompting it to raise its full-year targets for the second time in just three months.
Allianz said on Friday strong earnings from property and casualty insurance, its main money-spinner, rose to 1.089 billion euros ($1.39 billion) from 506 million a year ago, bolstering a group result that beat analysts' expectations.
A calm 2006 hurricane season compared with a disastrous 2005 and a drop in automobile accident claims in its home market helped earnings at Germany's largest insurance group.
"These figures are very, very good," said J.P. Morgan analyst Michael Huttner. "Allianz obviously benefited from the lack of hurricanes (in the US), but it has also cleaned up its industrial risks business in Germany too. It doesn't seem to be competing so aggressively on price as it previously did."
Allianz's Chief Financial Officer Helmut Perlet told a conference call that he did not expect net profit to exceed 6.5 billion euros this year but added that the company wanted to raise earnings by at least 10 percent in 2007. He also said Allianz wanted to raise its dividend payout ratio to around 40 percent in the future, from 16 percent last year.
The results also showed that Allianz's life and health business was battling strong headwinds as expected in the third quarter. Net profit in life and health fell to 288 million euros from 330 million a year ago. "The life and health division suffered from a premium collapse in Italy and the United States," LRP analyst Robert Mazzuoli said in a note. "However, thanks to efficient management in the division, there was little impact on the result."
DRESDNER PROFIT UP: In a presentation following the release of third-quarter results late on Thursday, Allianz also said its Dresdner Bank arm made a net profit of 230 million euros in the third quarter, against 113 million a year earlier.
It added that it expected to book up to 350 million euros ($446.7 million) in restructuring costs in the fourth quarter for the problem banking unit, which has weighed on profits. Allianz late on Thursday raised its full-year profit outlook to more than 6 billion euros, up from a previous forecast of 5.5 billion to 6 billion euros.
Its third-quarter group net income doubled to 1.6 billion euros, well above the 1.2 billion average forecast in a Reuters poll of analysts and up from to 794 million a year earlier. Allianz said its bottom line was boosted by around 300 million euros from the sale of British healthcare provider Four Seasons Healthcare.
Allianz shares have risen by more than 17 percent in the last four months, outpacing a 13 percent rise in the DJ Stoxx European insurance index, as investors factored in the fading threat from this year's hurricane season and a potential boost in earnings from Allianz's Europe-wide restructuring.
The company is cutting some 7,500 jobs at its banking and insurance operations in Germany, prompting protests from employees and politicians against the backdrop of the group's record profits. But despite its recent share rally, many analysts see Allianz as inexpensive relative to other insurers. Bear Stearns this week estimated that Allianz shares trade at about 1.3 times book value, compared with 1.5 times for the sector.
Comments
Comments are closed.