German insurance giant Allianz expressed confidence on Friday it would meet its full-year targets despite falling second-quarter profits, largely due to the costs of natural disasters and disposing of its South Korean operations.
Net profits in April through June slumped by 46 percent compared with the second quarter last year to 1.1 billion euros, driven down by a one-off 352-million-euro charge for ending its activities in South Korea as well as the costs of claims due to natural disasters and bad weather.
Ongoing turbulence in the global economy saw revenues slide by 2.5 percent to 29.4 billion euros and operating profit dropped 17.2 percent to 2.4 billion euros. "The second quarter in particular was shaped by markedly higher damages from heavy floods and storms in Europe this spring," said chief executive Oliver Baete in a statement.
In its property and casualty division, natural disasters weighed on underlying or operating profit during the first half, which fell by 16.2 percent to 2.5 billion euros compared with the same period a year earlier.
In its life and health division, first half profitability was stable at 1.9 billion euros despite tough market conditions. "The good earnings growth in Life and Health insurance business could not fully offset the decline in the Property and Casualty segment," he said.
Like banks and insurers, Allianz is feeling the pinch from low interest rates, which make it difficult for the group to offer attractive returns on investments to clients.
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