Europe's largest insurer Allianz dispelled investor worries of big subprime write-downs on Thursday by revealing it had hit its 2007 profit targets despite the credit turmoil in the fourth quarter.
Allianz said it reached its full-year net profit goal of 8 billion euros ($11.72 billion), up about 14 percent from the previous year, despite a 900 million euro write-down on complex financial instruments in its banking business during the fourth quarter.
The write-downs pushed Dresdner Bank to a quarterly operating loss of 450 million euros but the unit still managed to achieve operating profit of 750 million euros in the full year, Allianz said in a statement released nearly one month ahead of schedule. "When you look at what is happening with other banks, people had expected the worst," said WestLB analyst Andreas Schaefer.
"And although it is a big loss at the bank (Dresdner) it is not something which is catastrophic. This will calm down investors," he added. Allianz shares widened already strong gains on the news to trade up more than 12 percent at 124.70 euros by 1337 GMT, outpacing a 7.5 percent gain among European peers. The insurer said it expected to deliver operating profit of more than 10.8 billion euros for 2007, just shy of its 11 billion euro target.
Full-year operating profit in Allianz's main business of property and casualty insurance was expected to be more than 6.2 billion euros and nearly 3 billion euros in its life and health insurance business, the statement said.