FRANKFURT (AFP) - German insurance giant Allianz upgraded its full-year targets after better-than-expected third-quarter earnings, particularly at its Dresdner Bank unit, helped cushion the costs of damage claims connected with this year's deadly spate of hurricanes in the United States.
Allianz said Friday in its interim earnings report that group net profit fell by eight percent to 539 million euros (695 million dollars) in the period from July to September.
"The hurricanes in the US had a negative effect during the third quarter," Allianz explained.
Nevertheless, the decline was not as steep as analysts had been expecting in the wake of deadly hurricanes such as Charley, Frances, Ivan and Jeanne.
And taking the first nine months of the year as a whole, Allianz's bottom-line net profit jumped by 150 percent to 1.828 billion euros.
The better-than-expected numbers were largely attributable to the continued strong turnaround at what was previously Allianz's problem child, banking unit Dresdner Bank.
The bank, Germany's second-biggest in terms of total net assets, turned in net profit of 129 million euros in the third quarter, compared with a loss of 25 million euros a year earlier.
And on a nine-month basis, Dresdner Bank swung to net profit of 360 million euros in the first nine months, compared with a loss of 411 million euros a year earlier.
Indeed for the year as a whole, Allianz said it was pencilling in a "balanced year-end result after restructuring expenses for Dresdner Bank."
Until now, the unit had been expected to break even only before substantial restructuring charges.
Nevertheless, the bank could book a loss again in the fourth quarter as a result of losses on the sale of parts of its loan portfolio, Allianz's head of controlling Helmut Perlet cautioned in a telephone conference.
But next year, Dresdner Bank was "absolutely on-track" to meeting its target to achieve 2005 earnings that would cover its capital costs, which currently amount to 650-700 million euros, Perlet said.
Among its other key divisions, Allianz said it achieved "strong internal growth" of 8.1 percent in its life and health insurance business and growth of 17 percent in its asset management segment.
And the property and casualty insurance division also registered "disciplined growth" of 2.7 percent when adjusted for exchange rate fluctations, Allianz boasted.
All in all, total group revenues rose by 7.6 percent to 23.2 billion euros in the third quarter, bringing nine-month revenues up by 2.3 percent to 72.6 billion euros.
And the so-called combined ratio, a key profitability yardstick which measures the ratio of claims and expenses to net premiums earned, improved by 3.7 percentage points to 93.2 percent at the nine-month stage.
The performance boded well for the whole year, Allianz said.
"For the whole of 2004, we expect to exceed our goal in our insurance business of internal growth in total premium income of four percent," Allianz said.
Investors were cheered by the results and Allianz shares were among the biggest gainers on the Frankfurt stock exchange on Friday, showing a gain of 2.30 euros or 2.53 percent at 93.19 euros in early afternoon trading.
11/12/2004 - 13:27 GMT - AFP