European insurer Allianz SE (AZ) Friday reported higher net income for the second quarter, as the year-ago results were affected by a loss from discontinued operations. However, net income from continuing operations for the latest period declined 16% from last year, owing to poor show by the property and casualty unit.
Quarterly net income grew over 21% to 1.869 billion euros from 1.542 billion euros in the second quarter of 2008. Earnings per share advanced to 4.13 euros from 3.39 euros.
However, net income from continuing operations declined to 1.869 billion euros or 4.13 euros per share from 2.225 billion euros or 4.90 euros per share in the previous year.
The company reported a net loss from discontinuing operations of 683 million euros in the previous year, whereas no income or loss from discontinuing operations was reported this year as the Dresdner Bank sale had been completed.
Total quarterly revenues grew to 22.172 billion euros from 21.521 billion euros generated in the second quarter of 2008. The company noted that foreign currency exchange effects increased total revenues by 223 million euros.
Operating profit for the quarter was 1.786 billion euros, down 33% from 2.659 billion euros reported last year.
In the Property and Casualty insurance business, gross premiums written dropped to 9.5 billion euros from 9.8 billion euros in the same quarter of last year. Operating profit slipped 47% to 895 million euros from 1.681 billion euros, owing to lower investment income and underwriting result.
The company noted that the latest quarter was impacted by recession, high number of small weather related claims, large claims in France and singular events such as the Abruzzo earthquake in Italy.
The combined ratio was 98.9%, compared to 93.5% last year. Helmut Perlet, CFO of Allianz, said the company expects an improvement of its combined ratio in the second half of the year. ''We are still seeing new business and renewal rates rising since last quarter. Also, we expect to benefit from further underwriting actions initiated in selected markets," he added.
In Life and Health insurance business, second-quarter statutory premium income grew 10% to 11.8 billion euros from 10.7 billion euros in the previous year. The company noted that top-line growth continues to stem from greater demand for investment products with guarantees and/ or investment participation. Operating profit rose 41% to 990 million euros from last year, mainly due to a strong investment result. Allianz said in the segment, Switzerland and Germany recorded double-digit revenue growth compared to the same period of last year.
In Financial Services, quarterly revenues remained flat with last year at 0.9 billion euros, while operating profit dropped 49% to 146 million euros owing mainly to set-up costs of 84 million euros for Allianz Bank in Germany.
The company said its capital position continues to be strong with a solvency ratio of 159% at June 30, 2009. Shareholders' equity was 34.5 billion euros as of June 30, 2009, compared to 33.0 billion euros at the end of the first quarter of 2009.
For the first quarter, the company reported a plunge in profit, hurt mainly by huge losses from discontinued operations related to the sale of Dresdner Bank. First quarter net income declined 97.5% to 29 million euros from 1.15 billion euros in the year-earlier quarter. On a per share basis, earnings were 0.04 euros, down from 2.48 euros in the comparable quarter last year. Total revenues for the quarter increased 2.8% to 27.7 billion euros from 27 billion euros in the year-earlier quarter.
For the first half of the year, Allianz said net income decreased to 1.898 billion euros from 2.690 billion euros, while on a per share basis, the decline was to 4.17 euros from 5.85 euros. Revenues improved to 49.899 billion euros from 48.5 billion euros.
Commenting on the results, Michael Diekmann, CEO of Allianz, said, "Overall, we achieved very good quarterly results. Allianz is prepared for what we perceive as 'the new normal', an ongoing challenging market environment with structurally lower returns. We remain strongly capitalized and our low risk profile allows us to withstand potential market shocks. In addition, we are well diversified from both a regional and business unit point of view, and are thus able to benefit from market upturn."
Among others in the industry, French insurer AXA Group (AXA) said recently that profit declined for the first-half, as revenues dropped, reflecting the impact of adverse market environment and lower management fees. For the first six months, the company's net income dipped to 1.32 billion euros from 2.16 billion euros in the year-ago period. On a per-share basis, net income plummeted 53% to 0.50 euros from 1.07 euros in the prior year. Half-yearly revenues decreased 1.8% to 48.4 billion euros from 49.32 billion euros.
Looking ahead the company said that despite the recovery seen in the first quarter, it expects the global economy to shrink by around 2.5 % in 2009 and industrial country gross domestic product to decrease by as much as 3.5 %.
AZ closed Thursday's regular trade at $10.76, up from the previous close of $10.98, on 1 million shares.
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