ALIZF Allianz Ag Muenchen Namen (PK)

Allianz SE (ALV.XE), Europe's largest primary insurer by market capitalization, Monday said third-quarter net profit more than doubled on lower asset write-downs, and as improvements in life/health insurance and financial services more than offset lower contributions from property/casualty insurance.

The figures reflect Allianz's improved earnings power in its core operations following the sale of loss-making Dresdner Bank.

Allianz shares were among the top gainers in the German blue-chip index as most of the earnings figures topped consensus forecasts.

At 1230 GMT, the stock was up EUR4.64, or 5.9%, at EUR83.90, outperforming the Stoxx Europe 600 insurance index, which was up 2.8%.

UniCredit analyst Andreas Weese said net profit and operating profit were ahead of consensus following a better-than-forecast contribution from life/health insurance and financial services, while the contribution from property/casualty insurance was in line. Weese, who rates the share at buy, described the capital position good.

JPMorgan analyst Michael Huttner said the company's "margins were OK" and said the figures showed signs of "a little bit of growth" in life/health insurance and asset management. He said that the company's statement that it is not in need of capital and that no acquisitions are planned do give the share a lift compared with competitors French Axa SA (AXA) and Zurich Financial Services AG (ZURN.VX).

"The capital statement helps - though a capital hike wasn't expected - and there's no deal risk," Huttner said.

Earlier Monday, Axa said it planned to launch a EUR2 billion rights issue to swell its war chest for potential acquisitions, including the possible purchase of AXA Asia Pacific Holdings Ltd.'s (AXA.AU) Asian assets.

Merck Finck analyst Konrad Becker also said the figures topped his forecast, though he would have liked to see some full-year guidance.

Still, the company refrained from giving concrete earnings targets for 2009 or beyond.

Chief Financial Officer Oliver Baete, who took up his post on Sept. 1, said a full year earnings forecast for 2009 or for 2010 wouldn't be reliable in the current, still highly volatile, market environment.

But, Allianz is well capitalized and prepared for delivering solid earnings even in the "challenging market environment with structurally lower returns" ahead, due to its high-quality investment portfolio and conservative risk management approach, Baete said.

Allianz, which accrued a dividend equivalent of EUR1.4 billion for the first nine months, plans to stick to a dividend payout ratio of 40% of net profit, Baete said.

Third-quarter net profit rose to EUR1.32 billion from EUR545 million in the year-earlier quarter, roughly in line with the EUR1.33 billion average forecast in a Dow Jones Newswires poll of 15 analysts.

The year-earlier figure was restated to reflect continuing operations only, after Allianz sold Dresdner Bank to Commerzbank AG (CBK.XE) for around EUR5.1 billion in the first quarter. A year ago, Allianz made a EUR2.02 billion loss when it still owned Dresdner Bank.

Operating profit rose 23% to EUR1.93 billion from EUR1.56 billion, beating a forecast of EUR1.84 billion. Life/health insurance and financial services benefited from improvements in capital markets, the gradual economic recovery and the narrowing of credit spreads - which supported good-margin revenue growth from investment products with underlying guarantees.

Meanwhile, property/casualty contributed 18% less to operating profit than in the year-ago quarter, which the company attributed to negative effects from the recession on business in Germany, France, Italy and credit insurance, and to an unusually high number of weather-related claims in those countries.

Higher claims costs pushed the combined ratio up to 96.9% from 96.5% a year ago, meaning Allianz spent 96.9 cents on claims and other costs for each euro of premium income. For the full year, Allianz targets a combined ratio of between 97% and 98%. JPMorgan's Huttner said a combined ratio better than 97.5% could be difficult to reach in 2009, as it would require a fourth quarter figure of some 95%.

Allianz said property/casualty business is working on improving productivity, that first signs of improvement will be seen in 2010, but the full impact will only be noticeable over the next three years.

The investment result, and notably lower net write-downs on investments, made a substantially better contribution to earnings than a year ago. In the quarter, net write-downs on investments were EUR46 million compared with EUR921 million in the third quarter of 2008. Net realized disposal gains were EUR322 million compared with EUR517 million a year ago.

-By Ulrike Dauer, Dow Jones Newswires; +49 69 29725 500; ulrike.dauer@dowjones.com

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