UPDATE: Allianz Profit Down On Greek Debt Hit; Keeps Goal
05 August 2011 - 5:43PM
Dow Jones News
Allianz SE (ALV.XE), Europe's largest primary insurer by market
capitalization, Friday said second-quarter net profit fell 8.2%,
after the write-down of the value of its entire Greek sovereign
debt portfolio to market value was only partially offset by
moderate costs for severe-weather damage.
Allianz also confirmed that it was on track for its full-year
target of an operating profit in a EUR7.5 billion to EUR8.5 billion
range.
Net profit fell to EUR1.00 billion from EUR1.09 billion a year
earlier, below the average estimate of EUR1.23 billion in a Dow
Jones Newswires poll.
At 0708 GMT, shortly after the open, Allianz shares were on
EUR1.92, or 2.3%, at EUR80.91, outperforming the German DAX
blue-chip index, which was down 3.5%
Impairing the Greek sovereign debt portfolio shaved off EUR326
million of the quarterly net profit, Allianz said. Its hit on
operating profit was EUR76 million, entirely in the life/health
insurance segment.
It said in line with IFRS impairment rules for
available-for-sale securities, its Greek government bond portfolio,
which had a volume of around EUR1.3 billion at the end of 2010, was
impaired and consequently written down by EUR644 million gross, or
by around 50%, to the current market value as at June 30.
After the impairments, Allianz said it still has EUR6 million in
gross unrealized losses in its gross exposure to Greek sovereign
debt. That figure is EUR726 million for gross sovereign debt in
Greece, Spain, Ireland and Portugal combined. The net figure, after
policyholder participation and taxes, for unrealized losses on
sovereign debt in those four countries is EUR236 million.
Operating profit, which some investors consider better reflects
a company's actual business performance, was unchanged at EUR2.30
billion, beating the forecast for EUR2.14 billion.
Total revenues--which include insurance premiums, operating
revenues in the asset management segment, and revenues from the
corporate and the small banking segment--fell 3.2% to EUR24.6
billion, below the forecast decline to EUR24.9 billion.
Equinet analyst Philipp Haessler said the figures were better
than expected, pointing to the operating profit and the confirmed
full-year operating profit guidance, though he noted that the net
impact from writing down Greek sovereign debt was higher than
forecast.
The company currently has a market value of around EUR38
billion.
-By Ulrike Dauer, Dow Jones Newswires; +49 69 29725 500;
ulrike.dauer@dowjones.com