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Allianz insurance issues profit warning, with focus on banking unit
2008-03-20
The German insurance group Allianz issued a profit warning for this year and next on Thursday. Chief executive Michael Diekmann said that meeting targets would become "much more challenging" and that further writedowns in the banking division were likely. "I need to place a special caveat on our outlook for the banking sector," Diekmann said in extracts from the German insurer's annual report. "In view of the current uncertainties and potential further mark-downs it is not possible to give a reliable forecast of the banking segment's contribution to the overall results." As a result, boosting operating profit by an average of 10 percent per year from 2007 to 2009 had become "much more challenging," he said. Financial markets in general would "not return to calmer waters until uncertainty is dispelled about the nature of the economic risks originating from the US housing crisis," Allianz said. It nonetheless forecast that the economy would pick up in the second half of 2008 and give the banking sector a boost. In 2007, net profit at the group's Dresdner Bank unit fell to 366 million euros (570 million dollars) and the bank had to take 1.5 billion euros in writedowns to cover exposure to losses stemming from the collapse of the US market for high-risk, or subprime, mortgages. Allianz said last week it would separate the bank's investment and retail activities, which could lead to a merger or dismantling of the bank. Shares in Allianz gained 0.15 percent to 161.88 euros in late morning trades on the Frankfurt stock exchange, while the DAX index of leading shares was 0.19 percent lower overall.
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