Allianz Group reported a 65 percent decline in net income in the first quarter of this year due mainly to markdowns related to asset-backed securities stemming from the credit crisis.
The company reported a net income of EUR1.1 billion (U.S. $1.7 billion at current exchange rate) for the quarter compared to EUR3.2 billion ($5 billion) in 2007.
For its property-casualty business, Allianz reported that gross written premiums dropped 3 percent, from EUR14.1 ($21.8 billion) in the first quarter of 2007 to EUR13.7 ($21.2 billion) for the first quarter of 2008.
Operating profit improved, though, to EUR1.5 ($2.3 billion) for the quarter compared to EUR1.3 ($2 billion) in 2007. The combined ratio also improved, dropping from 96.8 in the first quarter of 2007 to 94.8 in the first quarter of 2008.
Helmut Perlet, chief financial officer of Allianz SE, said: "We have again achieved superior results in soft p-c markets through selective underwriting, pricing discipline and improved efficiency. Therefore, we are in a position for strong growth when the cycle turns in our mature markets."
The company was hurt by its banking segment, Dresdner Bank, which posted a 64.5 percent decline in operating revenues driven mainly by EUR845 million ($1.3 billion) in markdowns on its asset-backed securities trading book.
Mr. Perlet said, "Although we are seeing somewhat lesser tension in U.S. residential mortgage prices as well as cautiously rebounding equity markets, it is hard to predict when the stormy weather will end. While 2008 will remain a challenging year, the longer this environment persists, the harder it will also be to achieve our medium-term outlook."
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