"The key is to boost our earning potential"
In the first half of 2004, Allianz was able to maintain its upward earning trend in all segments and further improve its combined ratio to 94.3 percent. AllianzGroup.com News spoke with CEO Michael Diekmann and CFO Helmut Perlet about the results and Allianz's goals.
AllianzGroup.com News: Are you satisfied with the results for the first six months of 2004?
Diekmann: We have reason to be satisfied. The positive results very clearly demonstrate that our '3+One' program is bearing fruit. We were able to improve the quality of our earnings in all segments and our upward earnings trend is sustainable.
Diekmann: "We are concentrating on our earnings"
? What are the most important trends?
Perlet: We have significantly improved our risk-return profile. This means that we are achieving controlled growth - the organic growth rate is just 2.4 percent - but earnings are growing at a faster rate.
We were able to increase our income before tax, minorities and goodwill amortization to 3.3 billion euros compared to 0.5 billion euros in the first half of 2003.
The operating profit increased by 43.9 percent to 3.1 billion euros, and net income improved by more than 1.1 billion to 1.3 billion euros.
We were able to increase our income before tax, minorities and goodwill amortization to 3.3 billion euros compared to 0.5 billion euros in the first half of 2003.
The operating profit increased by 43.9 percent to 3.1 billion euros, and net income improved by more than 1.1 billion to 1.3 billion euros.
? Which development are you most pleased with?
Perlet: We are particularly pleased with the property and casualty business, where our group-wide risk management is paying off.
We improved the overall combined ratio to 94.3 percent, marking a further reduction of 2.7 percentage points since the previous year. All major units – including for the first time AGF – had a combined ratio below 100 percent in the second quarter. This means that our premium income exceeded our expenditure to cover costs and claims and we are making money again in the insurance business.
We improved the overall combined ratio to 94.3 percent, marking a further reduction of 2.7 percentage points since the previous year. All major units – including for the first time AGF – had a combined ratio below 100 percent in the second quarter. This means that our premium income exceeded our expenditure to cover costs and claims and we are making money again in the insurance business.
? Aren’t you worried about the declining sales in some areas?
Diekmann: No, we’re not, because profitability is more important than volume. In our underwriting policy, we have clear guidelines that we apply consistently around the world. Occasionally, this means that we cannot clinch a deal, but that doesn’t bother us. We are concentrating on our earnings.
Perlet: "We have significantly improved our risk-return profile"
? How do things look in life and health insurance?
Perlet: Results are significantly better than last year. But we are still not completely satisfied because growth did not meet our expectations. We cannot be content - the market conditions are simply too good. In Germany we expect new business to pick up substantially as a result of the new Retirement Income Act.
Diekmann: Our goal is clear: In the next year, we want the life insurance business to contribute more than 1,5 billion euros to our operating result.
Diekmann: Our goal is clear: In the next year, we want the life insurance business to contribute more than 1,5 billion euros to our operating result.
? Dresdner Bank has now been part of the Allianz Group for three years. Could you comment on its results?
Diekmann: We are also satisfied with Dresdner Bank. The turnaround is on track and the quarterly result is positive for the second time. From an operating point of view, the last quarter was the most successful since the acquisition.
Perlet: We are especially pleased to note that the bank has established a stable and sustainable income trend. We are sticking to our goals: This year Dresdner Bank will have a balanced annual result before restructuring expenses, and in 2005 the bank will earn its capital costs.
Perlet: We are especially pleased to note that the bank has established a stable and sustainable income trend. We are sticking to our goals: This year Dresdner Bank will have a balanced annual result before restructuring expenses, and in 2005 the bank will earn its capital costs.
? So you still think that the takeover of the bank was the right move?
Diekmann: Absolutely! The close link between banking and insurance is the right way to go. People in Germany need a one-stop shop for full consultation and advice, particularly in the complex but vitally important area of private retirement planning.
And the results of this cooperation prove us right: Sales of insurance products over the bank counter increased by 25 percent in the first half of the year.
Our agents stepped up sales of investment funds. Net inflows through Allianz sales agencies into investment funds totaled more than 350 million euros during the first half of the year: an increase of more than 27 percent compared to the previous year.
And the results of this cooperation prove us right: Sales of insurance products over the bank counter increased by 25 percent in the first half of the year.
Our agents stepped up sales of investment funds. Net inflows through Allianz sales agencies into investment funds totaled more than 350 million euros during the first half of the year: an increase of more than 27 percent compared to the previous year.
? How has asset management, one of the company’s core segments, performed?
Perlet: We have improved our results despite the strong euro. We increased total assets under management by seven percent and operating income by more than 22 percent. We are also on track for profitable growth – as envisaged under the '3+One' program. We cut the cost-income ratio a further 1.8 percentage points to 67.2 percent.
? What are your expectations and goals for the second half of the year and beyond?
Diekmann: 2004 will be marked by our return to former strength. We are well on the way to achieving our targets. We are striving to achieve 15 percent return on equity for the Group.
Please remember: We can't just multiply the first-half results by two. There are still uncertainties such as natural disasters, which have hardly affected us at all so far, and the volatility in interest rates and capital markets.
In general we can say: Now is not the time for the kind of high-flying visions that do not earn us any money. The key is to boost our earning potential. That's what we're concentrating on.
Please remember: We can't just multiply the first-half results by two. There are still uncertainties such as natural disasters, which have hardly affected us at all so far, and the volatility in interest rates and capital markets.
In general we can say: Now is not the time for the kind of high-flying visions that do not earn us any money. The key is to boost our earning potential. That's what we're concentrating on.
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