Allianz achieves strong third quarter results

Allianz Group today announced strong results for the third quarter and confirmed its operating profit outlook for 2010. Revenues in the third quarter grew by 11.4 percent to 24.5 billion euros. In the same period of 2009, this figure was 22.0 billion euros. Internal growth1 of revenues amounted to 6.5 percent. Quarterly operating profit grew by 2.3 percent to 2.1 billion euros, from 2.0 billion euros in the third quarter of last year. Quarterly net income of 1.3 billion euros was impacted by a higher tax expense. Compared to 1.4 billion euros in third quarter 2009, net income decreased by 8.8 percent.

Michael Diekmann, CEO of Allianz SE: "We increased our nine-month operating profit by 19.8 percent to 6.1 billion euros. With this strong performance, I expect our full-year operating profit to trend towards the upper end of our target range of around 7.2 billion euros plus or minus 500 million euros. Also, for the first time since 2005 we are likely to end the year with total revenues above 100 billion euros."

Allianz Group's capital position remains solid with a solvency ratio of 168 percent as of September 30, 2010, following 170 percent at the end of second quarter 2010. Shareholders' equity increased by 2.5 percent to 44.9 billion euros as of September 30, 2010, from 43.8 billion euros at the end of June 2010.

Michael Diekmann: "With this strong performance, I expect our full-year operating profit to trend towards the upper end of our target range"

In the Property and Casualty business, gross premiums written increased by 3.6 percent to 10.6 billion euros, compared to 10.2 billion euros in third quarter 2009. Adjusted for currency effects, premiums decreased by 1.1 percent. Operating profit grew by 8.8 percent to 1.1 billion euros, compared to 1.0 billion euros in third quarter 2009. As in the second quarter of 2010, an improved underwriting result and higher operating investment income contributed to the operating profit growth.

The combined ratio amounted to 97.1 percent, compared to 96.9 percent in the same period of last year. Claims from natural catastrophes in the third quarter amounted to 307 million euros, accounting for 3.0 percentage points of the combined ratio. A run-off ratio of 3.4 percent offset the high NatCat impact.

"For natural catastrophes during the first nine months, about 1.1 billion euros were used worldwide to pay the claims of our policyholders and to build provisions for these occurrences. Higher-than-expected NatCat impact aside, the segment substantially improved its operating profit in the third quarter. This was evidenced by improvements in the accident year loss ratio excluding natural catastrophes. At 69.1 percent, it is below 70 percent for the first time in eight quarters. In addition, prices in several core markets continued to rise, and are expected to keep rising in 2011," said Oliver Bäte, Chief Financial Officer of Allianz SE.

In the Life/Health segment, revenues grew by 16.4 percent to 12.6 billion euros, compared to 10.8 billion euros in third quarter 2009. Adjusted for currency effects, growth amounted to 11.7 percent. The increase was based on continued demand for old age provisioning, including unit-linked insurance as well as traditional life insurance.

Operating profit2 amounted to 655 million euros, 30.2 percent lower than the 939 million euros earned in third quarter 2009. This decrease reflects last year's exceptionally high third quarter investment result when markets strongly rebounded from the financial crisis.

"The Life/Health segment continued its good performance during the third quarter. Our nine-month operating profit of 2.3 billion euros is already within our full-year target range," said Oliver Bäte.

Oliver Bäte: "The Life/Health segment continued its good performance during the third quarter"

The Asset Management business achieved an operating profit of 521 million euros. This translates into 41.6 percent growth, compared to 368 million euros in third quarter 2009. Net fee and commission income increased by 42.6 percent to 1.24 billion euros, from 866 million euros. On an internal basis, growth amounted to 31.9 percent. The cost-income ratio improved further to 58.5 percent, compared to 59.1 percent in third quarter 2009.

Total assets under management grew by 25.5 percent to 1,443 billion euros as of September 30, 2010, compared to 1,150 billion euros at the end of the third quarter 2009. This growth was supported by exceptionally strong third-party net inflows of 40 billion euros during the third quarter of 2010.

Oliver Bäte: "The segment's outstanding performance has continued. In the third quarter, Asset Management contributed more than one-fifth of Group net income. Nine-month operating profit has already outperformed the annual target, and third-party net inflows during the first nine months reached 100 billion euros. At its current level, Assets under Management provide a strong basis for future profitability."

1 Adjusted for foreign currency and consolidation effects

2 We changed our accounting policy for fixed-indexed annuities as of July 1, 2010, which impacted the result of our U.S. business. Therefore the prior quarter figures were restated.

 
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