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Allianz profits soar

Allianz has reported a 95.8% rise in net profits to €5.49 billion ($7 billion) for the year to December, with operating (pre-tax) profits up 20.8% to €9.5 billion ($12.18 billion) – its best result since before the global financial crisis.

The operating profit of its Australian arm grew 16.6% on the previous year to $490 million and gross written premium (GWP) was up 10.7% to $3.74 billion.

“Allianz Australia continues to record strong year-on-year organic growth,” Australian MD Niran Peiris said.

“Premium growth was seen across all of our distribution channels and came from a combination of growth in policy numbers and premium rates.

“The results in 2012 were assisted by more benign weather than 2011, which was one of the worst years on record for natural catastrophes in Australia.”

The global group’s improved result was spread across the divisions, with property and casualty operating profits up 12.5% to €4.71 billion ($6.04 billion), life and health rising 22.1% to €2.95 billion ($3.78 billion) and asset management up 33.6% to €3.01 billion ($3.86 billion).

Performance improved throughout the year, according to Group CEO Michael Diekmann.

“By the third quarter business developments were already looking so favourable that we were able to raise our operating profit target to more than €9 billion ($11.54 billion)… despite the impact of the storm Sandy,” he said.

Given the economic outlook for 2012 “it could have turned out to be an awful year”.

However, European capital markets took confidence from the European Central Bank’s pledge of support mid-year and the situation stabilised, Mr Diekmann says.

“The claims situation also improved compared with the previous year… and worldwide the number of natural catastrophes was down significantly.”

But the worst US drought in a century and Superstorm Sandy “left their mark, especially in the profits and losses of our US subsidiary Fireman’s Fund”, Mr Diekmann says.

Property and casualty GWP for the year was up 4.7% to €46.9 billion ($60.18 billion), with growth in all markets, particularly Australia and Latin America.

In nearly all markets the combined ratio was well below 100%, and despite Sandy natural catastrophes contributed only 1.7 percentage points to the loss ratio, compared with 4.4 percentage points in 2011.

The accident year loss ratio fell to 71.2% from 74.1%, and the overall combined ratio dropped 1.5 percentage points to 96.3%.

GWP in life and health was down slightly to €52.3 billion ($67.11 billion) on a dip in sales through some bank distribution networks, but operating profit grew 22.1%, mainly because of better investment returns.

Rising income from a growing asset base offset slightly lower yields.

Although the life and health business remains tough, results “exceeded our expectations from a year ago”, CFO Dieter Wemmer said.

Mr Diekmann expects Allianz to maintain its profitability this year, with operating profit likely to be €9.2 billion ($11.8 billion), plus or minus €500 million ($640.67 million).

Property and casualty GWP is expected to rise 2.5%-3.5%, while life and health is predicted to remain stable.

A 10-year sales co-operation agreement with HSBC is expected to increase coverage of high-growth markets such as Australia, China and Malaysia.

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