Frankfurt (AFP) Feb 24, 2011
German insurance giant Allianz said Thursday that it foresees an operating profit of eight billion euros ($11 billion) this year, give or take half a billion.
Allianz chief executive Michael Diekmann told a press conference in Munich, southern Germany, that uncertainty caused by new European capital requirements for insurers made it hard to give a more precise outlook.
"For the 2011 exercise, we foresee an operating profit of eight billion euros, give or take 500 million owing to uncertainties," Diekmann said.
Shares in the biggest European insurer were then hammered in midday trading on the Frankfurt stock exchange.
Allianz was exposed to a maximum of 300 million euros in losses from the earthquake on Tuesday in New Zealand and torrential rains in Australia early this year, its boss acknowledged.
But "that is a very provisional estimate," Diekmann said.
He underscored optimism for the full-year but warned a new set of EU capital requirements known as Solvency II needed to be clarified because they might entail risks for some of Allianz's activities.
"Owing to uncertainties over Solvency II we cannot make any large acquisitions," Diekmann noted.
The new regime is to take effect in 2013, but some details must still be finalised and an insurer might have to raise its capital significantly, which would undermine earnings and make some activities unattractive, he explained.
Allianz finance director Paul Achleitner said the uncertainty could also affect Allianz's investments in financial markets.
For 2010, the group reported a 17 percent jump in operating profit to 8.2 billion euros, exceeding its own target and analyst forecasts thanks in part to 500 million euros in exceptional items, including positive effects from foreign exchange rates.
Allianz's net profit leapt by 20.1 percent to 5.05 billion euros.
Revenues gained 9.3 percent to a record high of 106.5 billion euros, and Allianz directors will propose a dividend of 4.50 euros per share, up from 4.10 euros in 2009.
Investors apparently had hoped for more and the group's share price plunged in midday Frankfurt trading, showing a loss of 3.06 percent to 101.4 euros while the DAX index of German blue-chips was 1.10 percent lower overall.
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