Allianz hit by Dresdner losses

Parts of the banking business could be sold off

Insurance giant Allianz has reported worse-than-expected results after its banking subsidiary Dresdner Bank sank further into the red.

The poor results prompted Allianz to say its original goal of making Dresdner profitable this year was still questionable.

That has increased speculation that the firm might now sell off parts of the bank rather than continue with attempts to turn it around.

The bank's investment arm Dresdner Kleinwort Wasserstein (DKW) is the main focus of speculation.

The revenues and risks are not completely under our control and driven by outside factors

Helmut Perlet, Allianz board member

In a conference call with analysts Allianz management board member Helmut Perlet said: "Our first priority is to make it [DKW] sustainably profitable.

"It is also true that over the medium term we are examining all options, in terms of the business model and also in terms of freeing up capital and partnering and similar things."

Cost-cutting

Allianz made a net loss of 520m euros (£367m; $596m) in the first three months of the year compared with a 1.93bn euro profit last time.

Most of the losses came from Dresdner Bank which contributed 424m euros to the figure.

This was caused mainly by the bank writing down the value of its share portfolio, but it was also due to lower fee and interest income and a 9% rise in provisions for bad debts.

But the company said that money was saved through cost-cutting.

"We are very confident that we will reach our cost goals but the revenues and risks are not completely under our control and driven by outside factors," Mr Perlet said.

Allianz paid 24bn euros for Dresdner in 2001.