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EDITIONS
Thursday, 14 November, 2002, 11:45 GMT
German insurer hits 'rock bottom'
Flooded street in Pirna, Germany
Flooding dampened Allianz's numbers
Flooding, falling stock markets and compensation claims over asbestos have caused huge losses at giant German insurer Allianz.

Allianz reported a net loss of 2.5bn euros (1.5bn; $2.5bn) for the July to September period - roughly double analysts' expectations.

Allianz made a net loss of 46m euros in the same period of last year.

The insurer said it was unable to forecast its full year results because of uncertainty about how much it would have to write off the value of its stock market holdings.

'Low point'

Chief executive Henning Schulte-Noelle said the firm had "reached rock bottom" but that "the low point should now be behind us".

But WestLB Panmure analyst Carsten Zielke described Allianz's financial results as a "catastrophe".

"I've never seen such bad numbers [from a firms such as Allianz] in all my career."

The figures revealed Allianz's vulnerability to the German economic downturn, he added.

Share losses

Stock market falls were the biggest single contributor to Allianz's woes.

Altogether it has had to write off 1.9bn euros from the value of its investments over the quarter, during which the Frankfurt stock market hit seven-year lows.

Allianz's Dresdner bank unit contributed 972m euros to its parents losses, due to shaky stock prices and the feeble state of the German economy.

Flood damage

Insurance claims from the flooding which swept parts of Germany and Eastern Europe in the summer are likely to cost 664m euros, Allianz said.

It has also set aside $750m (472m; 745m euros) to ensure its US Fireman's Fund business can cover the cost of compensation claims for asbestos related illnesses.

Its shares swung wildly on the Frankfurt stock market as shocked investors absorbed the news.

The stock lost 2% as trading opened, but added 5% by mid-morning as investors decided the firm had given a full account of its woes and the worst was over.

Hopes rise

The rise in the share price was "coming now that the numbers are out, which were really bad, and that the comments for the operating business are very good," said a trader at a German bank in Frankfurt.

Allianz's shares were trading up 5.48 euros at 102.58 euros at 1104 GMT.

The firm said it would no be raising it full year dividend, but would pay the same as last year "excluding any unanticipated events in the fourth quarter".


European havoc

Germany ravaged

Prague drama

Freak phenomenon?

FORUM

TALKING POINT
See also:

29 Aug 02 | Business
19 Aug 02 | Business
31 Jul 02 | Business
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