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Insurance: Allianz profits collapse

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The first half of 2022 is not an overly happy one for Allianz. A scandal in the US and the collapse of the financial markets cut net profit in half.

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A billion-dollar scandal in the US and the slump in the financial markets caused Allianz’s net profit to shrink by more than half in the first half of the year.

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The largest German insurer reported a surplus of almost 2.3 billion euros attributable to shareholders on Friday. That was 2.5 billion fewer than a year earlier. In the second quarter, the bottom line was a profit of 1.7 billion euros, 23 percent less than a year earlier. Apart from the alleged case of fraud at the subsidiary AGI in the USA, Allianz felt the slump in the financial markets: the investment result fell, investors withdrew billions from the two asset management companies AGI and Pimco.

CFO Giulio Terzariol highlighted the positive developments: Sales rose by a good seven percent to 81.2 billion euros, partly due to strong price increases in the actual insurance business. Operating profit increased by 1.2 percent to 6.7 billion euros. CEO Oliver Bäte is sticking to the goal of an operating profit of 12.4 to 14.4 billion euros for the whole year.

The best was the bread and butter business in the property and casualty division with an increase in sales of over 12 percent, including motor insurance and liability. In asset management, things went in the opposite direction: in the wake of market turbulence and rising interest rates, investors withdrew a total of 33.8 billion euros from the funds of the two subsidiaries. CFO Terzariol predicted that the money would come back: “It’s only a matter of time.”

The news was initially not well received on the stock exchange, and the Allianz share lost. The partial sale of the Russian business will make itself felt in the third quarter, with an expected impact on earnings of around EUR 400 million. Unlike some other companies, Allianz does not want to completely withdraw from Russia. Instead, the group has sold the majority of its business there to a local company.

The scandal surrounding the subsidiary Allianz Global Investors (AGI) in the USA burdened Allianz with compensation and fines totaling around 5.6 billion euros last year and this year. The company pleaded guilty to securities fraud in the United States in May. Large investors suffered billions in losses with AGI funds at the beginning of the corona pandemic.

Source: Stern

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