Thursday August 7, 08:55 AM
German insurer Allianz warns on profits after weak second quarter
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FRANKFURT, (AFP) - Shares in the German insurance group Allianz plunged on Thursday after the group warned that it would not reach its operating profit target going into 2009 following a difficult second quarter.
Allianz shares showed a loss of 3.52 percent to 109 euros in initial trading on the Frankfurt stock exchange after the company had also said in a statement that the international financial crisis was likely to persist.
In 2006, the group had set a goal of increasing its operating profit by an average of 10 percent by next year.
But in light of "contrary winds in the market," Allianz said it now expected to miss that target.
Net profit plunged by 28 percent in the second quarter to 1.5 billion euros (2.3 billion dollars) and operating profit shed 36 percent to 3.3 billion, the statement said.
Turbulence on international financial markets had seriously cut into its life insurance activities, the group explained.
Its banking unit Dresdner Bank was also hit by the turmoil, posting an operating loss of 566 million euros in the three months from April to June.
Dresdner's investment banking activities suffered in particular from losses in market operations and asset writedowns linked to the crisis.
Allianz said it expected the difficult market conditions to continue into next year.
Its profit warning comes a week after one from the German reinsurance group Munich Re.
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