Allianz beats forecasts as life insurance shines

FRANKFURT (Reuters) - Allianz (ALVG.DE), Europe's biggest insurer, beat forecasts with net profit of 2.140 billion euros ($2.9 billion) in the second quarter, down 6 percent from a year earlier when the result was boosted by asset sales.

The net result Allianz posted on Friday was helped by strong life insurance and banking results and beat the average forecast in a Reuters poll of 15 analysts for net profit of 2.059 billion euros in the April-June period.

"The good results from the first half year provide an excellent platform for attaining our goals in 2007-2009," Chief Executive Michael Diekmann said in a statement.

"We are expecting net income of around 8 billion euros for the year 2007."

Allianz shares were indicated up 2.3 percent in a flat wider market before the 0700 GMT opening in Frankfurt.

Operating profit rose nearly 18 percent to 3.288 billion euros, beating the poll average of 2.991 billion euros.

Operating profit in Allianz's main business of property-casualty insurance rose nearly 3 percent, while it was up 44 percent in life and health and leaped nearly 80 percent at Dresdner Bank.

Allianz's share price has suffered in recent weeks along with those of other financial players, as investor concerns grow about credit risks stemming from the crisis in the U.S. sub-prime mortgage market.

The share is up 1 percent so far this year, compared with a 5 percent drop among European insurers .SXIP.

On Thursday, Allianz was trading at about 1.4 times current embedded value, in line with the sector average, according to research from KBW, which has an "outperform" rating on the share.