Allianz writedowns from crisis approach $4 billion
FRANKFURT (Reuters) - Europe's biggest insurer Allianz (ALVG.DE) unveiled fresh writedowns at its Dresdner Bank unit of 900 million euros ($1.4 billion) from the global markets crisis and said the turmoil could hurt future profits.
The latest writedowns -- more than double what they were when Allianz finance chief Helmut Perlet updated investors at the beginning of the year -- take the insurer's total bill from the financial turmoil to about 2.5 billion euros.
Allianz also warned that its profit targets, while still attainable, would become harder to reach the longer the turmoil lasted. The remarks came as Deutsche Bank (DBKGn.DE) retreated from its 2008 goal and announced its first quarterly loss in five years.
Allianz had been aiming to fatten operating profit -- it made almost 11 billion euros last year -- by an average 10 percent each year between 2007 and 2009. This would take it over 13 billion euros at the end of next year.
The Munich-based group said its operating profit reached 1.8 billion euros in the first three months of the year.
ANNUS HORRIBILIS
Chief executive Michael Diekmann has been credited with turning around the group since taking charge after what his predecessor Henning Schulte-Noelle described as the "terrible year" of 2002 that forced his own departure.
Diekmann has since boosted the profitability of its insurance work and cut costs to pull Dresdner out of the red.
But market turbulence following the collapse in subprime mortgages and continued problems at Dresdner Bank has sent its stock into a tailspin in recent months.
Diekmann is now planning to break up Dresdner Bank in a move that would pave the way for a sale of investment banking laggard Dresdner Kleinwort, which is partly behind the problems that resulted in the writedowns.
Allianz bought Dresdner in 2001 in a 24 billion euro deal a shareholder once described as the biggest disaster in German industrial history.
The architects of the takeover had hoped to sell bank accounts to Allianz customers as well as car insurance, for example, over the counter at branches. Instead, Dresdner racked up losses of almost 3 billion euros as cross-selling floundered.
It then appeared to turn the corner with modest profits before financial market ructions pulled it back into the red again in recent months.
Allianz shares, which have lost nearly 12 percent since the start of the year, were trading down about 1 percent at 1007 GMT (6:07 a.m. EDT).
(Editing by Quentin Bryar/Elizabeth Fullerton)
