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FRANKFURT, Germany (Reuters)—German insurer Allianz posted forecast-beating third-quarter operating profit and said it could withstand economic adversity, sending its shares higher on Friday.
Allianz shares rose 2.3% on Friday, outperforming the German blue-chip DAX index and the STOXX Europe 600 insurance index.
Europe's biggest insurer affirmed its full-year target of operating profit between €7.5 billion ($10.34 billion) and €8.5 billion ($11.72 billion) but said net profit would be well below the 2010 level after big writedowns on equities and Greek debt saw it miss expectations for net profit in the third quarter.
"Overall we believe Allianz has reported a reasonably strong operating performance which is overshadowed by huge writedowns," said DZ Bank analyst Thorsten Wenzel in a note.
Third-quarter net profit collapsed to €196 million ($2.7 billion) from €1.26 billion ($1.74 billion) a year earlier, missing the €566 million ($780.6 million) average analyst estimate in a Reuters poll.
The bottom line was hit by impairments totaling €931 million ($1.28 billion), principally on financial-sector investments but also due to a further writedown on Greek sovereign bond holdings. A higher tax burden also hurt the net result.
The euro zone debt crisis sent waves of fear through financial markets in the third quarter, forcing the FTSEuroFirst 300 index down nearly 16% and hammering insurers brave enough to hold equity investments.
A Reuters poll found Allianz was expected to report a 21% decline in 2011 net profit to €3.99 billion ($5.5 billion).
Chief Financial Officer Oliver Baete said all market participants were facing uncertainty and volatility in the capital markets.
Insurers have slashed the value of their Greek sovereign bond holdings—Allianz wrote its portfolio down to a nominal value of 39%—and some have sold off peripheral sovereigns.
While Munich Re unloaded €1.4 billion ($1.93 billion) worth of Italian sovereign bonds in the third quarter, Allianz's Baete told journalists the group has not reduced its exposure and he was confident Italy would bring its financial house in order.
Italian debt market swings were "totally overdone," he said.
The crisis has also dented premiums, with Aviva and ING this month reporting weaker quarterly life sales in Europe because consumers have been putting off savings decisions amid austerity measures aimed at restoring confidence in governments' ability to repay debt.
"Because of our solid operating results and unwavering capital strength, Allianz is well able to withstand this adversity," Baete said.
Third-quarter operating profit fell 7.3% to €1.91 billion ($2.63 billion), above consensus of €1.71 billion ($2.36 billion).
Quarterly operating profit in Allianz's property/casualty, life-health and asset management businesses were all above consensus, although life-health fell by a fifth, hit by poor investment returns.
FRANKFURT (Reuters)—Germany's insurers will face only a moderate additional capital burden when adjusting to new European risk rules due to come into force in 2013, management consultancy Zeb said on Wednesday.