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Storm losses hit Allianz’s property/casualty results

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Allianz S.E. saw property/casualty revenue rise but operating profit fall in the first quarter of 2017 as the Munich-based insurer reported higher catastrophe losses and the negative effects of a change in the U.K.’s discount rate.

Operating profit for its property/casualty unit fell to €1.26 billion ($1.38 billion) in the first-quarter, down 12.7% compared with the same period last year, Allianz reported on Friday. The combined ratio for the property/casualty business deteriorated to 95.6% in the first quarter, compared with 93.3% in the 2016 first quarter.

“The (property/casualty) business segment is on track to meet its full-year target despite higher quarterly charges compared to prior year for large losses, storms in Europe and Australia, and the Ogden discount rate change,” said Dieter Wemmer, chief financial officer of Allianz, in a statement.

Several insurers with U.K.-related business have reported significant increases in reserves this year in response to a change in the so-called Ogden discount rate, which is used to calculate liability claims payments.

Allianz reported a 2.7% increase in property/casualty revenues to €17.7 billion ($19.33 billion).

Overall, Allianz reported net income of €1.92 billion ($2.1 billion) for the quarter, down 14.4% from last year, which “benefited from one-off gains from the sale of financial stakes, as well as significantly lower restructuring expenses and a lower effective tax rate,” the statement said. Operating profit rose 9.4% driven by strong performance in its life/health insurance business and asset management business, the statement said.