Allianz SE, Europe's biggest insurer, said that its fourth-quarter profit fell 52 percent on subprime-related writedowns and trading losses at its banking division.
Net income declined to 665 million euros (US$979.6 million), or 1.48 euros a share, from 1.37 billion euros, or 3.21 euros a share, a year earlier, the Munich-based insurer said today in a statement.
That missed the 729 million-euro median estimate of 12 analysts surveyed by Bloomberg.
Chief executive officer Michael Diekmann plans to increase Allianz's earnings from insurance and expand operating profit by an average of 10 percent a year even as more than 1.3 billion euros in writedowns weigh on its Dresdner banking division's profits.
Banks worldwide have booked more than US$146 billion of writedowns and credit losses during the US subprime mortgage market collapse.
"Dresdner remains the problem child, which is disappointing because it looked like they managed the turnaround just before the subprime crisis hit," said Ernst Konrad, who helps oversee about 24 billion euros as head of equities at BayernInvest in Munich, including Allianz stock.
Allianz's dividend "has finally reached the payout level of peers such as ING or Fortis," he said.
Diekmann said yesterday that the company was "well-positioned" for this year and expected to meet medium-term profit targets. "However, financial markets and their future development will have a stronger impact on our business results than usual," he said.
Allianz has fallen 21 percent in Frankfurt trading this year, valuing the insurer at 53 billion euros, compared with a 14 percent decline in the 28-member Bloomberg Europe 500 Insurance Index.
Dresdner had a fourth-quarter loss of 589 million euros compared with a loss of 194 million euros a year ago.
The bank's ratio of costs to income for all of last year worsened to 89 percent from 79.7 percent a year earlier, Allianz said.
Frankfurt-based Dresdner said in a separate statement that it plans to provide "support" to its K2 structured investment vehicle. K2's volume has been cut to US$18.8 billion from US$31.2 billion since July, it said.
Allianz's banking division had an operating profit of 730 million euros last year, down from 1.4 billion euros in 2006, after writedowns on structured products led to an operating loss in the fourth quarter.
Dresdner wrote down the value of asset-backed securities by 350 million euros in the third quarter and by 66 million euros in the second.
The company plans to increase its dividend to 5.50 euros a share from 3.80 euros distributed to shareholders for 2006.
That beat the median estimate of 5.05 euros.
Allianz has repeatedly said it plans to raise the portion of profit it pays in dividends.
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