Allianz fleshes out deal

May 31, 2001
Web posted at: 1008 GMT

LONDON (CNN) -- Allianz said on Thursday it expects cost savings and income of 1.1 billion ($925 million) by 2006 from the acquisition of Dresdner Bank.

The German insurer, which agreed to buy Dresdner (DRB) for about $21 billion last month, expects the merger to generate cost savings and income of 290 million in 2002, rising to 885 million in 2005.

Of the 1.1 billion it expects in five years time, 825 million will be income and growth increases.

The deal to create the world's sixth-biggest financial group by market value has come under fire, with investors waiting almost two months for Allianz (ALZ) to flesh out the benefits of combining with Germany's No. 3 bank.

"The biggest proportion (of savings and extra revenue) is projected to come from growth potential generated in the markets for private as well as corporate old-age provisions and asset management in Germany,"  Allianz said.

"The two companies are jointly addressing the challenges in these growth markets with a new strategy in sales and asset management," it added.

Allianz, which has been under pressure to strengthen its distribution network for insurance and investment products amid rising competition in the booming retirement savings field, hopes the merger with Dresdner will open new doors for its products.

Allianz, which owns 21.4 percent of Dresdner, plans to offer one of its shares plus 200 for every 10 Dresdner shares in a deal valuing Dresdner at 53.13 per share, or 29.7 billion.

Allianz Chief Executive Officer Henning Schulte-Noelle told a news conference that the acquisition of Dresdner would stop it from making acquisition in the U.S. to strengthen its life insurance business.

"If there is a good opportunity we are certainly very interested. But we are not in talks with a U.S. life insurer at present," Schulte-Noelle said.

The company also said it made a first-quarter profit of 705 million and expects 2001 earnings to grow by 13 percent. The insurer reported first-quarter earnings for the first time and did not provide comparable figures.

The Munich, Germany-based company expects total 2001 premiums to rise more than 5 percent to over 72 billion. Gross premium income in the first-quarter rose 6 percent to 20.6 billion, Allianz said.

Shares in Allianz rose 2.8 percent and Dresdner climbed 2.4 percent in early morning trade in Frankfurt.

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