Allianz, Dresdner slip

August 14, 2001 Posted: 0758 GMT

LONDON (CNN) -- German insurer Allianz, which in April agreed to buy Dresdner Bank for $21 billion, said on Tuesday its first-half profit fell 6.7 percent.

The Munich-based company said net profit in the six months to June 30 fell to 1.4 billion ($1.25 billion) from 1.5 billion a year ago. Analysts expected profit of about 1.54 billion, according to a Reuters poll.

Allianz, Europe's largest insurer by market value,  said gross premium income, a measure of an insurance company's business volume, rose 7.9 percent to 31.4 billion, slightly above market forecasts.

The company became the world's sixth-largest financial services institution with its takeover of Dresdner Bank. The purchase was designed to improve Allianz's distribution network for insurance and investment products in the face of rising competition in the growing market for retirement savings products.  

The acquisition is expected to open new doors for Allianz products. The insurer has gone on record to say it would increase earnings by 13 percent in 2001 and expects total premiums to rise more than 5 percent to more than 72 billion.

Dresdner Bank, Germany's third-largest, also reported first-half earnings, saying pretax profit fell 12.7 percent to 616 million. That was partly down to a rise in administrative costs – up 18.6 percent to 4.4 billion - as Dresdner absorbed U.S. investment bank Wasserstein Perella.

Net fee and commission income in investment banking fell 10.9 percent to more than 2 billion and trading income dropped almost 18 percent to 750 million, amid deteriorating international equity markets.

"Dresdner Bank Group's business development for the first six months of 2001 was increasingly characterised by weakness in the international capital markets," the bank said.

Dresdner raised the amount it set aside to meet the cost of bad loans to 567 million in the second quarter, up 3.8 percent. Due to "the increasingly rapid deterioration of the world economy, it was necessary to take additional provisions for exposure to problem countries," Dresdner said in a statement.

Net profit climbed 44.8 percent to 608 million as the company's tax payment plunged 97.2 percent to 8 million from 286 million a year ago.

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