Insurance Profit Slowdown Hitting Europe
Market volatility and economic uncertainty continue to play havoc as large European insurers reveal first-half losses. Allianz of Germany forfeited their earnings target as quarterly profits dropped by almost one-third to 1.5 billion euros. Losses at Allianz’s banking divsion, Dresdner, were said to be the primary cause.
French insurers AXA claimed a first-half profit loss of 29% by the end of June. Aegon, a Dutch insurance company, also revealed a reduction in profits. Axa and Allianz have both been adversely affected by the credit crunch resulting in 739 million euros in write-downs.
As many experts have predicted in the UK, economic uncertainty is expected to continue through 2009. Allianz are admitting they will not be able to achieve previous predictions of 10% profit growth expected this year and the next.
Allianz plans to offset some of the risk by selling Dresdner, which was acquired in 2001 for over 23 billion euros, according to reports. Plans are to focus more on insurance and asset management, its core business.
Like many plagued financial institutions already suffering from the backlash of the mired US sub-prime mortgage market, Aegon has seen profits fall by as much as 58% during the 2nd quarter this year.
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