Allianz to retain dividend despite 57% income drop

Insurance group Allianz has proposed an unchanged dividend after fourth-quarter earnings missed estimates on Greek debt writedowns and natural disaster losses.

Net quarterly income dropped 57% to €492m, the Munich-based insurer said yesterday, short of the €876m mean estimate of 18 analysts surveyed by Bloomberg. Allianz will keep the dividend at €4.50 a share and is targeting operating profit of €7.7bn to €8.7bn this year, compared with €7.87bn in 2011.

Insurers are seeking higher prices for their policies as low interest rates, natural disaster losses and writedowns on investments related to the sovereign-debt crisis weigh on earnings and capital buffers.

Allianz, led by chief executive Michael Diekmann, 57, had its credit rating placed on a negative outlook by Standard and Poor’s. That threatens the insurer’s AA long-term rating, the highest among the 28 members of the Bloomberg Europe 500 Insurance Index.

“The impairments were one of the major problems,” said Konrad Becker, a Munich-based analyst at Merck Finck & Co. “The 2012 target is rather conservative considering that writedowns should have peaked last year.”

Net income in 2011 dropped 50% to €2.55bn as Allianz booked €1.9bn of non-operating impairments on Greek sovereign debt and investments, particularly in financials. The insurer wrote down its Greek bonds to market values at the end of 2011, representing 24.7% of their nominal value.