Insurance giant Allianz posts big loss

German insurance giant Allianz has reported a net loss of €2.02 billion for the third quarter, saying it has taken a big hit from the turmoil in financial markets and its Dresdner Bank arm.

Insurance giant Allianz posts big loss

The Munich-based company which is Europe’s largest insurer announced the loss late on Friday and scaled back its operating profit forecasts for this year and the next as a result.

The loss however was lower than the €3.61 billion figure that many analysts had feared. Allianz posted a profit of €1.9 billion in the same period last year.

“Without a major equity market recovery, the operating profit outlook of 9 billion euros before banking for this year and next year cannot be reached,” Allianz Chief Financial Officer Helmut Perlet said in a statement. “In this environment, reliable statements about future earnings are not possible,” he added, referring to the ongoing financial crisis which has battered financial institutions around the globe.

The insurer has also been pummelled by the weak performance of its Dresdner bank which is being sold to Germany’s second largest lender, Commerzbank next year.

Allianz said the Frankfurt-based Dresdner Bank, which it counted as a discontinued operation since September 1st, posted its fifth straight loss in the latest quarter as it “continued to suffer from weak and volatile markets.”

Dresdner had an operating loss of €835 million in the third quarter compared with an operating profit of €87 million a year earlier, Allianz said.


US investors buy up north German state bank hit by financial crisis

Two German states said Wednesday they would sell troubled maritime lender HSH Nordbank in the first full privatisation of one of the regionally-owned "Landesbank" lenders hit badly by the financial crisis.

US investors buy up north German state bank hit by financial crisis
Photo: DPA

Leaders from Hamburg and Schleswig-Holstein states said at a news conference they would sell their 95-percent stake for one billion euros to investors led by two US funds, J. Christopher Flowers and Cerberus capital.

The European Commission ordered a change of ownership in exchange for its approval in 2009 of a €13-billion-euro rescue – one of two taxpayer-funded bailouts for the north German bank since the 2007-2008 financial crisis.

That rescue plan helped cover risky investments amounting to €60 billion, most of them in real estate and the shipping sector, which HSH built up in the pre-crisis years.

“Today we've reached an important milestone on the way to selling the states' holdings in HSH,” which had over the years proved “very costly to the taxpayer,” Schleswig-Holstein state premier Daniel Günther said.

Wednesday's deal must still earn a green light in a further competition probe by the Commission and from banking supervisors at the European Central Bank.

If it goes ahead, “the privatisation means that we can limit the damage to the states that has resulted from the bank's irresponsible strategy of expansion between 2003 and 2008,” Hamburg mayor and future federal finance minister Olaf Scholz said.

The sale was immediately criticized by Sahra Wagenknecht, leader of Die Linke (the Left Party), who described it as a gift to “the finance mafia.”

“Future profits will be privatized, tax payers will lose multiple billion euros and jobs are at risk – whoever calls that a success doesn't deserve to be finance minister,” she wrote on Twitter.

Hamburg and Schleswig-Holstein have taken on a portfolio of HSH's bad loans, meaning taxpayers could face a bill of up to €7 billion when they are eventually sold to private buyers.

The contract for Wednesday's sale also provides for HSH's payroll to be halved, to around 1,000 workers.

HSH's departure into the private sector leaves just five of the “Landesbank” lenders standing after a series of post-crisis interventions.