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Allianz achieves increased revenues and profit in Latin America in the first half year


WEBWIRE

* Revenues up by 8 percent to 1.4 billion euros
* Revenues in the property and casualty business rise 13 percent1
* Life and health insurance grew 50 percent1
* Operating profit climbs to 73 million euros

Munich - Allianz has continued its successful development in Latin America and reported further growth in the first half of 2013. Revenues rose by 8 percent to 1.4 billion euros from 1.3 billion euros in the first six months of 2012. Both segments contributed to this growth. After adjustments for foreign exchange effects, revenue in the property and casualty business grew by 13 percent and by 50 percent in the life and health business.

Operating profit climbed by 12 percent to a total of 73 million euros, compared to 65 million euros in the first half of 2012. At the same time, the combined ratio improved to 98.1 percent from 98.9 percent in the prior-year period.

"We got off to a successful start this year despite a somewhat weaker economic environment compared to last year and have been able to continue on the growth path we followed last year,” said Helga Jung, member of the Board of Management at Allianz SE. “Even though growth rates in the region are lower today than they were a few years ago, we still see potential for our business in Latin America. However, in the next few years, we will need to focus on our homework in order to take advantage of the potential in Latin America.”

In Latin America, Allianz is mainly active in the property and casualty business, with auto insurance representing the largest individual business area, followed by commercial insurance business. Allianz also offers life and/or health insurance in Brazil, Colombia and Mexico.

Solid development in Argentina

In Argentina, gross written premiums were up by 37 percent in the first six months to 129 million euros, compared to 94 million euros in the first half of 2012. This increase was primarily attributable to strong growth in the auto segment and in crop insurance. Operating profit grew by 1.6 percent to 8.7 million euros. After adjustments for foreign exchange effects, growth from operating profit came in at 19.3 percent.

The combined ratio stood at 99.2 percent, 2.6 percentage points higher than at the end of the first half of 2012. While the expense ratio dropped to 35.8 percent, compared with 38.7 percent in the prior-year period, this was not enough to compensate entirely for the increased benefits paid out for poor harvests due to difficult climatic conditions in the first half of 2013.

Fabiana Castiñeira, CEO of Allianz Argentina: “Our efforts are showing signs of success. We have further expanded our market position and in the first half of the year moved up in the ranking to 11th place. We expect to be able to continue on this path.”

Operating profit growth of 24 percent in Brazil

Brazilreported solid growth in terms of both revenues and operating profit. Gross written premiums swelled by 4.4 percent to 778 million euros, compared to 745 million euros in the previous year. After adjustments for foreign exchange effects, this corresponds to an increase of 15.4 percent. Particular gains were made in the auto insurance business, which grew internally by 22.3 percent in a year-on-year comparison.

Operating profit grew by 24.1 percent to 44.2 million euros, compared to 35.6 million euros in the previous year. Improvements in claims settlements resulted in a 2.1 percentage point improvement in the combined ratio to 98.3 percent.

In Brazil, health and auto insurance are among the largest business segments. The combined ratio in these areas is currently just below 100 percent in auto insurance and slightly above 100 percent in health insurance. With the launch of the IberoLatam platformnext year, the focus will be on process optimization and efficiency improvement and therefore also on improving the combined ratio.

Allianz achieved double-digit growth in terms of both customers and policies.

Colombia’s operating profit remains unchanged

In the first quarter of 2013, gross domestic product growth fell 2.5 percentage points from the year before to 2.8 percent. The number of new car registrations also fell 12 percent compared to 2012. The Colombian government has reacted to this development and adopted a growth program to buoy the country’s economy. The decline in growth also had an impact on the business of the Allianz subsidiary there. In the property and casualty insurance segment, revenues reached 156 million euros, down by 15.8 percent from 186 million euros reported for the first half of 2012. This drop is due to a number of factors including portfolio adjustments and the loss of a few major customers. At 10.1 million euros, operating profit in this segment lagged 3 percent behind the figure for the same period in 2012. After adjustments for foreign exchange effects, the operating profit was 0.1 percent above the prior-year result. The combined ratio came in at 99.4 percent, 0.8 percentage points higher than at the end of the first half of 2012.

Revenues in the life and health insurance segment dropped by 26.7 percent to 39 million euros, compared with 54 million euros in the prior year. This drop is largely due to portfolio cleaning of unprofitable positions of the group life insurance business. Operating profit in the life and health segment dipped to 1.2 million euros, compared to 3.1 million euros in the previous year. In addition to a lower investment result, this development was largely due to an investment in growth initiatives.

In order to give people in Colombia easier access to insurance services, Allianz has invested more than 15 million euros in the technical capabilities of its systems over the past two years. The launch of the IberoLatam business platform has laid the foundation for more efficient sales and claims settlement. This should have a sustainable impact on profitability.

Mexico reports above-average growth in life insurance

Since its market entry in 1985, Allianz has continuously expanded its range of products in Mexico. It now offers a wide selection of products for companies and private customers in life insurance and property and casualty insurance.

The growth trend that has emerged in recent years continued in the first six months of this year, too. Gross written premiums rose to 283 million euros, compared to 209 million euros in the previous year. Operating profit fell slightly, by 2.5 percent, during the same period to 11.9 million euros and net income grew by 57 percent to 13.5 million euros.

Revenues in the property and casualty insurance segment fell in the first six months of this year to 134 million euros, compared to 139 million euros in the prior-year period. This development reflects, among other things, restructuring measures within individual portfolios and delayed policy renewals. Operating profit in the property and casualty business stood at 9.5 million euros, compared to 10.1 million euros in the previous year. The combined ratio climbed by 3.6 percentage points to 92.6 percent.

The life and health insurance business continued to show positive development. Revenues more than doubled to total 149 million euros, compared to 70 million euros in the prior year. This increase is primarily attributable to high unit sales of asset management products that are similar to unit-linked life insurance. Largely due to a higher asset base and a good investment result, the operating profit was up by 14.2 percent to 2.4 million , compared to 2.1 million euros in the first half of 2012.

Sergio Ghibellini, CEO of Allianz in Mexico, said, “The successful development of our Life business shows clearly that we are selling the right products in Mexico to fulfill the needs of our customers. Our main focus is still on achieving profitable growth in all business areas. In order to further strengthen our presence in Mexico, we will be increasing the number of our branch offices from six, as at present, to 21 over the next four years.”

1) After adjustments for foreigy exchange effects



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