Pimco parent Allianz back in the black

With the sale of Dresdner Bank now well behind it, Allianz appears to be back on track. Proof? The Pimco and Oppenheimer parent recorded close to a $6B profit in 2009.

German insurer Allianz SE made €1.1 billion ($1.5 billion) in the fourth quarter, bouncing back from a loss of more than €3 billion a year ago thanks in part to improvements in capital markets.

Revenue was 11% higher to €26 billion from €23 billion in the fourth quarter of 2008.

For the full year, Allianz, based in Munich, reported net income of €4.3 billion, compared to a loss of €2.2 billion in 2008, as the company’s revenue for the year rose more than 5% to €97 billion from €93 billion in 2008.

Allianz’s U.S. units include Bill Gross’ Pimco, one of the world’s largest bond managers, Fireman’s Fund and Oppenheimer Capital.

CEO Michael Deikmann said Thursday it was impossible to give a precise outlook “given the still volatile market environment.”

“With regard to key figures for the fiscal year 2010, we believe that our operating profit will be at the same level as 2009,” Mr. Deikmann said. The company reported 2009 operating profit of €7.2 billion, down 2% from €7.3 billion in 2008.

Allianz also said it would raise its dividend to shareholders by 17%, to €4.10 a share for 2009.

The company’s combined ratio, a key measure of insurance performance, slipped to 97.4 in 2009 from 95.4% in 2008. The combined ratio is claims paid out and costs versus premiums paid in; a level under 100 indicates an underwriting business is profitable.

“Management focus in 2010 will be again on investment performance as well as combined ratio,” Mr. Deikmann said.

UniCredit analysts said the farther away Allianz gets from its “debacle” with Dresdner bank, the better Allianz looks. Allianz sold the underperforming Dresdner Bank unit to German lender Commerzbank AG in 2009.

Allianz’ “underlying operating performance has been resilient and its financial condition strong. Going forward, we see a rejuvenated insurer forging ahead with its global franchise and leading positions in major markets, while maintaining solid financials. We are ‘Marketweight’ on the name,” UniCredit credit analysts said in a note to clients.

For 2009, the company said its property and casualty insurance business saw a 2% decline in gross premiums written to €42.5 billion while operating profit dropped a steep 28% to €4.1 billion.

In life and health insurance, 2009 premiums grew by 11% to €51 billion. Operating profit in life and health more than doubled to €2.8 billion.

The company said it saw a 31% increase in 2009 third party assets under management to €926 billion from €703 billion in 2008. Total assets under management exceeded €1.2 trillion in 2009.

The company’s investments have recently benefited from better results on the world’s stock markets as the global economy shows signs of improvement. Germany’s DAX market, for example, is nearly 40% higher than a year ago.

“2009 was an important and successful year for the Allianz Group. While the financial crisis undoubtedly impacted our results, we have nevertheless delivered a very robust and sound performance quarter on quarter,” Mr. Deikmann said.