Allianz profit slumps on virus impact

Agence France-Presse
Like other insurers, Allianz is facing a flood of payouts over events that have had to be canceled or scaled down because of lockdowns

ALLIANZ. The company's building in Singapore. Photo from Shutterstock

MUNICH, Germany – German insurer Allianz on Tuesday, May 12, reported a near 30% plunge in quarterly profits, weighed down by claims for Australian wildfires and events canceled because of the new coronavirus

The group said global economic “uncertainties” caused by the pandemic had forced 2020 targets to be abandoned.

“The COVID-19-induced turmoil in the financial markets and a slowing economy have clearly aggravated business conditions,” a statement said.

From January to March, net profit at Allianz fell by 29% to 1.4 billion euros ($1.5 billion) compared with the 1st quarter a year earlier.

Group revenues climbed almost 6% to 42.6 billion euros, driven mainly by new business in its life and health insurance arm.

Earnings at the key property and casualty business however were dragged down by higher claims for natural catastrophes including Australia’s deadly bushfire season and storms in Europe, as well as “COVID-19-related losses.”

Like other insurers, Allianz is facing a flood of payouts over events that have had to be canceled or scaled down because of lockdowns.

The company also saw demand fall for its travel insurance as the virus closes borders and people are urged to stay home.

There was better news for the asset management division, which reported a jump in operating profits thanks to higher fees and commissions for the funds it manages on others’ behalf.

“The 1st quarter of 2020 showed the resilience of Allianz in these unprecedented circumstances,” said chief executive officer Oliver Baete.

“These are very testing times for us all, but I believe that together we will rise to this challenge.”

But as the pandemic roils the global economy, Allianz’s finance chief Giulio Terzariol said it was “naive” to think insurers could shield companies completely from feeling the pain.

The French government recently floated plans for a special pandemic insurance to help companies deal with the turmoil.

“Solutions can only be found together with governments,” Terzariol told reporters in a conference call. “But a private company can’t carry the lion’s share of the risks.”

Allianz plans to announce a revised profit target for 2020 “once the impact of the corona crisis can be better assessed.” – Rappler.com