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EARNINGS

Allianz more than doubles net profit in 2012

German insurance giant Allianz said Thursday its net profit more than doubled last year as it shrugged off the worst of the financial crisis.

Allianz more than doubles net profit in 2012
Photo: DPA

Allianz said in a statement that its net profit amounted to €5.169 billion last year, up from €2.545 billion a year earlier. The 2011 figure had been impacted by write downs on Allianz’s holdings in Greek sovereign debt and investments, the insurer explained. But underlying or operating profit also increased, rising by 20.8 percent to €9.5 billion on a 2.7 percent rise in revenues to €106.4 billion.

All divisions achieved double-digit percentage growth in operating profit, Allianz said. In the fourth quarter alone, net profit soared 148 percent to €1.22 billion, operating profit rose by 13.8 percent to €2.275 billion and revenues grew by 3.6 percent to €25.9 billion.

Chief executive Michael Diekmann noted that the numbers exceeded the group’s forecast, which Allianz had already raised last year after a better than expected performance in the first three quarters. “Despite the impact from the storm Sandy, we exceeded our forecast,” Diekmann said.

In January, Allianz had said it took a hit of €455 million from Hurricane Sandy. But overall, insured losses for the industry were significantly lower in 2012 than in the previous year, when record figures were posted due to the earthquakes in Japan and New Zealand and severe floods in Thailand.

“Our results show how well our business model can handle the various turbulences from the financial crisis,” Diekmann said. Allianz would therefore pay an unchanged dividend of €4.50 per share for 2012, he added.

Looking ahead to the current year, Diekmann said that despite the low interest rate environment and overall global economic uncertainty, “I am confident that again in 2013 Allianz will maintain its profitability.”

“With cautious optimism and assuming that natural catastrophes and capital market turbulence do not exceed expected levels, our operating profit outlook for 2013 is €9.2 billion, plus or minus € 500 million,” Diekmann said.

On the Frankfurt stock exchange, Allianz shares were performing slightly better than the overall market, showing a loss of just 0.77 percent while the blue-chip DAX 30 index was down 1.05 percent.

AFP/mb

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ECONOMY

How is Denmark’s economy handling inflation and rate rises?

Denmark's economy is now expected to avoid a recession in the coming years, with fewer people losing their jobs than expected, despite high levels of inflation and rising interest rates, The Danish Economic Council has said in a new report.

How is Denmark's economy handling inflation and rate rises?

The council, led by four university economics professors commonly referred to as “the wise men” or vismænd in Denmark, gave a much rosier picture of Denmark’s economy in its spring report, published on Tuesday, than it did in its autumn report last year. 

“We, like many others, are surprised by how employment continues to rise despite inflation and higher interest rates,” the chair or ‘chief wise man’,  Carl-Johan Dalgaard, said in a press release.

“A significant drop in energy prices and a very positive development in exports mean that things have gone better than feared, and as it looks now, the slowdown will therefore be more subdued than we estimated in the autumn.”

In the English summary of its report, the council noted that in the autumn, market expectations were that energy prices would remain at a high level, with “a real concern for energy supply shortages in the winter of 2022/23”.

That the slowdown has been more subdued, it continued was largely due to a significant drop in energy prices compared to the levels seen in late summer 2022, and compared to the market expectations for 2023.  

The council now expects Denmark’s GDP growth to slow to 1 percent in 2023 rather than for the economy to shrink by 0.2 percent, as it predicted in the autumn. 

In 2024, it expects the growth rate to remain the same as in 2003, with another year of 1 percent GDP growth. In its autumn report it expected weaker growth of 0.6 percent in 2024.

What is the outlook for employment? 

In the autumn, the expert group estimated that employment in Denmark would decrease by 100,000 people towards the end of the 2023, with employment in 2024  about 1 percent below the estimated structural level. 

Now, instead, it expects employment will fall by just 50,000 people by 2025.

What does the expert group’s outlook mean for interest rates and government spending? 

Denmark’s finance minister Nikolai Wammen came in for some gentle criticism, with the experts judging that “the 2023 Finance Act, which was adopted in May, should have been tighter”.  The current government’s fiscal policy, it concludes “has not contributed to countering domestic inflationary pressures”. 

The experts expect inflation to stay above 2 percent in 2023 and 2024 and not to fall below 2 percent until 2025. 

If the government decides to follow the council’s advice, the budget in 2024 will have to be at least as tight, if not tighter than that of 2023. 

“Fiscal policy in 2024 should not contribute to increasing demand pressure, rather the opposite,” they write. 

The council also questioned the evidence justifying abolishing the Great Prayer Day holiday, which Denmark’s government has claimed will permanently increase the labour supply by 8,500 full time workers. 

“The council assumes that the abolition of Great Prayer Day will have a short-term positive effect on the labour supply, while there is no evidence of a long-term effect.” 

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