Allianz 2Q Net Profit Seen +13%; Update Eyed On Full-Year Goals

Allianz SE (ALV.XE) is expected to report a 13% rise in net profit for the second quarter, helped by moderate costs for severe-weather damage, a lower tax rate and higher investment income that more than offset the weaker contribution from the life/health insurance and asset management businesses.

Allianz, Europe's largest primary insurer by premium income and market capitalization, is scheduled to release second-quarter earnings around 0500 GMT Friday.

Twelve analysts in a Dow Jones Newswires poll on average forecast a rise in net profit to EUR1.23 billion from EUR1.09 billion in the same period a year ago.

Total revenue is expected to decline about 1.7% to around EUR24.9 billion from EUR25.4 billion.

ING analysts said they expect Allianz's operating profits in life insurance and asset management to suffer from depressed stock markets, low interest rates and the debt crisis in peripheral euro area countries. Fierce competition in France, Italy and Asia will also be a negative for the life operations, and the euro's gain against the U.S. dollar will weigh on the life business of insurers reporting in euro, the analysts write.

Allianz executives are expected to give an update about the hit they will take from the bailout package for Greece involving private-sector investors that was agreed in July.

While UBS analysts calculate a EUR65 million pretax hit from Greek sovereign debt in the second quarter, ING analysts "have not incorporated a haircut scenario into second-quarter forecast numbers, as we believe that this will potentially occur in 2H."

ING analysts said they consider Allianz's exposure to Greece, Portugal and Ireland "manageable," while the insurer's exposure to Italian sovereign debt of around EUR8.5 billion net "can have a substantial impact."

Allianz's exposure to Greek sovereign debt was EUR1.3 billion at the end of 2010, the latest figure available.

"If we simulate a 20%-40% haircut on Greek sovereign debt, this only has a EUR90 million to EUR180 million net impact on Allianz's P&L with a maximum one-percentage-point negative impact" on the Solvency I ratio, which was 180% in the first quarter, the ING analysts write.

Allianz shares have gained around 7% over the past year, a substantial beat to the Stoxx 600 insurance index and raising market value to around EUR42 billion.

-By Ulrike Dauer, Dow Jones Newswires; [phone]; [e-mail]