UPDATE: Allianz Profit Down On Greek Debt Hit; Keeps Goal

Allianz SE (ALV.XE), Europe's largest primary insurer by market capitalization, Friday said second-quarter net profit fell 8.2%, after the write-down of the value of its entire Greek sovereign debt portfolio to market value was only partially offset by moderate costs for severe-weather damage.

Allianz also confirmed that it was on track for its full-year target of an operating profit in a EUR7.5 billion to EUR8.5 billion range.

Net profit fell to EUR1.00 billion from EUR1.09 billion a year earlier, below the average estimate of EUR1.23 billion in a Dow Jones Newswires poll.

At 0708 GMT, shortly after the open, Allianz shares were on EUR1.92, or 2.3%, at EUR80.91, outperforming the German DAX blue-chip index, which was down 3.5%

Impairing the Greek sovereign debt portfolio shaved off EUR326 million of the quarterly net profit, Allianz said. Its hit on operating profit was EUR76 million, entirely in the life/health insurance segment.

It said in line with IFRS impairment rules for available-for-sale securities, its Greek government bond portfolio, which had a volume of around EUR1.3 billion at the end of 2010, was impaired and consequently written down by EUR644 million gross, or by around 50%, to the current market value as at June 30.

After the impairments, Allianz said it still has EUR6 million in gross unrealized losses in its gross exposure to Greek sovereign debt. That figure is EUR726 million for gross sovereign debt in Greece, Spain, Ireland and Portugal combined. The net figure, after policyholder participation and taxes, for unrealized losses on sovereign debt in those four countries is EUR236 million.

Operating profit, which some investors consider better reflects a company's actual business performance, was unchanged at EUR2.30 billion, beating the forecast for EUR2.14 billion.

Total revenues--which include insurance premiums, operating revenues in the asset management segment, and revenues from the corporate and the small banking segment--fell 3.2% to EUR24.6 billion, below the forecast decline to EUR24.9 billion.

Equinet analyst Philipp Haessler said the figures were better than expected, pointing to the operating profit and the confirmed full-year operating profit guidance, though he noted that the net impact from writing down Greek sovereign debt was higher than forecast.

The company currently has a market value of around EUR38 billion.

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