AGF Posts Record $660 Million 1st Half Net

August 16, 2004

AGF, the French subsidiary of Germany’s Allianz Group, announced record first half net income of 532 million euros ($660 million), and annualized return on equity of 16.3 percent.

“The AGF Group is in line with its targets. In individual life and financial services in France, premium income grew by 11.8 percent in individual life, the portion of premium income deriving from unit-linked contracts rose to 35 percent,” said the announcement. “Cost reductions were in line with the end-2004 target of 75 million euros [$93 million]. In particular, the ratio of costs to mathematical reserves in life insurance was down eight basis points at 0.77 percent. All the factors that lead to improved new business value were favorably oriented. In particular, AGF continued to follow a conservative profit-sharing policy in the first half of 2004.”

In the Group’s P/C sector the consolidated combined ratio of all businesses was 95.9 percent (99.3 percent in France, 98.9 percent internationally, 75.7 percent in credit insurance and 94.2 percent in assistance). In group and health insurance in France, the combined ratio stood at 100.2 percent in individual health and at 96.4 percent in group income protection.

The bulletin noted that AGF’s capital gains decreased markedly from the same period last year, when it disposed of a number of investments.

The company said, “the quality of earnings continued to improve, as all operating objectives were achieved in all businesses. All businesses showed positive underwriting results before capital gains on disposals. Capital gains represented only 23 percent of underlying profit in the first half of 2004. Excluding capital gains, underlying profit rose by more than 24 percent to 582 million euros [$722 million]. Underlying profit declined by 4.6 percent to 759 million euros [$941 million], principally because capital gains were lower.”

The announcement concluded: “In view of the results achieved in the first half of 2004, the AGF Group remains confident it can reach or might even exceed the targets it has announced to the financial community. Barring unforeseen events or a significant deterioration in financial markets, management is now even more confident in its outlook for very significant growth in net income compared with 2003.”

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