FRANKFURT, Germany (AP) — Low losses from natural disasters and higher prices in the key markets of Germany, Turkey and Latin America lifted profits at German insurance company Allianz SE during the first quarter.
But Allianz did not increase its profit outlook for the rest of the year, saying Wednesday that record low interest rates will hold back profits. The current benign backdrop for catastrophes could also change, it warned.
Munich-based Allianz maintained its forecast for 9.2 billion euros ($11.9 billion) in earnings, plus or minus 500 million euros. Last year it made 9.5 billion euros.
Allianz said "insurance profits will remain under pressure" from low yields and financial market volatility. Insurers must invest premium income in predictable investments such as bonds that are currently carrying low yields. Those yields are largely due to interest rate cuts by central banks as part of their efforts to stimulate shaky economies.
Last week, the company reported that its net profit during the period had increased 24 percent to 1.7 billion euros ($2.2 billion). Revenues rose 6.6 percent to 32.0 billion euros.
The company gave more detailed figures Wednesday, saying net losses from natural catastrophes increased only slightly to 70 million euros from last year's already low 42 million euros. Meanwhile, higher prices boosted gross premiums at the company's basic property and casualty insurance business by 2.7 percent. Strong growth in motor insurance in Turkey and Brazil also boosted revenues.
The company improved a key measure of insurance profitability, lowering its combined ratio by 1.9 points to 94.3. The combined ratio is costs and claim payouts divided by premiums, meaning a ratio under 100 percent shows the basic insurance underwriting business is profitable.