March 24, 2003 by Canadian Underwriter
On the heels of a EUR1.2 billion (Cdn$1.9 billion) loss in 2002, Munich-based Allianz Group is set to raise EUR5 billion (Cdn$7.9 billion) in capital through a variety of means.
In its 2002 yearend report, Allianz noted that the loss comes despite 10% growth in premiums, a result of the lackluster stock market, natural catastrophes, absestos claims reserving and poor performance by its Dresdner Bank unit. Write-downs on investments totaled EUR5.5 billion (Cdn$8.7 billion) alone.
In response, Allianz will raise up to EUR5 billion through a rights offering of EUR3.5-4 billion (Cdn$5.5-6.3 billion), and the issuance of hybrid capital to the tune of EUR1.5 billion (Cdn$2.4 billion).
“The proposed capital measures secure the sufficient capital base of the Group and create the necessary flexibility to take advantage of future growth opportunities,” states a press release. “After the capital raising, Allianz expects to have a credit rating within the AA/Aa band.”
The company also plans to reduce its stake in Munich Re to about 15%, as well as seeing Munich Re reducing its stake in Allianz to about 15% by participating in the rights issue. “We will each be less dependent on the respective earnings development of the other group,” says Michael Diekmann, incoming chair of the management board. “This will reduce the volatility of each of the shares in the interest of our shareholders.”