10 Insurers Report Q3 Results

Insurance Networking News, November 16, 2011

Justin Stephani

A number of insurers have released financial results for Q3 2011. The following is a compilation of their announcements:

Allianz

For the third quarter 2011, Allianz reported revenues amounting to $32.7 billion, an operating profit of $2.6 billion, and a net income of $349 million, impacted by losses from financial market turmoil. The company reported a solvency ratio of 179 percent.

Allianz reported significant investment losses of $3.5 billion during the third quarter of 2011. The operating impact of these losses of $1.8 billion in life/health business led to a decrease of approximately $303 million in the net investment result. Non-operating losses totaled $1.7 billion across the segments, $1.1 billion of which were reflected in its corporate and other segment.

Losses from our corporate investments in financial sector assets, like our participations in Commerzbank, The Hartford, Unicredit, China Pacific Insurance Group and Banco Popular, were a key driver of the non-operating result. In total, these losses were approximately $1.1 billion for the quarter.

American Financial Group Inc.

American Financial Group Inc. reported net earnings attributable to shareholders of $96 million ($0.94 per share) for the 2011 third quarter, compared to $132 million ($1.21 per share) for the 2010 third quarter. Per share results reflect the impact of share repurchases in 2011 and 2010. The 2011 results include realized gains of $5 million compared to realized gains of $15 million in the 2010 period. Net earnings attributable to shareholders for the nine-month period were $234 million ($2.24 per share), compared with $346 million ($3.11 per share) in the comparable 2010 period. Nine month results in 2011 include realized gains of $14 million and a special charge of $38 million resulting from a second quarter reserve strengthening related to the Company's asbestos and other environmental exposures. The comparable period in 2010 includes $24 million in realized gains.

Core net operating earnings were $91 million ($0.90 per share) for the 2011 third quarter, compared to $117 million ($1.07 per share) reported in the 2010 third quarter. Core net operating earnings for the first nine months of 2011 were $258 million ($2.48 per share) compared to $322 million ($2.89 per share) for the same period a year ago. Lower underwriting profit and lower investment income in our specialty property/casualty insurance operations, partially offset by increased earnings in our annuity and supplemental operations in the first nine months of 2011, contributed to these results. Nine-month annualized core operating return on equity was 9 percent.

During the third quarter of 2011, AFG repurchased 2.6 million shares of common stock at an average price per share of $32.25. Repurchases during the first nine months of 2011 totaled 7.8 million shares at an average price per share of $33.70.

Assured Guaranty

Third quarter 2011 operating income was $38.3 million, or $0.21 per diluted share, bringing the nine-month 2011 operating income to $430.9 million, or $2.31 per diluted share. Third-quarter 2011 net income was $761.2 million, or $4.13 per diluted share, driven primarily by net unrealized gains on credit derivatives and financial guaranty variable interest entities, totaling $749.4 million. Nine-month 2011 net income was $859.2 million, or $4.61 per share. Operating shareholders’ equity per share increased 8.4 percent and GAAP book value per share increased 28.7 percent since year-end 2010. Adjusted book value1 per share of $48.87 remained steady compared with year-end 2010.

The company reported third-quarter 2011 operating income, a non-GAAP financial measure, of $38.3 million, or $0.21 per diluted share, which includes the effect of lower risk-free rates used to discount expected losses of approximately $120 million in pretax loss expense. The effect of lower discount rates is not indicative of additional credit impairment in the period. Operating income for the nine months ended 2011 was $430.9 million, or $2.31 per diluted share. The comparable prior year operating income was $222.6 million, or $1.19 per diluted share for the three months ended Sept. 30, 2010, and $511.4 million, or $2.70 per diluted share, for the nine months ended Sept. 30, 2010.

Cincinnati Financial

Cincinnati announced for the third quarter of 2011: $19 million, or 12 cents per share, of net income compared with $156 million, or 95 cents net income per share, in the 2010 third quarter. Operating income of $20 million, or 13 cents per share, for third quarter 2011 compared with operating income of $56 million, or 34 cents, from a year ago.

$137 million decrease in third quarter 2011 net income driven by the after-tax effects of a $101 million decrease in net realized investment gains and a $34 million decrease in the contribution from property/casualty underwriting operations. That contribution reflected previously announced third-quarter natural catastrophe losses totaling $60 million after taxes, up $42 million compared with the same period of 2010.

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