Allianz Latin America hit by FX movements

German insurer Allianz saw total revenues in Latin America fall to 22 percent in the first half of 2014 as it was hit by unfavourable foreign exchange movements and volume reductions in property/casualty business, mainly in Brazil.

Total revenues fell to €1.1 billion, compared with €1.4 billion in the first half of 2013.

Revenues in the property and casualty business were down 23 percent to €923 million euros, compared with €1.2 billion, and down 6 percent after adjustments for foreign exchange effects.

“This drop was mainly due to negative top-line effects from a migration of the Brazilian IT platform. The revenues in the life and health business went down by 14 percent to €162 million,” said Allianz.

Overall operating profit for the first half of 2014 declined 37 percent to €48 million euros, compared with €76 million. The main drivers of the deterioration were negative foreign currency exchange effects, as well as weak business results in the health insurance segment in Brazil.

The combined ratio in Latin America rose to 103.0 percent, a deterioration from 98.1 percent in the same period of 2013.

"We see a temporary impact in Latin America due to the IT migration in Brazil. This is a tough project and a big investment, but in the long run it will help us to optimize our processes and improve our efficiency,” said Helga Jung, member of the board of management at Allianz SE. “At the moment we are doing our homework and optimising our business model to take advantage of the potential in Latin America.”