FRANKFURT (Dow Jones)-- Allianz SE's (AZ) exposure to U.S. subprime loans isrelatively small compared with the size of the overall investment portfolio andit doesn't expect its business to be affected by the current woes in the U.S.subprime and mortgage-backed securities markets, Chief Financial Officer HelmutPerlet said Friday.
"From today's perspective, I don't have any grounds to be concerned about thedevelopments for our capital investments and our portfolio," Perlet said.
Perlet said the insurer's exposure to subprime securities amounts to around EUR1.7 billion or around 0.16% of the overall assets in the group's EUR1.3trillion investment portfolio.
Allianz's investment in asset-backed securities amounts to EUR35 billion ofwhich EUR13 billion are invested in mortgage-backed securities, Perlet said.
Roughly 50%, or EUR17 billion, of the EUR35 billion in asset-backed securitiesare in Allianz's trading portfolio that are marked to market value on a dailybasis, Perlet said.
"As an example, the market value of the portfolio would have been EUR100million lower Thursday (than a day earlier)," Perlet said.
Perlet also said its banking arm Dresdner Bank is on track for a return onrisk-adjusted capital of 15% in 2007.
Speaking during a conference call with journalists following the group'ssecond-quarter earnings, Perlet said the group as a whole is on track for anoperating profit of more than EUR11 billion.
Earlier Thursday, Allianz said it expects a net profit of around EUR8 billionfor 2007, up 14% from EUR7.02 billion in 2006.
However, Allianz now expects a 2007 operating profit of around $550 million atits U.S. operations Allianz Life compared with $600 million forecast earlier,Perlet said.
Perlet said the lower full-year profit forecast at the U.S. unit was due to "accounting volatility" which weighed on the unit's operating profit of $122million in the first six months and is expected to continue in the second half.
In U.S. dollar terms, Allianz Life's statutory premiums fell 14% in the secondquarter to $2.4 billion from $2.8 billion. Allianz said Friday it has stoppedthe slide and the unit is on track for full-year statutory premiums of $11billion.
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