Allianz Australia’s continuing underwriting woes have sparked media speculation that the company is up for sale, an assertion that CEO Terry Towell was swift in hosing down last week. In an unattributed media statement, Allianz Australia said its parent, Allianz AG, “is pleased with its investment in Australia and has no current intention of selling its Australian operations or floating on the Australian stock market”.

Sydney Morning Herald reporter Anthony Hughes provoked the low-profile company’s response when he linked its continuing dismal underwriting performance to the German parent’s own financial problems.

Noting industry scuttlebutt that Allianz Australia is “likely to fall victim to the next round of sector consolidation”, the Hughes report pointed to the local operation’s 2002 underwriting loss of $87 million – even worse that the $47 million lost in 2001 – which came “despite benign conditions” in the Australian market.

While net profit improved to $26.5 million ($4.3 million in 2001) on earnings of $2.47 billion (up from $1.97 billion in 2001), claims expenses rose 29% to $1.65 billion.

Allianz said the 2002 result “was entirely due to the poor performance of investments”, adding that many companies have also faced similar conditions.

“Trading in the first quarter for 2003 resulted in a profit of $23 million before tax and the forecast for the half year is substantially higher than that achieved for the full year in 2002.”

Allianz Australia was equally dismissive of the SMH report’s suggestion that its capital base – which was 1.15 times the minimum capital requirements of APRA – may need to be strengthened. IAG has twice the requirement in reserve and Promina 1.83 times.

It said its capital base “substantially exceeds” the minimum capital requirements, and it expects it to be “above 1.35” by the end of the year. “Both the board and… Allianz AG believe the company is adequately capitalised.”

As to the SMH’s doubts whether the parent group would be prepared to tip in more capital after suffering a $2.1 billion loss of its own last year, the statement said Allianz AG board member Werner Zedelius believes Allianz Australia “is performing well and… Allianz AG is pleased with its investment”.