German insurer Allianz S.E. reported third-quarter net income of 1.32 billion euros, a big improvement over the 2 billion euro loss for the same period a year earlier, when costs associated with discontinued operations -- mainly Dresdner Bank -- put Allianz in the red. But strong life/health results were offset by deteriorating performance in the property/casualty segment.

The multiline insurer recorded an operating profit of 1.9 billion euros (1.69 billion pounds) for quarter, up 23% on the 1.56 billion euros it posted for the same period of 2008.

Allianz's operating profit for the first nine months of the year fell 20.4% to 5.13 billion euros.

The company's property/casualty division saw a third-quarter 2009 operating result of 1.03 billion euros, down 18.2% from a year earlier. The division made a profit of 2.89 billion euros for the first nine months, down 34.8%.

Allianz cited negative underwriting effects on credit insurance in Germany, France and Italy from the recession, along with "an unusually high number of weather-related claims."

The combined ratio improved to 96.9 from 98.9 in the second quarter of 2009, but was slightly above the 96.5 of the previous year?s third quarter.

"We achieved a reasonable result in the property and casualty business, given the still challenging market environment, but the operating result is not yet satisfactory," said Chief Financial Officer Oliver Bate in a statement. "Top-line development reflects our disciplined risk selection approach in all markets. We remain focused on our efforts to improve productivity in this segment. While pricing shows an upward trend, volumes remain challenged due to weaker demand and portfolio cleaning measures."

The life/health segment's third-quarter operating profit was 859 million euros, a rise of 294% from the 218 million euros it made in the equivalent quarter of 2008. For the first nine months of 2009, the life/health division's operating profit rose 49.1% to 2.25 billion.

Improved conditions in the capital markets led to an improved investment result of about 580 million euros, "including significantly lower impairments" for the segment, said Allianz. Net inflows amounted to 4.5 billion euros in the third quarter of 2009.

"Our life and health business is performing very well and generates both strongly growing revenues and very good margins, despite significantly reduced interest rates," said Bate. "Nearly all markets contributed to this excellent result. Italy, Switzerland, Germany and Asia-Pacific recorded double-digit growth in premiums."

Joy Ferneyhough, an equity analyst with Execution Ltd., said in a statement that the "solid set of headline numbers from Allianz mask an exceptional contribution from life insurance, while Allianz's core P&C business continues to deteriorate. We continue to believe Allianz offers little upside from here."

Allianz S.E. currently has a Best's Financial Strength Rating of A+ (Superior).

(By Marc Jones, London news editor: marc.jones@ambest.com)