The German insurer Allianz reveals new restructuring initiatives to resurrect itself. However, challenges abound. When in May, this year, Allianz - Germanys top insurer - announced its latest first-quarter results, it seemed that the last few years woes might be behind now. There were strong reasons to feel so. The groups first-quarter net income had grown by more than 34% to approximately 1.8 bn while its overall total revenues increased by 4.9% to 29.6 bn. It also added to the optimism that this would just have the kind of rub-off effect on the performance for the rest of the current fiscal as well.

However, the announcement did not go down well with its labor union, which even threatened to go on strike. Nevertheless, the insurer wants to go ahead with its cost cutting plan which it expects will reduce costs by as much as 600 mn ($758 mn), while the changes at Dresdner would likely result in savings and increased revenue of some 600 mn ($750 mn) in 2008.

Speculation about potential job losses at Germany's largest insurer has grown since Allianz unveiled a plan last year to streamline itself on a pan-European basis, including merging separate German insurance operations that employ 40,000 people, says a report by Insurance Newscast. "The plan at Germany's largest insurer is to bring its property and casualty, life and health insurance business under one roof, as well as merging separate sales forces, to boost efficiency and cut costs," it further said.

However, the latest move is a part of the restructuring drive initiated in the wake of the German group's largest, which was also its first-ever, annual loss of 1.17 bn($1.23 bn) recorded in 2002. The firm attributed it to weak capital markets, natural catastrophes, and increase in reserves for asbestos claims in the US, among other factors. The poor performance was despite significant improvements like a strong rise in premium income and a consistent reduction in the combined ratio in the group's operating insurance business. The group's Achilles' heel was Dresdner Bank, the entity which it acquired in 2001, as it posted a loss of 935 mn ($991 mn) during the fiscal. And it continues to be a drag on its balance sheet.

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