GERMANY – Allianz says it expects cost reductions at its asset management arm to lead to “a noticeable” profit contribution next year – despite a loss at the arm due to acquisition-related expenses in the third quarter.

“We're entitled to be satisfied with the 9.5% increase in operating earnings in asset management, although we recorded an overall loss due to acquisition-related expenses in line with expectations,” said board member Helmut Perlet.

“Next year, we will be able to reduce these costs significantly. This is why we expect a noticeable profit contribution in this segment in 2005.”

He added: “We significantly increased third-party assets and based on current exchange rates, they will rise by around 10% on a year-on-year basis.”

Asset management posted a net income of –191 million euros, compared to –226 million a year ago. Operating profit was 578 million euros, up from 528 million. Its total income was 2.36 billion euros.

The division gained net inflows of 14 billion euros, which combined with market and currency movements meant third-party assets under management rose 4.8% to 592 billion euros.

Last month Allianz Dresdner Asset Management, recording a nine billion-euro net asset inflow in the first half, said it was changing its name to Allianz Global Investors.

Today Allianz said: “In Germany, we upgraded assets under management in the institutional market as well as in the area of public funds.”

It said that in institutional asset management its dbi unit’s special fund assets have risen top 71.1 billion euros from 68 billion euros at the end of 2003.

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