Allianz SE withdrew its forecast for the year as Europe’s biggest insurer struggles with the fallout from the Covid-19 pandemic.

Given the economic uncertainty, the board “does not assume that Allianz can achieve the target range for operating profit for 2020,” the German company said in a statement Thursday. Allianz said it will announce a new profit target after revising its planning.

The coronavirus hit the industry “like a meteorite,” Chief Executive Officer Oliver Baete warned in an interview on April 16. Many insurers face an increased volume of claims, while their investment portfolios are at risk because of the market rout. Allianz follows Munich Re in withdrawing its guidance.

Allianz said it expects first-quarter operating profit of 2.3 billion euros, a decline of almost 25%, and net income of 1.4 billion euros, down 30%. It had previously forecast operating profit of 12 billion euros ($13.1 billion) for the year, plus or minus 500 million euros, after earning 11.9 billion euros on that basis in 2019.

Insurers are facing crushing losses as the virus wreaks havoc with economies and markets around the globe. Swiss Re AG on Thursday joined the swelling chorus of firms pushing for governments to backstop potential losses as the industry gets overwhelmed. Countries including Germany and Belgium have already offered guarantees for credit insurance markets amid an expected flood of claims.

S&P Global Ratings said in late March that for insurers, financial-market risks currently outweigh insurance risks. Companies in the industry typically invest the premiums they earn in assets such as bonds and stocks. Fitch Ratings on April 30 confirmed some of Allianz’s ratings in light of the pandemic, saying the company is well-capitalized and has diversified business lines, geographical exposure and distribution channels.

Despite European regulators calling on insurers to preserve capital, Allianz earlier this month repeated its intention to propose a dividend, while suspending part of a buyback program. BaFin, the German regulator, has said it’s against a blanket dividend ban.

–With assistance from Patrick Henry.

(Photo caption: The Allianz SE logo sits on a top of a building in Berlin, Germany. Photographer: Krisztian Bocsi/Bloomberg)

Topics Profit Loss COVID-19 Allianz Germany