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Allianz to eliminate 7,480 jobs in insurance, banking

Allianz AG, Europe's largest insurer, plans to cut about 7,480 jobs, or 4.2 percent of the workforce, in Chief Executive Officer Michael Diekmann's biggest overhaul of the company's insurance operations since he took over three years ago. Allianz will shed about 5,000 workers at its German insurance unit by reducing administrative offices to 10 from 21, and trim about 2,480 jobs at Dresdner Bank, the Munich-based company said in a statement today. Diekmann, 51, is merging Allianz's German life, health and property and casualty units under one holding company and seeking to reign in costs at Dresdner to make European operations more profitable. Allianz expects the job cuts at the insurance unit to reduce expenses by as much as 600 million euros by 2008. ``They need to be efficient,'' said Markus Engels, who helps oversee about $55 billion, including Allianz shares, at Cominvest Asset Management in Frankfurt. ``If you compare Allianz with international competitors it still isn't top in terms of capital returns.'' He spoke before the announcement. Allianz's return on equity, a measure of profitability, was 12.6 percent in 2005, lagging behind Paris-based Axa SA's 13.4 percent and Trieste-based Assicurazioni Generali SpA's 16.5 percent, data compiled by Bloomberg show.

Allianz said the reorganization won't lead to any firings at its German insurance units until the end of 2007. Job losses could result as Allianz shuts offices and employees decide to leave rather than move to another city, said Frank Lehmhagen, an official at Ver.di, Germany's biggest labor union, and a member of the supervisory boards at Allianz's German insurance units. Unions criticized Allianz for making job cuts after net income almost doubled to a record 4.4 billion euros last year. Ver.di said in a statement today it's preparing warning strikes to protest the reductions cuts and will pursue such actions unless Allianz offers more job guarantees. Allianz plans to cut 3,300 jobs at the property and casualty unit in Germany, 1,000 at the life unit and 700 at the health insurance unit. Allianz earlier this year already announced the reduction of 700 jobs at its sales organization in Germany. Allianz said in February that it expects the reorganization of the German insurance units will boost operating profit by 200 million euros in 2007, 400 million euros in 2008 and 600 million euros in 2009.

Allianz plans to close its regional headquarters in Cologne and the property and casualty unit's offices in Mainz, Aachen, Hanover, Augsburg, Freiburg, Mannheim, Nuremburg, Magdeburg and Ulm. It will also close the life unit's office in Frankfurt and the health unit's office in Dortmund. (Bloomberg)