Digging out at Allianz The German financial-services giant is back in the black — but still struggling

WHEN MICHAEL Diekmann took over as chief executive of Allianz last April, the sprawling Munich financial-services empire was mired in its deepest crisis since World War II. The company's mainstay insurance business had been hammered by payouts for claims related to terrorist attacks and natural disasters, its assets were withered by a plunge in equity markets, and its Dresdner Bank subsidiary was swimming in red ink.

Critics questioned Allianz' financial stability after it posted a huge $1.45 billion loss. There were skeletons everywhere. "Whenever they pulled open a drawer, they'd find anotiier problem," says Sven Janssen, who follows Allianz for Metzier, the private bank in Frankfurt.

A year later, Allianz still faces huge challenges. But analysts say it's on track to emerge as a much stronger competitor to global rivals. The U-turn comes after Diekmann & Co. cut $2.3 billion in costs by slashing head count, auctioning off noncore holdings such as its stake in British insurer Ml. Assurance and AGF Life & Pension Brazil, and revamping key subsidiaries such as U.S. property-and-casualty underwriter Fireman's Fund Insurance Co. Investors have taken notice of the changes: Allianz' share price has risen 77% in the past 12 months.

"We have made significant progress," says Diekmann, 49. "And the capital market has acknowledged our efforts."

Business Week

• Text 8. Translate the text orally paying attention to the words relating to food. Can you explain the choice of these words?

A Dedicated Enemy of Fashion Most companies claim to run their business for the long term. Nestle is one of the few that really does

PETER BRABECK is used to the name-calling by now. Boring, lame duck, sleeping giant — he has heard them all. Sitting in his office in Vevey, overlooking Lake Geneva, the chief executive of the world's biggest food company is almost proud that Nestle has been dismissed as dull for much of its 136-year history.

What worries him far more are accusations that the Swiss group is swapping a consistent, long-term strategy of controlled expansion for an unbridled acquisition spree to pep up its growth rate — and that it is doing so just when dullness is back in fashion in the business world.

By any definition, Nestle is already a giant. It owns an array of global brands, including Nescafe, the world's bestselling instant coffee.

The company is keen to grow even bigger, and acquisitions have a role to play. While most of its previous takeovers were small, now Nestle has acquired a taste for big, expensive bites, and Nestle's finance chief, has even said the company would sacrifice its cherished AAA credit rating for the right deal.

For Mr Brabeck, there is no contradiction here — and certainly no change in strategy. As he points out, acquisitions have always been part of the Nestle way, with bouts of feeding usually followed by periods of digestion.

Nor does Mr Brabeck see anything wrong with a streak of opportunism, even at a high price, when a "filet mignon" comes up for sale. "They are very rare, those pieces," he says. "When you have such an opportunity, it fits strategically and you want to be a leader in that area, I don't see why you shouldn't act." By this definition, Ralston Purina was pure filet mignon — as, he concedes without bitterness, was Bestfoods, which was snapped up by Unilever, his nearest rival.

He describes Hershey, perhaps a little disingenuously, as "entrecote" — a slightly inferior cut of meat. After all, with a 43% share of American confectionery sales, it would give Nestle a big lead in the world's biggest chocolate market, where the Swiss group is currently number three.

The Economist

Notes

filet mignon [filemi'njon]- Fr. a thick, round cut of lean beef tenderloin broiled

entrecote [antrekot] - Fr. a boned rib steak

• Text 9. Translate the text orally. Make a list of words and phrases used metaphorically to describe the company's plight.