Frankfurt - Shares in Allianz SE edged down Friday after Europe's biggest insurer reported a 65-per-cent slump in first-quarter earnings following a loss reported by its banking offshoot in the wake of the global financial crisis.

Munich-based Allianz said net profits dropped to 1.15 billion euros (1.8 billion dollars) in the first-three months of the year following a 513-million-euros loss run up at its Dresdner banking group.

This followed a 64.5-per-cent drop in revenue at Dresdner with the Frankfurt-based bank writing down asset-backed securities by 845 million euros during the first quarter. Allianz shares dropped by 0.8 per cent to 129.95 euros in early trading Friday.

"While 2008 will remain a challenging year, the longer this environment persists the harder it will also be to achieve our medium term outlook," said Allianz chief financial officer Helmut Perlet.

Allianz plans to divide Dresdner operations into two completely separate entities under a holding company to help it participate more actively in the drive for consolidation in Germany's "overbanked" financial industry. (dpa)