updated 6/22/2006 5:33:35 PM ET 2006-06-22T21:33:35

Allianz AG, Europe’s largest insurer by premium income, said Thursday it will cut 7,480 jobs — about 4 percent of its worldwide work force — at its German insurance and banking activities as part of a restructuring it began last year.

The Munich-based company said it will shed 5,000 jobs in its German insurance arm and 2,480 at its Dresdner Bank unit by the end of 2008. The investment banking division will also drop the name Wasserstein, leaving it known as Dresdner Kleinwort.

Allianz also said it plans to reduce the number of its administrative insurance centers in Germany from 21 to 10.

“What we are initiating now will lay the foundation for our companies’ future profitable growth in Germany,” Allianz Chief Executive Michael Diekmann said.

“Today, we are able to do this from a position of strength. Anyone who puts off essential decisions until some distant point in time will find themselves coming under far greater pressure in the future and will then be forced to take far more drastic steps.”

The company said it planned no further cuts in the coming months.

The announcement didn’t sit well with labor union ver.di, which said it would launch warning strikes next week, board member Uwe Foullong said.

“The employees have no sympathy for the company’s actions, given its record income of 4.5 billion euros ($5.6 billion),” he said. “And rightly so, they expect that a restructuring of the company would take place with them, and not against them.”

If Allianz does not negotiate seriously on job security, workers “won’t express their resentment with demonstrations anymore,” he said. “Strikes can’t be ruled out then.”

In Germany, it’s not uncommon for workers in companies like Allianz to be part of a union. Ver.di counts some 2.4 million members who work in financial services, insurance, health care, the media and the federal government.

The company said it expects the job cuts at its insurance business, which will come through attrition, to reduce costs by as much as 600 million euros ($758 million), while the changes at Dresdner would likely result in savings and increased revenue of some 600 million euros ($750 million) in 2008.

Dresdner CEO Herbert Walter said in a conference call that some 500 of the jobs being eliminated would come at bank subsidiaries in Germany and abroad. He said the bank would try to avoid layoffs and make cuts through attrition “but we can’t rule them out.”

Stefan Jentzsch, the management board member for investment banking, said it was too soon to say if the unit’s foreign offices, such as those in financial centers like New York and London, could be affected. But he did say that the bank plans to shrink its proprietary trading desk in London.

Allianz bought Dresdner in 2001 for approximately 24 billion euros and has since eliminated 17,000 jobs at the company, which operates more than 960 branches in Germany, and performs retail and private banking, asset management and lending.

Dresdner, which had bought New York investment bank Wasserstein Perella Inc. in 2001 for about $1.5 billion, will combine its private banking arm with the unit that serves medium-sized companies. That will create a private and business client division and expand the number of branches advising private and business clients to 400 from 120.

Allianz’s domestic insurance work force comprises 40,000, while Dresdner Bank has nearly 29,000 workers. Worldwide, the company employs about 178,000 people.

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