The German insurance giant Allianz has cut its earnings forecasts for the year, as the turbulent market conditions battered the performance at its banking unit Dresdner Bank.

The company said it had made a net loss of 350m euros ($342.1m) in the second quarter, whereas it posted a net profit of 1.9bn euros during the first quarter.

Earlier this year the company had said it would make a 3bn euro profit this year.

"The previous forecast for the full fiscal 2002 of 3 billion euros was based on the assumption that the equity market would stabilize at the level reached at the start of the year," said Allianz in a statement.

"It is clear that in current market conditions the forecast cannot be achieved while maintaining the expected quality of earnings," the company added.

Allianz said its main insurance division had continued to perform well, with premium income growing in the property and casualty insurance business.