(Bloomberg) -- Allianz AG, Europe's biggest insurer, said increased earnings from life insurance and banking bolstered first-quarter profit.

Earnings at Dresdner Bank, bought by Allianz for $21 billion in 2001, rose 15 percent, the Munich-based company said today. Profit from life insurance increased 41 percent. Allianz said first-quarter net income rose 34 percent to 1.78 billion euros ($2.29 billion) after providing preliminary figures on May 2.

Chief Executive Officer Michael Diekmann, 51, has helped revive profit at Frankfurt-based Dresdner by cutting almost a third of the workforce and shedding bad loans. He's now reorganizing the European insurance operations by buying the rest of Italian subsidiary RAS Holding SpA and combining units in Germany.

Allianz's shares have trailed competitors so far in 2006, rising 5 percent, compared with an 8 percent gain in the 31-member Bloomberg Europe 500 Insurance Index and an 8.7 percent increase in Paris-based Axa SA, Europe's No. 2 insurer.

Profit at Allianz's life and health unit rose 41 percent to 534 million euros in the quarter. Profit at Allianz's property and casualty insurance division climbed 10 percent to 1.1 billion euros. Asset management earnings tripled to 90 million euros.

Rising equity markets in the first quarter bolstered profit at financial companies including Credit Suisse Group and UBS AG by increasing revenue from money management and securities trading. Germany's benchmark DAX Index surged 10 percent during the first quarter.

Allianz is paying about 5.7 billion euros to take full control of Italian insurer RAS, after previously owning 55 percent of the company. The insurer also changed its legal structure into a pan- European company, a move that may make takeovers easier.

Allianz is combining its German life-insurance, property and casualty and health subsidiaries into Allianz Deutschland AG. The company includes the units' former sales forces, which have been united under a single management structure.

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To contact the reporter on this story:
Oliver Suess in Munich at  osuess@bloomberg.net

©2006 Bloomberg L.P.