PROFITS AT Allfinanz fell from €2.1 million in 2007 to just €61,000 last year, the first full year it was a subsidiary of German reinsurance giant Munich Re.

The German firm acquired Allfinanz in late 2007 for a cash consideration of €48 million.

Accounts just filed with the Companies Registration Office show that turnover at Allfinanz increased by 28 per cent during the year to €8.6 million from €6.7 million in 2007. But an associated increase in cost of sales, from €2.6 million to €5.6 million, and operating expenses, from €1.9 million to €2.8 million, eroded pretax profits. Operating expenses were affected by a €570,000 foreign exchange loss.

The directors’ report attached to the accounts attributes the growth in revenues to “increased sales in our Australian and Asian operations and increased activity won in the mainland Europe”.

Chief executive Ross Mayne said the company had been investing heavily in new products and markets with a focus on expansion in Germany and Japan. In September 2008 the company established a new subsidiary, Allfinanz KK, in Japan and is establishing a German operation. It has subsequently announced large contracts with Japan’s SBI-AXA Life Insurance and German life insurer Karstadt Quelle Versicherungen.

Mr Mayne said part of the investment involved localising its products. “It’s important to be German in Germany and Japanese in Japan,” he said.

Allfinanz provides business processing and underwriting automation software to life insurance companies. Last year it also introduced a business analytics product.

During 2008 the Dublin-based firm generated €5.1 million in revenues from European countries other than Ireland and €2.7 million from Australia.

The accounts confirm that no dividend was paid to Munich Re last year. They also show that employment at the Irish operations increased from an average of 40 staff to 56.

Founded in 1987 as FM Systems, Allfinanz had been backed by venture capital firms Bank of Scotland (Ireland), ACT Venture Capital and Dutch investor Parc-IT.