Allianz announces robust profit and underwriting performance in third quarter 2019

Overview

The business continued to deliver a robust profit and underwriting performance in the third quarter in both Commercial and Personal Lines. This performance was achieved against a backdrop of increasing claims costs in property and motor. Operating profit in the third quarter was also impacted by £11m as a result of the change in the discount rate.

The strength of Allianz was underlined by the announcement of its status as the No1 Global insurance brand according to the respected Interbrand Best Global Rankings, with the value of the brand rising to $12.1billion from $4.9billion in 2010. This is a significant achievement and reflects not only the global strategy to raise the profile of the group, but also Allianz’s strong commitment to achieving customer loyalty which is a factor in the rating’s methodology.

Commercial

Gross Written Premium has increased by 13.0% which reflects good underlying growth and the positive impact of the transferred LV= commercial business. At 97.3%, the Combined Operating Ratio reflects the ongoing delivery of underwriting profit.

The LV= transfers have gone smoothly and in line with expectations, giving Allianz the new business it wanted, which has changed the portfolio mix and incurred short-term transfer costs. The main programme of transfers is complete and just a very small number of Commercial Lines schemes policies are outstanding. These will be completed by the end of the year, as originally planned.

The cost of claims in both property and motor is increasing ahead of inflation. The weak performance of sterling against both the Euro and the Dollar is an important factor as the price of materials brought in from abroad and used in repairs has increased markedly. This is not just confined to the cost of repairing motor vehicles but also applies to material used to repair property damaged by fire and flood. With signs that labour costs are also increasing, tackling claims inflation remains a priority for the business.

In addition to these inflationary pressures on claims, the property account is also experiencing a 1-in-10 year for large losses and saw an increase in recessionary claims for fire and theft.

Customers and brokers can play their part in helping to manage costs by being vigorously focused on risk management. Allianz is playing its part with the launch of its new Risk Management website to existing and prospective customers to help businesses manage and mitigate both traditional and emerging risks to help keep their employees and customers safe and to comply with relevant legislation.

Engineering, Construction & Power (EC&P) has had a successful quarter as its business performance remains strong in profit and growth terms. The renewables launch has been a huge success with some notable business wins in this sector.

Personal

Allianz remains a significant player in personal lines. Petplan, the market leader in pet insurance, continues to deliver a strong set of growth and profit numbers. The business is delivering an excellent digital customer-focused solution alongside its other well established revenue channels. For example, online quotes are usually obtained within three minutes and 90% of claims are paid within five working days.

Other personal lines include Allianz Musical Insurance (AMI) - the UK's no. 1 specialist insurer of musical instruments, providing musical instrument cover since the 1960s, directly to customers and via brokers. Today AMI insures over 70,000 musicians, from beginners to internationally renowned artists. Although a relatively small part of the Allianz portfolio, AMI continues to grow and remains robustly profitable.

Brand news

In addition to the global Interbrand recognition, here in the UK, the most recent example of high-profile brand building was the sponsorship of the London 2019 World Para Swimming Allianz Championships which took place in September at the London Aquatics Centre in the Queen Elizabeth Olympic Park. The event was part of the group’s long-term support of Paralympic sports and every day of the championship was broadcast on Channel 4 and More4.

Underwriting Excellence

To support the development of the next generation of insurance underwriters, Allianz announced a refresh of its award winning Underwriting Academy, first launched in 2001. Now called Excellence in Technical, the programmes include specialist online and external training together with on-the-job support across faculties in underwriting, data, pricing and portfolio management.

Excellence in Technical sits alongside Allianz’s Excellence in Distribution and Excellence in Claims, demonstrating Allianz’s long-term and unwavering commitment to the training and development of its people and the attraction of new talent into the business.

Chief Executive Officer, Jon Dye said:

“This has been another successful quarter for Allianz and we enter the last period of the trading year in a strong position. There are some challenges ahead, not least the financial impact of claims inflation, but with the support of our broker partners in our underwriting for profit approach, this can be managed.

“Looking forward to next year, our preparations for the transactions with the general insurance businesses of LV= and Legal & General are entering their final phase. When these are completed, Allianz UK will become a business with a combined GWP of more than £4bn, 12 million customers and 8,000 employees, achieving a size and scale unprecedented in its 114 year history.

“This represents a significant step change for the organisation and I am confident we can look to push forward from that position because we have the right long-term objectives, the right people and the right strategy to achieve our goals. 

Authored by Allianz