Allianz Holdings plc Q3 2020 Third Quarter Trading Update

Authored by Allianz

This is a quarterly update of the Allianz Holdings Group, incorporating Allianz Insurance, LV= General Insurance and the general insurance business acquired from Legal & General.

Jon Dye, Chief Executive of Allianz Holdings:

“2020 continues to present unprecedented challenges as we face the ongoing impact of Covid-19. I’m very proud of how our business has adapted throughout the crisis to meet the demands of this evolving situation. We have worked extremely hard to maintain service levels and deliver for our customers and brokers, and this is reflected in the positive feedback we have received from the market.

“At the same time, it is important to recognise that there are many other external issues facing our business and it is essential we are ready to meet those. The Commercial lines market is still under pressure and events in 2020 have demonstrated that the market is not in a place where it has been able to adequately absorb the shock of major events, whether that be severe weather, Covid-19 or increased recessionary trends.

“Despite these extremely challenging circumstances, Allianz Holdings continues to perform well. Our larger combined operation means that we are even more resilient and able to maintain our stable position, which once again reinforces the benefit of our diversified business.”

Steve Treloar, CEO of LV= General Insurance, added:

“I’m pleased with the results we’ve delivered in the third quarter. It’s most certainly been an eventful three months both from an industry perspective and within our own business but our people have continued to maintain their focus on ensuring our customers get great products and an excellent service which I’m incredibly proud of. We have strong foundations as a business and I’m confident that we’re very well positioned for the future.”

Allianz Insurance

Allianz’s Commercial & Personal lines performance reflects the tough market conditions we currently operate in with lower levels of economic activity and a general downturn in new business affecting revenue.

Ongoing investment into our digital capabilities has ensured service levels to customers and engagement with brokers has remained high throughout the Covid-19 crisis. This has been reflected in recent Net Promoter Score (NPS) research amongst our brokers, which revealed that our General Commercial and Engineering Construction & Power businesses are loyalty leaders as is Petplan.

Throughout 2020 we have worked hard to provide support to brokers, customers and communities impacted by Covid-19. Since the beginning of the crisis, we’ve made payments on 1,676 valid Business Interruption claims totalling over £20m. Whilst Allianz was not a defendant in the FCA Test Case on business interruption insurance claims, we do have policies that were affected by the outcome. Therefore we have continued to monitor developments following the recent judgement closely and have now carried out a review of those claims impacted so as to ensure we proactively move them to a resolution once we have a final decision from the courts.

Despite the recent complication of regional lockdowns, our engineering inspection service levels in Allianz Engineering Construction & Power have remained at pre-Covid levels, which is thanks to the dedication of our Engineer Surveyors who have continued to deliver exceptional customer service in very challenging circumstances.

In September Petplan launched our new online customer hub, My Petplan. This exciting new addition enables Petplan customers to view all of their pet insurance information digitally in one place for the first time, allowing us to further deliver excellent customer service.

Earlier this year Allianz donated more than £10m to the COVID-19 Support Fund, which recently announced that it has now achieved its target of raising £100m for charity, making it the biggest sector fund in the UK. From this amount donations have been granted to an initiative with The Charities Aid Foundation and to the National Emergencies Trust (NET) to support community based organisations across the UK and national charities including Mind, Shelter and Age UK. Funds have also been donated to Business in the Community’s National Business Response Network. We are extremely proud to have played a part in this.

Learning & Development remains a key priority during 2020 despite the challenges of working remotely. Allianz has just welcomed 39 new graduates, having made adjustments to ensure that the new intake of talent can experience the 2020 programme virtually. Allianz has also announced the roll out of free access to the online learning platform, LinkedIn Learning, for many of our independent brokers. This builds on our existing Broker Training proposition, which provides webinars and technical broker training programmes to all brokers.

We are delighted to have recently announced our new landmark partnership with the Rugby Football Union (RFU) in which Allianz will become the Official Insurance Partner of England Rugby. Allianz also becomes new title partner for the women's Premier 15s and Inner Warrior grassroots programme with landmark investment to grow women and girls’ rugby in England. This is an excellent fit for our organisation, complementing our existing national partnerships, and we are excited about the potential this new agreement will bring for us.

LV= General Insurance

Our trading performance to date has been very positive, delivering £1,570 million in GWP, up 31% from the prior year. The business remains in good health and we continue to maintain good momentum. In Q3, we were incredibly proud to once again have our customer service recognised after being ranked in the top ten in the Institute of Customer Service UK Customer Satisfaction Index for the fourth consecutive time, moving up two positions to eighth place.

Following the recent launch of our first monthly subscription insurance product – Flow - we’ve also seen significant interest from customers with more than 2,700 policies bought in just a few months. Flow car insurance is a flexible, online product with a significantly shorter question set, no long-term commitment, no instalment charges and the freedom to change or cancel the policy whenever the customer wants to, with no additional costs.

Q3 also saw us start offering travel insurance again to new customers, with cover introduced to reflect the changes affecting travel caused by the ongoing COVID-19 pandemic.

To ensure we’re operating more efficiently and are well positioned for the future, in the third quarter we announced proposals to reshape the business over the next 2.5 years. Collective consultation recently concluded and we continue with individual consultations - which we expect to complete in Q4 - and where possible redeployment opportunities are being found for our people to minimise redundancies.

Finally, Q3 also saw the FCA publish the outcome of its General Insurance market study. The UK General insurance market is extremely competitive and ensuring it works as fairly as possible for everyone is vital and we welcome the proposed remedies as we believe they should result in a level playing field for all insurers, brokers and intermediaries and deliver positive outcomes to consumers. As a business, we have always focused on helping our customers, giving them choice, clearly explaining their options and helping them to understand what makes up the price they pay for their insurance cover and we will now work with the regulator to discuss the proposed remedies in greater detail with the aim of ensuring that these are implemented effectively.

Outlook

Jon Dye concludes: “2020 remains an extremely challenging environment for businesses. We don’t yet know what the economic impact of a potential second wave of Covid-19 will have and this is currently combined with the ongoing uncertainty caused by Brexit. Despite this, I believe there will be areas where new opportunity presents itself for profitable growth. An example of this is the Government’s commitment to invest in the construction sector, which we believe could lead to new prospects for us.I’m confident that we are in a strong position to manage the challenges of the future while taking advantage of new opportunities that arise.”