Allianz UK has released its financial results for the first six months of the year.
- Gross Written Premiums up 2.9% over same period in 2008
- IFRS Operating Profit ahead of plan but down 6.1% over 1H 2008
- Combined Ratio at an excellent 94.9%, improves 0.8% over 1H 2008
- Allianz Insurance Standard & Poor’s rating re-affirmed at AA- (stable outlook)
Last year was an excellent one for Allianz, recording a surge of 36.8% in profits to £193.6m for the year compared to £141m for 2007.
Allianz chief executive officer, Andrew Torrance, said: “I am very pleased with the performance the business has delivered during the first half of this year. Operating in such a low interest rate environment has had a degree of negative impact on the level of profit I would like to see the business producing at this point, but this is an inevitable outcome of the broader economic scenario.
A low interest rate economy also puts added pressure on the requirement to achieve a reasonable and consistent increase in rate strength ahead of claims inflation. Whilst there have been some positive signs in that direction, I am somewhat disappointed that in the second quarter, the market did not push on from the rate rises applied during Q1 of this year. Rate momentum must be regained as we progress through the remainder of the year if insurers are to make acceptable underwriting profits in 2010.”
He said the commercial business “continued to perform strongly and ahead of plan in a competitive marketplace” but that “the division’s results continue to benefit from the release of favourable prior year claims reserves and the profitability of business currently being written remains well below our target levels”.
Mr Torrance said the engineering business “continues to perform well in a market where premiums remain under competitive pressures, particularly in the insurance segment, which delivered negative rate strength of 0.4%”. The inspection element fared slightly better at +2.1%.
He continued: “In the retail business, the broker motor account continues to see GWP fall (20% compared to H1 2008) as we take the corrective action needed to restore this account to profit and I anticipate that there will be further reductions in top line as we progress through the year.
“Conversely, our broker household book has seen GWP grow by 50% above prior year to £33.5m. This performance has been strongly impacted by two new distribution relationships which began earlier this year and the launch of the Clear product range.”
In Animal Health GWP grew by 8% while the combined ratio reduced 0.8 percentage points to 95.8% at 1H.
Mr Torrance said: “In retail’s corporate partner business, the GWP of £56.8m is behind plan and reflects the recession’s impact. However, I am confident that this part of our business will grow substantially in the medium-term and make a significant contribution to the success of retail division going forward.”
Allianz said the legal protection business is delivering consistently good financial results and at the half-year point GWP was 11% ahead of plan with the after the event business the main contributor to this over- performance. The combined ratio was a healthy 92.5%.
It said Home and Legacy delivered profits in line with plan with new business sales achieving record levels in June.
