ALLIANZ INSURANCE MAKES A STRONG START TO 2013

Financial Highlights For Q1 2013:                                                                                                                  

·  Gross Written Premiums up 7.0% over same period in 2012

·  IFRS operating profit up 34.1% to £46.8m

·  Combined Ratio an impressive 95.2% - down 2.1 percentage points over Q1 2012

·  Allianz has now reported a sub 100% Combined Operating Ratio for 41 consecutive quarters

Statement from Chief Executive Officer Andrew Torrance

I am very encouraged with the start we have made to 2013. We have achieved strong GWP growth during the quarter, up 7.0% over the same period last year and our COR has fallen by 1.9% compared to the same period last year. We have also delivered a significant improvement in operating profit, up 34.1% over Q1 2012 to £46.8m.

Delivering profitable growth is our mantra and I am pleased that we are continuing to deliver results that live up to this. 

Commercial Division

The action programme we started more than a year ago to improve returns in our Commercial business is now bearing fruit, which is very pleasing. GWP is up 2.4% over the same period in 2012 in market conditions I would describe as having a slightly firmer tone than has been the case.  The Combined Operating Ratio of 95.1% reflects both our underwriting expertise and focus, as well as a lack of adverse weather claims during the quarter.

I am particularly pleased with the rate strength we are achieving across the general commercial lines and the excellent retention performance we delivered.  Liability continues to be our most challenged account and two years of double digit rate increases are required to allow an adequate return on capital to be made. 

The story of the performance of our market leading Engineering insurance and inspection business is a very familiar one. Positive rate strength remains an elusive goal in the insurance segment of the business, but I am pleased to say that the fee based inspection account delivered a GWP slightly ahead of prior year and rate strength ahead of inflation.

Retail Division

I am very satisfied with the performance of our Retail Division with GWP across the division up 12.2%. Broker business GWP is up 11.8% over the previous year and this over performance is mostly derived from the household portfolio where we have now become the lead insurer on Towergate’s household account. I am also pleased to report that overall the broker household policy count rose by 7.5% during the quarter 

In Broker private motor, the GWP is a shade behind prior year but the policy count grew by 5.0% during the quarter.

Animal Health (Petplan) continues to deliver excellent results both in terms of its new business and retention performance. GWP is up 10.3% above prior year and the total policies underwritten has reached a record high of 912k.

It has been a challenging quarter for the Retail Corporate Partner Business. GWP is behind prior year but the motor account continued to grow and I expect this position to improve as we proceed throughout the year.

In the Direct motor and household market, the first quarter of this year has been a subdued one as we implemented improvements to our underwriting algorithms. However, this work is virtually complete and we will look to expand volumes in Q2 and beyond.

I have been asked on more than one occasion about the plans for the future of our Legal Protection business in a post Jackson world. My answer is that ALP will develop and grow a profitable and sustainable non PI business account to include Commercial and other areas of risk, as well as replacing and growing our BTE offering in target markets and capitalise on the huge opportunity to develop civil litigation and legal services propositions. We know there is demand in these areas and we are currently in discussion with various companies regarding potential offerings.

I am very confident about ALP’s future and I draw this confidence from looking at the financials and the people within that business. ALP’s financial performance in 2012 and in the first quarter of this year, where we grew the GWP ahead of prior year, shows that the business is in a good place financially and this will remain the case for the foreseeable future because of the nature of the existing business model.

I also base my confidence on the quality of the people at ALP and their knowledge of the market which means that the plans for the future of the business are well founded and will be executed flawlessly.

Other News

During the quarter, we were very pleased to announce that Allianz Commercial had signed a new bancassurance partnership with Barclays to provide tailored solutions to meet the insurance needs of their 750,000 SME customers. This is the first UK success of a global programme to build a strategic relationship between Barclays and Allianz.  

I am also pleased that Allianz Commercial launched its full-cycle SME electronic trading model based on the new QuoteSME platform. It allows brokers to trade completely online, handling renewals and mid-term adjustments and instant online quotations and the immediate delivery of electronic documentation. This is a powerful tool for our broker partners to use and provides us with substantial differentiation from our competitors.

Also during the quarter, our sponsorship of Saracens Rugby Club reached a new landmark as the team played its first home league match at the Allianz Park stadium in north London on 16 February and celebrated with a victory over Exeter.  This was the first Premiership game played on an artificial pitch and was voted a great success by players and supporters alike. 

The Saracens sponsorship is the first strand of the multi year strategy designed to raise the level of awareness of the Allianz brand in the UK. More brand building activity is planned from 1^st June and we will be releasing more details shortly.

I am also pleased to report that following the successful launch of our Broker Scholarship Scheme in 2012, we are continuing our commitment to develop the future talent within the insurance industry and offered 30 new places for scholars this year. During the application window in February, we received 20% more applications than last year which demonstrates how highly regarded this programme is by brokers. The new intake of scholars will begin their 18 month studies towards the CII Diploma in Insurance at the end of May and will take their first exam in October. 

In conclusion, I believe we have got off to a great start in 2013, but it is just the first leg of what will undoubtedly be a challenging trading year.  This will be played out against a backdrop of continuing macro economic challenges and the ever present potential for natural forces such as significant bad weather or major fire losses, to cost insurers many millions of pounds in a single stroke.

Nevertheless, I am optimistic that with our proven track record of delivering year-on-year positive results for all our stakeholders, we will enjoy another successful year in 2013.