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ALLIANZ UK CONTINUES TO DELIVER A ROBUST FINANCIAL PERFORMANCE

Press release -

ALLIANZ UK CONTINUES TO DELIVER A ROBUST FINANCIAL PERFORMANCE

Financial Highlights: 

  • Gross Written Premiums up 4.3%
  • Strong operating profit of £115.0m
  • Combined Ratio at an excellent 96.7%

Group Results:                                          Q3 2012            Q3 2011

Gross Written Premium                            £ 1434.3m         £ 1374.7m

IFRS Operating Profit (before tax)            £   115.0m         £ 123.6m

Combined Ratio                                           96.7%            95.8%

Divisional Results Breakdown

Commercial                                                                                       

                                                                  Q3 2012         Q3 2011            

Gross Written Premium                             £ 746.2m         £ 740.5m

Combined Ratio                                         99.1%              95.1%

Retail

Gross Written Premium                            £ 688.1m          £ 634.2m

Combined Ratio                                        94.2%               96.8%

Statement from Chief Executive Officer, Andrew Torrance

I am very pleased to report Gross Written Premium (GWP) growth of 4.3% in 2012 with our Commercial and, in particular, our Retail business making valuable contributions to this performance. Unfortunately, our operating profit figure year-to-date is 6.9% down compared to the previous year, primarily as a result of adverse weather related losses of which the summer storms and floods represents £26m. However, it is very important to stress that delivering a combined operating ratio of 96.7% is a clear indication of our continuing ability to deliver underwriting profits at very acceptable levels even in the face of testing circumstances.   

Commercial Lines   

So far this year, rate strength achieved across in the general commercial business has been 4.5% but this remains short of what is required to allow us to make a decent return for our shareholder.  The 99.1% COR achieved so far this year is unacceptably poor.  However, there may be the first signs of the market ‘waking up and smelling the coffee’, at least in the Liability market where we have seen rates grow by 7.5%, but even this level of improvement is insufficient and needs to go higher for longer. Unfortunately, no such awakening is evident in the Property market where year-to-date only a 2.5% increase has been possible.

Commercial division is continuing to reposition its business portfolio towards more profitable lines and this strategy is paying off with GWP in the Packages and Commercial Motor accounts growing by 6.8% and 9.1% respectively so far this year. I would expect us to continue to look for growth in these areas for the foreseeable future.  As I have always maintained, we are prepared to shed business where we cannot achieve an acceptable level of return and this is a stance that my colleagues in Commercial are applying in the Liability and mid-commercial Property portfolios.      

The Engineering business top line performance is broadly in line with the position reported at the same point last year. As I have been saying for some time now, the engineering insurance sector is highly competitive and is also a sector which has been hit hard by the difficult macroeconomic environment.

The position is more favourable in the inspection business but still behind where we had planned to be at this point in the year.

Retail Business

Retail business overall has delivered a very satisfactory 8.5% growth in GWP over prior year which, coupled with an excellent 94.2% COR, 2.6 percentage points better than the same period in 2011,  underlines the excellent level of performance being delivered.

The division’s broker channel performed well with the motor portfolio delivering a very pleasing COR year-to-date of 95.5%. In non-motor the picture was less healthy, primarily due to the flood losses already mentioned and this resulted in a deterioration in the portfolio’s COR to 101.7%. 

The Corporate Partner business delivered a 10.9% increase in GWP over the same period in 2011. During the third quarter we also signed a 3 year exclusive agreement with Everything Everywhere (EE) to underwrite their mobile phone insurance.  This is a significant agreement and extends our existing partnership withOrangeto the T-Mobile and EE brands from which we will see additional significant growth.  Everything Everywhere has a customer base of around 27 million people, over half of theUKadult population, and two of the brands,Orangeand T-Mobile, together now represent the largest single book of mobile phone insurance customers in theUK.

The Animal Health business (Petplan) grew its GWP by 9.5% over prior year. Policy numbers continue to grow despite wider economic pressures and reached 877k at the end of the quarter.  We expect to cross the £250m GWP milestone for this business before year end.

Legal Protection GWP is 40% ahead of prior year driven principally by the After the Event (ATE) segment and we are making pleasing levels of underwriting profit from this business.  Planning for the post-Jackson civil justice system changes has advanced over the past three months.  I am now convinced that Legal Protection will evolve to remain a substantial business for us in the post-Jackson world.  Retail’s Your Cover Motor GWP is still running close to double the prior year figure. The Household element of this business remains relatively modest but will increase as the roll out across the major aggregators is completed, which we expect to be finalised during 2013.

Results for the Customer  

The recommendation of an organisation to a friend or colleague is at the heart of the Net Promoter Score (NPS) methodology and is therefore an excellent barometer for assessing the relationship an organisation has with its customers. I am very pleased to say that in a recent independently administered NPS feedback exercise involving our broker partners, Allianz Retail emerged as joint loyalty leader which is an excellent achievement and represents a significant journey of improvement for the division since the research process begain back in 2006.  In parallel research, I am also delighted to report that both the General Commercial and Engineering businesses maintained the loyalty leadership positions which they have occupied in their respective markets for several years.  

Awards

The third quarter of this year was one of achievement for the organisation in terms of award recognition.

I was very pleased to learn recently that Allianz Insurance has been named as a finalist in the General Insurer of the Year category at this year’s Insurance Times Awards.  In July we were also nominated in the same category at the British Insurance Awards, although we were ultimately a runner-up. I am hoping that we can go one better at the Insurance Times Awards in December but even if we do not, to continue to be nominated year-on-year in these categories is testimony to the consistent performance the company has delivered across a range of key customer and financial measures. 

I am also pleased to announce that Allianz Commercial has been shortlisted in four categories in the forthcoming Post Magazine Underwriting Awards. Furthermore, Allianz Commercial’s new Scholarship Programme has also been shortlisted in the Insurance Times Awards in the category of Training Programme of the Year – Insurer.  This is deserved recognition for our scheme which is supporting 30 young brokers as they work towards their CII Diploma in Insurance.

The Future

As we enter the final straight of the 2012 financial year and based on what we have already achieved, I am confident that we will once again grow our business in 2012 and that our profit plan target remains within reach. However, I always qualify any profit forecast with the positioning of the weather as a key determinant together with the absence of any major fire losses.  This year is just the same.

 Andrew Torrance

Chief Executive, Allianz Insurance

Topics

Regions


Allianz Insurance is one of the largest general insurers in the UK and part of the Allianz SE Group, one of the leading integrated financial services providers worldwide and the largest property and casualty insurer in the world.

With approximately 142,000 employees worldwide, the Allianz Group serves approximately    78 million customers in more than 70 countries.

The mission of Allianz Insurance is to be the outstanding competitor in our chosen markets by delivering products and services that out clients recommend, being a great company to work for and achieving the best combination of profit and growth.

Contacts

Amy Yorston

Amy Yorston

Press contact PR Consultant 07794266474
Sian Baker

Sian Baker

Press contact PR Consultant 07891570995
Sara Robinson

Sara Robinson

Press contact PR Consultant 07918470463

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