ALLIANZ UK DELIVERS STRONG FIRST HALF GROWTH

Financial Highlights For First Half 2012:            

• Gross Written Premiums up 5.6%
• Strong operating profit of £75.3m
• Combined Ratio an excellent 96.8%
• Retail GWP up 11.9% with an excellent 94.8% COR

Group Results:                                               HY 2012         HY 2011

Gross Written Premium                                 £ 965.1m         £ 914.0m

IFRS Operating Profit (before tax)                 £   75.3m         £   77.5m

Combined Ratio                                                  96.8%             96.1%

                                     Divisional Results Breakdown

Commercial                                                     HY 2012         HY 2011

Gross Written Premium                                    £ 525.9m        £ 521.5m
Combined Ratio                                                   98.6%            95.9%

Retail

Gross Written Premium                                    £ 439.2m        £ 392.5m
Combined Ratio                                                    94.8%           96.4%

Statement from Chief Executive Officer, Andrew Torrance

It is pleasing that we have been able to grow our top line by 5.6% in the first half of this year compared to the same period in 2011. This is almost an exact repeat of the performance we delivered at the same point in 2011 compared to the previous year. This is further evidence of our ability to consistently grow our business as we have been doing before and right through the macro economic crisis going right back to 2008.

Our underwriting performance also remains strong with our Combined Operating Ratio at a very pleasing 96.8%, despite the adverse weather experienced in June.

Commercial Lines:

Our Commercial business has achieved modest GWP growth (0.8%) in the first half of the year. Our Packages and Commercial Motor portfolios saw high single digit levels of GWP growth but this was largely offset by the Liability and Commercial Property portfolios where GWP shrank.  This reflects our efforts to write a larger proportion of the more profitable lines and accept reduced exposures in the Liability and mid-market Property lines where profitability is unacceptably low.

The Engineering GWP was just ahead of prior year. In the insurance segment of our Engineering business the market remained very competitive with rate strength continuing negative.  The picture is a little more positive in the fee based inspection part of the business where GWP was 3.8% ahead of prior year. However, the lack of growth in the overall economy is having an impact on the market for both insurance and inspection business although this line remains a strong profit performer overall.

Retail Business:

Retail Division GWP is up a pleasing 11.9 % over prior year which, coupled with an excellent 94.8% COR - 1.6% better than the same period in 2011, means our Retail business is continuing its strong recent performance.

The division’s broker business performed well in profit terms with a COR of 95, an 11 percentage point improvement on the first half of 2011.

The Corporate Partner business delivered strong top line growth with a GWP 19.1% ahead of prior year with particularly strong growth in the motor account as the partnerships with VW and BMW go from strength to strength.

The Animal Health business (Petplan) grew GWP 8.7%.  Policy numbers reached record levels, growing 2.5% in the first half of the year, underpinning Petplan’s leadership in the pet insurance market.  Rate strength in line with claims inflation was applied across the portfolio during the first half of the year. The underwriting performance continues to be strong with profit well ahead of plan.  

Legal Protection GWP growth was at an excellent level and well ahead of plan at 43.5%. The After The Event (ATE) segment of the account was the major contributor to this performance with good levels of underwriting profit also delivered.

Retail’s Your Cover Motor GWP was more than double the prior year figure. The Household element of this business remains modest but will increase as the roll out across the major aggregators is completed.  

Results for the Customer

Allianz has picked up its share of the recent bad weather claims and our current best estimate for the value of the insured loss is around £23m to the end of June.  The majority of the losses were suffered by the Commercial Property and Motor Trade accounts.

Our Claims Department has worked extremely hard to make sure that both our private and commercial policyholders have had their claims dealt with swiftly and with an understanding of just how unpleasant such incidents can be when your home is damaged or your business is disrupted under such circumstances.

In terms of the London Riots which took place in August 2011, I am pleased to say that we have now settled 90% of our policyholders’ claims and what remain to be settled are the large and more complex claims that will, by their nature, take longer to settle in full.

Finally, our Retail business latest Net Promoter Score research feedback for Broker service and the Petplan Claims function has revealed that we have achieved our highest ever scores.  This is excellent news because it means that Retail brokers would recommend Retail's service to a friend or colleague and the Petplan result is up there with the NPS scores achieved by the world’s leading companies, which is a great achievement.

We aim to ensure our customers are at the heart of everything we do.  Achieving such positive scores shows that we are not only listening to their views but are also acting on their feedback.

The Future

Very recently I participated in the launch of a major new sponsorship with leading rugby union club, Saracens. This long term partnership will see Allianz as team sponsor from the start of the new season in September.  I’m particularly excited that in February 2013 Saracens will move to a new home stadium in North London, to be called Allianz Park.  We will also become the title sponsor of Saracens’ youth rugby and community programmes.

This high profile partnership represents a first and significant step in making the Allianz brand better known across the UK and I look forward to a long and happy association with the club.  The move also aligns with the Allianz Arena (Munich), Allianz Stadium (Sydney) and Allianz Riviera (Nice) portfolio of sports facility sponsorships.

Looking ahead over the balance of 2012 I am confident that we will continue to grow and that our profit plan is very much within reach.  Achieving this, however, will require more favourable weather conditions for the rest of the year – a wish which I am certain is shared by all insurers with UKproperty exposures.

Andrew Torrance

Chief Executive, Allianz Insurance

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