2007 profits fall a fifth to £197m
Allianz has reported record net written premiums (NWP) of £1.4bn in its 2007 results, up nine percent on the previous year.
The company's pre-tax profits fell by 18 per cent from £239.4m to £197.1m. In a statement the company said it had produced an underwriting profit of £30.4m.
The growth was driven, the insurer said, by 10.9 per cent growth in its commerical lines business to £831.9m. The insurer's retail business NWP grew by 6.3 per cent year on year to £566.2m.
The insurer's combined operating ratio slipped by 3.8 per cent to 97.8 per cent following an £83m hit from last year's catastrophic weather events.
Chief executive Andrew Torrance conceded that the performance of its broker acquisitions Home & Legacy and Premierline had been below par. He said: "The growth of our 2006 acquisitions, Home & Legacy and Premierline, has been slower than the aggressive plans we set for these businesses. Nevertheless, we are very enthusiastic about their future prospects and we anticipate that 2008 will be a strong year for both.
Torrance also warned that the market needed to take action on rate, adding that Allianz was committed to proftiable growth.
He said: "The need to increase rates to a level where insurers can reasonably expect to make an acceptable level of profit without relying on prior year reserves releases has been a theme of mine for some time.
"Whilst I am pleased to say that both private and fleet motor rates are now moving consistently upwards, we are only just beginning to see the green shoots of increased rate strength in the property and liability accounts. This needs to move forward if acceptable accident year returns are to be made and capital retained in the UK market."
He added: "The Group will continue to pursue a strategy of only underwriting business where there is a realistic prospect of achieving a decent level of return. A very pleasing level of growth was achieved in both our Commercial and Retail businesses, without deviating from this principle, through affinity partners, enhanced distribution relationships and improved sales management.
"During 2007, we took a number of minority stakes in brokers which we consider to be winners in the fast-changing commercial marketplace. We continue to believe that the best interests of commercial customers will be served by a vibrant and independent intermediary market."
Torrance concluded: "Overall, the 2007 result demonstrates the strength of Allianz’s UK business model."