Twenty per cent drop in retail business reflects ‘corrective action’, says chief executive Andrew Torrance
Allianz UK has reported £825m in gross written premium (GWP), an increase of 2.9% for the first half of 2009 over the same period in 2008.
Operating profit was down 6.1% to £88.3m, from the £94m it reported last year, but Torrance said this was “ahead of plan”. The combined operating ratio improved by 0.8% to 94.9% over the first half of 2008.
Allianz UK’s retail business continued to struggle, however, with GWP down 20% to £292.1m for the first half of 2009, from the £306.4m the business reported in the first half of 2008. In the first quarter, retail suffered a 5.5% drop in GWP to £148.4m, from the £156.9m reported in the first three months in 2008. The combined operating ratio for the first half of 2009 improved, however, from 107.1% to 100%.
“In the retail business, the broker motor account continues to see GWP fall 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,” Allianz UK’s chief executive, Andrew Torrance, said.
The broker household book saw GWP jump by 50% above prior-year figures to £33.5m, however. “The performance has been strongly impacted by two new distribution relationships that began earlier this year and the launch of the Clear product range,” Torrance explained.
The GWP for animal health business Petplan grew 8% following increased premiums in order to improve profit. Torrance said the action was starting to deliver, with the combined ratio reducing 0.8% to 95.8 for the first half of this year.
Retail’s corporate partner business reported GWP of £56.8m, which Torrance said was behind plan and reflected the impact of the recession. The legal protection business’s GWP leapt 11% with after-the-event business a main contributor. “The combined ratio was a healthy 92.5%,” Torrance said.
The commercial business’s GWP rose to £532.9m, up from the £495.6m reported in the first half of 2008. The combined ratio suffered, however, rising to 91.8% for the first half of 2009, from the 88.1% it reported last year.
“I can report that our general commercial business continued to perform strongly and ahead of plan,” Torrance said. “However, 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. Securing the relationship with the Lloyds Banking Group during Q2 was especially pleasing.”
Torrance added he was disappointed that, in the second quarter, the market did not push on from the rate rises applied during the first quarter of this year. “A low interest rate economy puts added pressure on the requirement to achieve reasonable and consistent increases in rate strength ahead of claims inflation,” he said. “Rate momentum must be regained as we progress through the remainder of the year if insurers are to make acceptable underwriting profits in 2010.”