Insurer's commercial lines GWP jumps £72.4m
Allianz UK has reported strong growth in its commercial business in its Q3 2009 results.
Commercial lines gross written premium increased to £761.8m in the first nine months of the year, compared to £689.4m in the same period last year. The commercial businesses combined ratio was 85.5% compared to 88.8% last year.
Overall the insurer reported a 23.1% rise in operating profit (pre tax) to £173.3m in the nine months to 30 September 2009, compared to £140.8m during the same period last year. Gross written premiums rose almost £44m to £1197.5m in the nine month period. The combined ratio improved from 95.4% to 91%.
Allianz chief executive Andrew Torrance said: “Our performance during 2009 continues to be very strong, particularly when set against the twin pillars of competitive insurance market conditions and the economic recession. I do not see these challenges lessening to any great extent, anytime soon. I am therefore very pleased that we are able to deliver a set of financial results at the end of the quarter that should provide great confidence in the robustness of our business.
“Across the business I am pleased to report progress on all fronts. Our general Commercial business continues to perform very strongly. Achieving a combined ratio of 85.5% is an outstanding achievement. However, I must continue to remind the market that these results are significantly underpinned by the release, to date, of some £100m due to the continued favourable development of prior year claims reserves. The fact is that in the current accident year, we are still delivering an underwriting loss which means this business is failing to make a decent return for our shareholder.
“Also, the signs in the third quarter were that in commercial lines satisfactory rate strength increases to remedy this are further away than ever. This is a trend which needs to be reversed sooner rather than later.”
In its retail business, gross written premium fell to £435.8m during the nine months to 30 September, from £464.3m in the same period last year. Retail combined ration was 99.8%, compared to 105.4% last year.
“The signs in the third quarter were that in commercial lines satisfactory rate strength increases are further away than ever. This is a trend which needs to be reversed sooner rather than later
Torrance continued: “Our retail operation is continuing to make encouraging progress, returning to a positive underwriting result for the year to date. Our broker channel business remains a “tale of two halves’ with our household GWP well ahead of plan and even further ahead of prior year. However, our motor GWP has fallen by some 21.8% compared to prior year which is an ongoing reflection of our willingness to sacrifice market share in order to bring this account back to profit. There is still some way to go on this journey but we are seeing an improvement in motor underwriting performance which is very welcome.”
He added: “Within Retail, the corporate partner business GWP is behind plan which is largely a reflection of the impact of the recession on our business partners, but I am greatly encouraged by the progress being made in this part of our operation, particularly in the area of new business acquisition which I expect to continue in 2010.
“In other parts of our retail operation, Animal Health (Petplan), GWP is 6.5% ahead of prior year and the combined ratio at the end of the third quarter stood at a pleasing 95.0%, a further improvement in the past three months. In Legal Protection GWP was 12.7% ahead of prior year and the combined ratio stood at very pleasing 93.0%.”
Torrance said the insurer’s acquisitions, Home and Legacy and Premierline, were performing “satisfactorily in highly competitive markets.” He said H&L’s renewal income was close to anticipated levels and Premierline continues to grow with GWP finishing the third quarter 22.0% ahead of prior year.
'Flight to quality'
He concluded: “I am convinced that there has been a ‘flight to quality’ in the general insurance market. The stability and continuity of strategy for which Allianz is renowned has served to convince our customers and business partners that a combination of reliability and results is proving to be hard to ignore.
"Subject to an absence of weather catastrophes prior to year end, we are set to end the year having delivered a level of financial performance that will be all the more satisfying given the market and economic conditions I referred to earlier.”