Desired commercial rates rise will be difficult to come by, admits Torrance

Allianz Insurance is seeking rate rises in its retail broker and commercial books in 2011.

Overall, Allianz’s underwriting was profitable: the company posted a 95.9% combined ratio for 2010. However, the private motor account turned in a full-year combined ratio of 113% for 2010 as a result of continuing bodily injury claims inflation. Meanwhile, the household account, although it performed better, posted a combined ratio of 102% as a result of the winter weather in January, November and December.

Allianz chief executive Andrew Torrance said the company would be looking for 15 percentage point rate increases in private motor in 2011 on top of the 25-point rise achieved in 2010. “To make that account attractive from the viewpoint of the shareholder, we have got to get it to a combined ratio of around 97%-98%, given the low interest rate environment we have,” Torrance said.

Household will require rate rises of between five and 10 percentage points, in part because extreme winter weather appears to be becoming the norm rather than an anomaly. “That requires pricing action on behalf of the industry,” Torrance said. The retail business overall saw its combined ratio fall to 97.8% from 101%.

On the commercial side, Allianz’s combined ratio rose to 94.5% from 86.6%. The company said its fleet, large commercial property and liability accounts failed to deliver a satisfactory return on an accident year basis. Torrance said that, overall, commercial business needed rate increases of between five and 10 percentage points, but conceded that these might be difficult to come by.

However, he added that the commercial increases achieved in 2010 were around three percentage points. “I don’t see us going back from that,” he said.

Allianz made a group-wide profit of £158.5m, down 22% on the £203.7m it made in 2009. The fall was due to lower investment income and reserve releases.