Torrance bemoans “absence of common sense” in commercial lines
Allianz Insurance, the UK division of German insurance group Allianz, made a pre-tax IFRS operating profit of £119.1m for the first nine months of 2010, down 31% on the £173.3m it made last year.
However, Allianz Insurance chief executive Andrew Torrance said that the operating profit was still “ahead of plan” despite being markedly lower than that made in 2009, adding that last year’s result benefited from “exceptionally strong” reserve releases from old underwriting years.
Allianz Insurance’s combined ratio for the first nine months of 2010 was 95.8%, up from 91% in the same period last year.
Gross written premiums (GWP) increased 4% to £1.25bn from £1.2bn. Commercial lines GWP was up 3% to £722.1m from £702.3m, while personal lines GWP grew 6% to £525m from £495.3m.
While describing the commercial lines GWP growth as satisfactory given the tough market conditions, Torrance said: “I remain disappointed that the commercial lines market steadfastly resists efforts to push through rate rises at levels that are necessary for insurers to make a decent level of return for the risks they carry.”
He added: “As a result of this ongoing ‘absence of common sense’ I can only remain pessimistic about the prospects for the last quarter’s level of premium increases in this market. In this difficult market environment, we are not growing our exposures at present.”
The premium growth in personal lines was largely driven by price increases, according to Torrance. He expects the planned contraction in Allianz’s retail broker motor book to reverse over the next six months thanks to the further roll our of the firm’s Clear private car product, which he said has already achieved healthy sales volumes.
In addition, the hardening market in personal lines motor has allowed Allianz to increase rates by 22.5% in the year to date, which Torrance said is ahead of plan. While the household market is not hardening in the same way as private car, Allianz has put through year-to-date rate increases of 5.2% and has grown premium income by 29% through increased distribution.
Torrance is sanguine about Allianz’s prospects for the full year of 2010. “We are experiencing another strong year and barring losses from major weather events, I expect us to deliver a positive set of results for 2010 which are modestly ahead of the plan we set,” he said.