H1 commercial rate hikes disappoint Allianz chief

Allianz Insurance chief executive Andrew Torrance has described as “very disappointing” the three-percentage-point rate increases in commercial business his firm achieved in the first half of 2010.

“We were originally planning this year for rate increases that were close to double digit levels,” Torrance said. “It is reflective of a marketplace which has failed to harden in the way that we expected it to at the time we put our plan together for 2010 11 months ago.”

The firm revised its targets for a more modest increase of five percentage points during the second quarter alone, but only achieved increases of around four percentage points.

“In the balance of the year we will try to push towards that tactical goal of a five percentage point increase,” he said. However, he added: “We have a quality book of commercial business and if market conditions don’t allow us to get to that five percentage point increase then so be it. Our business needs rate increases much less than that of some of our competitors,”

Overall, Torrance was pleased with Allianz Insurance’s first half performance. Gross written premiums increased 4.4% to £861.1m in the first half of 2010 from £825m in the same period last year. The combined ratio increased to 95.3% from 94.9% in the first half, but Torrance described this as “a very good result in what is still a difficult market”.

IFRS operating profit fell 11% to £78.4m from £88.3m because of lower investment returns.

Torrance was particularly pleased with the performance of Allianz Insurance’s retail business. Its combined ratio improved 4.3 points to 95.6% from 99.9%. “This moves that business into a decent underwriting profit for the first time in quite a while,” Torrance said.