The insurer says it is still grappling with the ramifications of the Covid-19 pandemic – for example, it has made payments on 87% of its accepted business interruption claims

Insurer Allianz Holdings has reported a decline in gross written premium (GWP) across all areas of its business for the first half of 2021, due to the continuing impact of the Covid-19 pandemic, competitive market conditions and portfolio run-offs.

In its 2021 half year financial results, published today (6 August 2021), the group – which includes Allianz Insurance and LV= General Insurance (LV=GI) – recorded a 6% drop in GWP between 2020 and 2021, moving from £1,981m last year to £1,863m at the end of June 2021.

Operating profit decreased by the same percentage, falling from £179m in H1 2020 to £169m this year.

The insurer’s combined operating ratio (COR), however, saw a slight improvement, moving from 92.7% in 2020 to 91.7% for this year’s first half – the firm attributed this to the successful joint venture with LV=.

Jon Dye, chief executive of Allianz Holdings, said: “I’m proud of what our business has delivered for the first six months of the year.

“Our half year results show a very strong combined operating ratio, underlining the solidity of Allianz Holdings and our balanced portfolio of commercial and personal lines business.

“Four years after the announcement of the joint venture with LV=, these figures demonstrate that the integration has resulted in our business being in an incredibly strong position and this success has enabled us to take the next step in our journey with the creation of Allianz Commercial and Allianz Personal.

“This simplified structure will align our business to the distinct needs of our customer groups.”

For example, moving into the second half of 2021, Allianz Holdings plans to use its targeted commercial business to forge stronger partnerships with brokers.

The insurer said: “As we look ahead to the future, the focus for commercial lines will be on ensuring we continue to support our customers through our extensive network of broker partners.

“Having a dedicated commercial business with a UK-wide footprint will place even greater emphasis on broker relations and we remain committed to ensuring we provide them with an excellent service and great products.”

Commercial COR improves

For Allianz Insurance specifically, GWP fell by 5.6% in the first half of 2021, from £967m to £913m.

Dividing this up further, Allianz’s commercial lines business noted a 6% drop in GWP to reach £617m, compared to £656m in the first half of 2020. Its personal lines business experienced a 5.1% drop in GWP, moving from 2020’s H1 figure of £312m to £296m this year.

Operating profit for Allianz Insurance has decreased by 38.9% to reach £44m – versus £72m in 2020’s H1 – and COR also worsened slightly from 95.6% in 2020 to 96.7%.

However, the business’s commercial lines COR has improved by a huge 12.7% to reach 97.4%, compared to 110.1% at H1 2020. The insurer believes this is due to less new business interruption (BI) insurance claims coming through as UK companies begin to get back to their pre-pandemic activities.

Regarding its backlog of BI claims following January’s Supreme Court judgment, Allianz Insurance revealed it has now issued “a final or interim payment in more than 87% of accepted BI claims, compared to a market average of just 43%”.

New business levels are also improving within commercial lines, Allianz added.

As for its personal lines business, COR here increased by 3.7% to 94.1% - compared to 2020’s 90.4% - due to the negative impact of motor books which are in run-off.

However, Allianz noted that “the Petplan, Allianz Musical Insurance and Home and Legacy businesses – which now form part of Allianz Personal – have all performed well”.

Competitive motor market

LV=GI, meanwhile, experienced a 16.7% boost in its operating profit, moving from £107m in 2020 to now stand at £125m. GWP followed the same trajectory as Allianz Holdings’ other business areas, falling by 6.3% to reach £950m for H1 2021, compared to £1014m for the same period last year.

COR also improved in the first six months of the year, going from 89.7% in 2020 to 87% this year.

LV=GI has been keeping a close eye on claims trends over the first six months of the year. In 2021’s Q1, less people on the roads meant reduced claims frequency for the insurer, providing an “improvement in the profitability of our motor book” – the business accommodated this by passing on savings to customers at renewal and for new business.

From April, LV=GI noted that “the number of cars on the road increased exponentially and as a result claims frequency has been rapidly heading towards pre-pandemic levels and this is expected to continue”.

The insurer added that it “expects the motor insurance market to remain incredibly competitive for the foreseeable future”.

Claims levels for household policies remained consistent as Brits are still spending more time at home, according to LV=GI. “Benign weather created less fluctuations and a quieter claims period compared to the first half of last year, which has benefited the overall operating profit,” the insurer added.

Steve Treloar, chief executive of LV= GI, said: “We’ve had a positive start to the year and I’m pleased with our overall performance.

“The strength of our products combined with the exceptional service we pride ourselves on delivering to our customers has resulted in us delivering good results.

“There is a lot to look forward to in the second half of the year and the outlook for our business remains positive.”