Overall profit drops 7% and COR rises 0.9 points on £26m summer flood claims

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Allianz Insurance chief executive Andrew Torrance has hit out at his company’s ‘unacceptably poor’ 99.1% commercial combined ratio for the first nine months for 2012.

The commercial combined ratio was four percentage points worse than the 95.1% the company reported in the first nine months of 2011.

Torrance said in a statement accompanying the results: “There may be the first signs of the market ‘waking up and smelling the coffee’, at least in the liability market where we have seen rates grow by 7.5%, but even this level of improvement is insufficient and needs to go higher for longer.”

He added: “Unfortunately, no such awakening is evident in the property market where year-to-date only a 2.5% increase has been possible.”

Allianz UK’s commercial gross written premium (GWP) grew by less than 1% to £746.2m (9M 2011: £740.5m).

Torrance said: “The commercial division is continuing to reposition its business portfolio towards more profitable lines and this strategy is paying off with GWP in the packages and commercial motor accounts growing by 6.8% and 9.1% respectively so far this year. I would expect us to continue to look for growth in these areas for the foreseeable future.

“As I have always maintained, we are prepared to shed business where we cannot achieve an acceptable level of return and this is a stance that my colleagues in commercial are applying in the liability and mid-commercial property portfolios.”

Company-wide performance

Despite his disappointment with the commercial combined ratio, Torrance praised the company-wide combined ratio of 96.7%, even though it was 0.9 of a point higher than the 95.8% reported in the same period of 2011.

Allianz was hit by £26m of summer storm and flood claims, which cut operating profit by 7% to £115m (9M 2011: £123.6m).

Torrance said: “It is very important to stress that delivering a combined operating ratio of 96.7% is a clear indication of our continuing ability to deliver underwriting profits at very acceptable levels even in the face of testing circumstances.

Personal lines prowess

Allianz’s saving grace in the first nine months of 2012 was its personal lines book. The combined ratio improved by 2.6 percentage points to 94.2% (96.8%). GWP increased 8.5% to £688.2m (9M 2011: £634.2m).  

Torrance said the “very satisfactory” GWP growth and COR improvement “underlines the excellent level of performance being delivered”.

Brokered personal lines motor reported a year-to-date combined ratio of 95.5%. But the non-motor broker business reported a combined ratio of 101.7%, mainly because of the £26m flood losses.

The Corporate Partner affinity business delivered a 10.9% increase in GWP over the same period in 2011.

During the third quarter Allianz signed a three-year exclusive agreement with Everything Everywhere (EE) to underwrite the company’s mobile phone insurance. This extends Allianz’s existing partnership with Orange to the T-Mobile and EE brands.

Allianz’s Petplan animal insurance business grew GWP by 9.5%. Allianz expects to hit its £250m GWP milestone in this line by the year end.

Legal protection GWP is up 40%, driven mainly by the after-the-event (ATE) segment. Torrance said: “Planning for the post-Jackson civil justice system changes has advanced over the past three months. I am now convinced that Legal Protection will evolve to remain a substantial business for us in the post-Jackson world.”

GWP for the Your Cover Motor direct aggregator product is “still running close to double the prior year figure”, Torrance said.

He added that the household portion of the aggregator offering remains relatively modest but will increase once the roll-out to major aggregators is completed, which is expected to be during 2013.

On target - weather permitting

Torrance said that based on what the company had already achieved in 2012, its full-year profit target was within reach.

But he added: “I always qualify any profit forecast with the positioning of the weather as a key determinant together with the absence of any major fire losses. This year is just the same.”

Allianz UK nine-month 2012 results in £m (compared with nine-month 2011)


  • GWP: 1,434.3 (1374.7)
  • Operating profit: 115.0 (123.6)
  • Combined ratio (%):96.7 (95.8)


  • GWP: 746.2 (740.5)
  • Combined ratio (%): 99.1 (95.1)


  • GWP: 688.1 (634.2)
  • Combined ratio (%): 94.2 (96.8)