GWP £1,172.3m £1,108.9m
COR 94.7% 95.7%
GWP £1,014.0m £1,032.3m
COR 100.1% 103.4%
Chief Executive Officer, Jon Dye said:
“2017 was a landmark year for the organisation with the completion of the strategic joint venture partnership with LV=. Overall, the business delivered a solid financial performance with Operating Profit increasing from £96.2m to £121m and revenue growing by 2.1%.
“Had it not been for the impact of the revised Discount Rate, the 2017 profit number would have been £22m higher. As I have said in the past, providing seriously injured people with a fair and appropriate level of compensation is the right thing to do. The sharp increase in the cost of settling personal injury claims is contributing significantly to rising premiums for customers. The pressure on insurers to pass on this cost to the customer can be removed by an appropriate government response.
“The implementation of a framework that delivers a fair outcome and brings greater clarity and certainty to the market is urgently needed.
“Aside from the Discount Rate, we also saw an exceptional number of large losses in the third quarter totalling £46m. This was an unfortunate and thankfully unusual experience and not the result of an underlying underwriting issue that will continue to negatively impact on our performance.”
Revenue growth of almost 6% over the previous year is a strong result and a COR of 94.7% is an excellent technical underwriting performance. The consistent year-on-year success of the commercial business is the outcome of having a clear trading strategy and delivering great customer service.
Last year, broker Net Promoter Score (NPS) feedback showed that the performance for the customer had improved from an already strong position and reaffirmed the status of loyalty leader in this very competitive market. We continue to invest in the nationwide branch structure which is a key strength and it ensures a high visibility of our people with key brokers. Enabling responsive decision-making based on customer needs and local market conditions is at the heart of our trading relationship.
The Engineering business has also been a consistently strong performer when it comes to growth and profitability, and 2017 was another good year. The Engineering modernisation programme strengthened operational efficiency, and customer service was again voted as market-leading by brokers. This is an exciting time for our Engineering, Construction and Power business as we broaden the proposition and realise further benefits from our investment.
As reported throughout the year, the withdrawal from the direct market reduced the top line performance and the COR stands at 100.1%
Petplan is another part of the business that can be trusted to deliver the market leading customer proposition for pet owners as well as a consistently strong financial performance. It delivered a strong underwriting profit last year and grew by more than 10%. Growth on or above this level has been delivered since 2012 despite the competition intensifying in this market.
Petplan’s empathy with its customers is first class and the claims service is excellent. This is independently supported by NPS research carried out last year among pet insurance customers, which placed Petplan in first position against its peers in the animal health market.
Jon Dye concluded:
“Allianz and LV= recently announced plans to transfer their respective personal and commercial portfolios which will start in the second half of 2018. The operational changes being proposed means that regrettably a number of roles at both organisations have been put at risk. We are carrying out individual meetings with the colleagues affected and every effort will be made to try and keep them in the business.
“Currently, there are more than 250 vacancies at Allianz and there are also opportunities coming out of the joint venture, so there is room for optimism that the number of redundancies will be less than the figures announced recently.
“The feedback from the broking community on the joint venture has been positive and during this period of operational change we will work hard to maintain the levels of service that have positively influenced the NPS feedback from brokers.
“The commercial book will broaden our underwriting acceptance and distribution footprint once the business has transferred from LV=. The personal lines motor and household business transferring the other way is well established in the broker market and will expand the joint venture PL book.
“These are exciting times for both businesses as we work together to establish our joint venture as the UK’s third largest personal lines insurer and Allianz as a top three general insurer by 2020.
“We have begun a game-changing journey for Allianz in the UK and I look forward to 2018 with great anticipation and excitement. The Allianz Group provides confidence in an uncertain world and that can seldom have been a more compelling proposition for our customers and business partners than it is now.”
Jon Dye, Chief Executive Officer.