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Allianz's financial strength meets the challenge of quarter three

by Allianz

Allianz's financial strength meets the challenge of quarter three


Jon Dye, CEO, Allianz Insurance

 

Allianz UK Financial Results

Q3 (YTD) 2017

Q3 (YTD) 2016

  • Gross Written Premium (GWP)

£ 1647.1m

£ 1614.8m

  • Operating Profit

£84.6m

£121.0m

  • Combined Operating Ratio (COR)

98.2%

96.9%

Commercial Lines

  • GWP £880.2m £829.8m
  • COR 95.5% 91.5%

Personal Lines

  • GWP £767.0m £784.9m
  • COR 100.2% 101.1%



Chief Executive Officer, Jon Dye said:

“Revenue growth remains at a pleasing level and business retention is strong despite stiff competition in all the markets in which we compete. The quarter saw an unusual number of large losses totalling £46m across the commercial property, fleet, liability and private car accounts. This made for a challenging period but these events happen to insurers from time to time and should not be seen as the start of a trend.

"The large losses in the quarter and the current year impact of £17m from the Ogden Discount Rate reduction have not prevented the business from delivering a reasonable underwriting profit year to date. This illustrates the financial benefit of a strong and diverse portfolio and our ongoing focus on delivering profitable growth.

“The announcement of the joint venture with LV= has created a lot of positive interest. The European Commission has recently given its approval for the joint venture which is an important step forward. We now await the PRA’s approval scheduled for December with great anticipation.

“Subject to receiving this regulatory approval, our intention is to communicate detailed plans to the broking community in the New Year. What I would reiterate strongly is the venture with LV= is about growth and opportunity.
During 2018, my colleagues trading in the commercial broker market will be operating as they are today, but with a broader portfolio of propositions. Alongside this, the planned joint venture will become a major player in personal lines.

“Allianz UK and our business partners can look forward to the future with great confidence and optimism.”
Commercial:

A 6.0% revenue growth over the previous year represents a strong top line performance and reflects the ongoing strategy of proactively looking for profitable business opportunities with brokers. The unusual number of large losses referred to earlier makes the delivery of a 95.5% COR an excellent result and provides a robust demonstration of the underlying strength in the commercial book.

Engineering continues to perform in line with its market leading proposition. Top line growth is strong as is the level of underwriting profit. The recent launch of the construction product has been well received by brokers and is delivering very positive new business numbers.

Personal:

As previously reported, revenue is down as a result of withdrawing from the direct market. The COR is maintaining its improvement over the previous year which is a positive performance in an account also affected by some significantly large motor claims during the quarter.

Petplan has delivered excellent profitable growth in line with its market leading status. This performance has been supported by a significant investment in technology designed to strengthen the customer experience.

Results for the customer:

For Allianz, the Top Down Net Promoter Score methodology is the key measure of broker sentiment towards the business and it allows us to benchmark our performance against key competitors. The results of this independently conducted research recently reported that Allianz Commercial Broker has seen an impressive improvement in positive sentiment for the service provided to brokers. Achieving our highest ever NPS score not only shows the business continues to strengthen its service delivery standards; it also maintains a Loyalty Leadership position.
Allianz Engineering also remains the Loyalty Leader which is an excellent performance in this market.

To underline the positive sentiment brokers have towards the service provided by Allianz, the results of the latest Brokerbility and Towergate surveys put Allianz top for overall satisfaction across a range of customer service criteria.

Jon Dye commented:

“One of the strategic objectives of Allianz is creating inclusive meritocracy within our business. The aim is to provide a culture where people and performance matter. It includes developing talent, strengthening employee engagement and fostering diversity as a source of success. I am therefore delighted to report that Allianz has recently become a signatory to HM Treasury’s Women in Finance Charter.

“The Charter reflects the ambition of both the government and the financial services industry to have a truly balanced workforce. This is good for employees, our customers and the industry. Signing this Charter reflects our commitment to supporting women in the workplace and gender equality.

“Continuing to maintain our focus on delivering for our customers and for our people even during a period of change is one of this organisation’s standout strengths. I congratulate all my colleagues for their ability to keep their day-in and day-out focus on the things that matter to Allianz.

“Turning to the market, the strengthening of rates is helping to manage the financial challenge of a significantly reduced Discount Rate.

"The September announcement from the government that it intends to put forward new legislation which if effective today, would set the rate at between 0 -1%, is welcome news.

"However, it is only an intention. It will take a considerable period of parliamentary time to get legislation through the various stages before it is on the statute books, at a time when the political agenda is dominated by Brexit. In the meantime, the -0.75% rate still applies which is an important consideration for underwriters in relation to the cost of serious personal injury claims now and for the foreseeable future.

“Finally, as we enter the final quarter of this trading year, the business is well positioned to deliver a solid set of financial results as we continue with our preparations for an exciting 2018.”