“2024 bodes very well for us.”
He noted this result predominantly came from its commercial and specialty pet businesses which performed well ahead of expectations, delivering strong, consistent results both in terms of premium and operating profit. Identifying the factors behind this performance, he pointed to the creation of Allianz Commercial and its benefits in respect of top-line growth and the strengthening of broker relationships.
“[Allianz Commercial] is all about delivering a consistent single face to the customer,” he said. “We’ve seen that working both in terms of premium growth and operating profit improvement year-on-year. We’re seeing a really strong performance delivered by Nadia [Côté, Allianz Commercial’s UK MD] and the team in commercial, and it’s not even had its first birthday yet.”
Holmes highlighted that the insurer’s specialty division, particularly its Petplan business, is a ‘UK success story’, delivering strong year-on-year growth. The business’s performance is impressive in its own right, he said, but even more so when compared to how the wider market has fared.
This success story has been possible because Petplan is built around the needs of the customer, he said, and the objective of delivering affordable, sustainable coverage throughout the lifespan of the pet. The business was able to outshine all expectations, aided by the rate strength needed to deal with the inflationary pressures being seen across the market.
With those inflationary pressures in mind, Holmes looked to Allianz Holdings’ personal lines business and noted how it strengthened, particularly in the second half of the year. H1 was heavily impacted by inflation, he said, which flowed through to increases in loss ratios - but in H2, the insurer took strong action around rate which aided increased performance, albeit not enough to wholly offset the first half of the year.
“The first thing we did when we started seeing inflation coming through was look to minimise its impact on our customers,” he said. “We fed rate through to minimise that impact because we know we’re in the midst of a cost-of-living crisis. So, we focused very heavily on cutting costs and on improving the mix of our business to ensure that, across the population, we could minimise the amount of rate increase needed.
“Through 2023, we saw a somewhat faster-than-expected reduction in the impacts of inflation in repair damage, in parts, etc. And we rated very strongly in 2023 so as we enter into 2024, I’m confident that the market has taken the steps necessary. Certainly, in motor, I would expect 2024 to be a much more balanced book in terms of rate where we’ll just match that of inflation.”
Allianz Holdings is in a very good position in early 2024 with regards to its motor lines, he said, and he expects this strong underlying position to flow through to its numbers. However, he noted that the impact of adverse weather conditions is weighing very heavily on the home insurance market, which is still seeing the impact of the nine storms that hit the UK since November of last year.
Looking ahead to 2024, the business is investing in its biggest-ever transformation and change budget, which includes heavy investment in data analytics, technical capabilities and digitising customer journeys.
Across commercial and personal lines, he said, the emphasis is on making customer journeys easier and faster, and on making the supply chains more efficient and more effective. That includes a focus on delivering the right results in terms of the technical capability of the business, to help Allianz drive the right price in the right segments of the market – particularly in the context of the cost-of-living crisis and its disproportionate impact on younger and older drivers.
“I’m working very closely with the ABI to look into finding the solutions that we can bring to the market,” he said. “Because, at the end of the day, it’s incumbent upon all of us in the industry to try and drive the cost of insurance down so that we don’t end up with an insurance gap in the market.”
Reflecting on 2023 and looking to 2024, Holmes said his message to the broker market can be summarised in a single word – “thanks”. Brokers are the best placed in the market to provide honest, informed feedback on how to support insureds – and Allianz craves that feedback as the fuel that helps it continue to improve.
“We won’t be letting up on this,” he said. “We’ve got new ideas and we’re making a significant investment in our digital connection with brokers to make it much easier for them to submit quotes and get bids on their business. We’re all about ease of trading. We hope our brokers will continue to see the sheer size of the investment that Allianz Group is making in becoming the number one insurer in the UK.”
