It’s been a manic couple of years for global insurers in the UK, what with all the uncertainty surrounding the country’s departure from the European Union, but it looks like major player Allianz is meeting the challenges head-on as its British unit reports better financial results.
From £84.6 million in July-September 2017, Allianz UK posted a higher operating profit of £113.6 million in the third quarter of 2018. Its combined operating ratio (COR) for the period also saw a positive shift, from 98.5% previously to 96%.
“Profits are up 34.3% over the same period in 2017 and the combined operating ratio has improved by 2.5% compared to this time last year,” noted Allianz UK chief executive Jon Dye. “The revenue position reflects the transfer of Allianz’s personal home and motor business to LV= with all the retained business lines continuing to perform well.”
Gross written premium (GWP) in the third quarter, excluding income from engineering inspection and special services, reached £1.5 billion. Commercial lines GWP, in particular, rose 4.1% to £856.1 million while COR was at 95.8%.
“Achieving rate strength at levels required to maintain a consistent approach to customers relies heavily on the relationship between broker and insurer where trust and respect for each other’s challenges is crucial,” explained the UK unit when it released its latest numbers. “Relevant to this is the issue of claims inflation which is trending at an adverse level.
“The increasing cost of repairing motor vehicles and the rise in the cost of labour for repairing damage to property are two examples where costs have risen sharply. The uncertain pre-Brexit environment means these are pressures that are unlikely to diminish in the near term and may well continue beyond the point the UK leaves the EU.”
Meanwhile Dye is happy with the ongoing LV= transition.
“I recently visited our Maidstone office, which is the home of the team coordinating the commercial transfers from LV=, and I am pleased to report that several months of careful preparation is paying off,” said the CEO. “The mapping of the e-traded products on to our own product suite is working well, the new taxi and truck products are also performing well in the market, and the conversion of cases is good.
“A determination to make the process as smooth as possible for brokers has helped significantly in the way we have gone about the transfer of business. We have another 10 months of case by case trading with brokers for previous LV= commercial business but we are undoubtedly off to an encouraging start.”
As for personal lines, GWP amounted to £678 million while COR stood at 97.2%. The insurer noted that moving its home and motor personal lines business to LV= is having an effect on the top line.
Overall, and with the help of brokers, the year is expected to be a positive one for Allianz UK.
“As we enter the last trading quarter we are well positioned to post a good financial performance in 2018, and the continued support of the broker community is important if we are to achieve this goal,” stated Dye.