Insurer pledges to take rating action as pre-tax profits rise 15% to £140m.
Andrew Torrance, chief executive of Allianz Insurance admitted that profit performance levels had still not reached acceptable levels, as they had been significantly bolstered by prior year claims reserves.
Allianz saw an increase in pre-tax profits of 15% to £140m in 2008 up from £97.4m in 2007. “We are intent on taking rating action to make business written today acceptably profitable,” said Torrance.
In the commercial lines market, efforts to raise rates in Q3 did not reach the targets of +5% that Allianz had set itself for both property and casualty lines. “Property did though move into positive territory to +1.5%, whilst casualty advanced marginally over Q2 to +2.5%,” said Torrance.
He added: “Despite this disappointing performance in Q3, the early indications for Q4 and the prospects for 2009 are now much more positive as the market recognises the impact of the unprecedented events in the financial markets over the summer.”
In personal lines Allianz said it saw motor rates increase but that this trend needed to continue if this book of business were to reach acceptable levels of profitability. “Withdrawing from the third party motor market and moving up the rates offered to underperforming brokers will also help in terms of profitability in the medium term. This is at the expense of growth but is an outcome we accept,” said Torrance.
Torrance added that credit hire was one of the biggest drains to profitability. He said tackling the issue would be top priority and that a team of 30 people would be focusing on this task.
Allianz said exposure to the global credit crisis was minimal. Its exposure to Lehman Brothers’ bankruptcy amounted to below £1m. Torrance pointed to Allianz UK’s AA- and the parent company’s AA rating accredited by S&P. He said the group itself was well capitalised with a solvency position of 157%.
“We understand that insurance buying customers are feeling nervous and uncertain about where they can place their trust at this time,” said Torrance. “The broking community has an important role to play in delivering the best advice it can to customers to help them select insurers who will be there to pay claims over the long term.”
