Allianz UK H1 profit dips after £23m flood bill

Allianz UK made an operating profit of £75.3m for the first half of 2012, down 3% on the £77.5m profit it made in the same period last year.

The result comes as the company estimates that it will pay out £23m in bad weather claims for the period to the end of June. The majority of losses were suffered in the commercial property and motor trade accounts, Allianz said.

Despite the flood claims, the combined ratio was almost flat at 96.8% (H1 2011: 96.1%). The commercial combined ratio increased 2.7 percentage points to 98.6% (H1 2011: 95.9%), but this was countered by a 1.6% drop in the personal lines combined ratio to 94.8% (H1 2011: 96.4%).

Last week, results from Allianz UK’s German parent group indicated that UK operating profit had risen by 3%.

Premium growth

Allianz UK’s overall gross written premium (GWP) increased by 5.6% to £965.1m (H1 2011: £914m). Commercial GWP was up by a “modest” 0.8% to £525.9m (H1 2011: £521.5m), while retail GWP was up 12% to £439.2m (H1 2011: £392.5m).

Allianz UK chief executive Andrew Torrance praised the company’s 5.6% GWP growth amid difficult economic conditions.

“This is almost an exact repeat of the performance we delivered at the same point in 2011 compared to the previous year,” Torrance said in a statement. “This is further evidence of our ability to consistently grow our business as we have been doing before and right through the macro-economic crisis going right back to 2008.”

Commercial cutbacks

Within the commercial business, Alllianz said its packages and commercial motor portfolios reported high-single-digit GWP growth, but that this was offset by a reduction in liability and commercial property. “This reflects our efforts to write a larger proportion of the more profitable lines and accept reduced exposures in the liability and mid-market property lines where profitability is unacceptably low,” the company said.

Engineering GWP was “just ahead” of its position last year, as competition in the insurance segment offset 3.8% of GWO growth in the fee-based inspection part of the business.

Retail growth

The retail division’s broker business saw its combined ratio improve by 11 percentage points to 95%.

The corporate partner business reported 19.1% GWP growth, with particularly strong increases in the motor account thanks to partnerships with VW and BMW.

The Petplan pet insurance business grew GWP by 8.7% and legal protection GWP was up 43.5%, largely driven by the after the event segment of the account.

Better weather

Torrance was sanguine about Allianz UK’s future performance, but warned performance was dependent on the weather.

He said: “Looking ahead over the balance of 2012 I am confident that we will continue to grow and that our profit plan is very much in reach. Achieving this, however, will require more favourable weather conditions for the rest of the year – a wish which I am certain is shared by all insurers with UK property exposures.”