Allianz UK profit “ahead of plan” despite 22% dip

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Insurer’s gross written premium up 4.8%

Allianz Insurance made an operating profit before tax of £158.5m for the full year of 2010, down 22% on the £203.7m it made in 2009.

Gross written premiums increased 4.8% to £1.66bn from £1.59bn, while the combined ratio increased to 95.9% from 92.9%.

Chief executive Andrew Torrance hailed 2010 as “another year of success and achievement” for the company and described the £158.5m profit as “slightly ahead of plan”.

The reduction in 2010 profit was caused by a drop in investment income and lower reserve releases than the exceptional level seen in 2009.

Torrance said the 95.9% combined ratio reflected the company’s stance of underwriting for profit rather than top line. “This is an excellent figure which sees us outperform our peer insurers in the UK once again.”

Although Allianz grew commercial net written premiums by 3.1%, Torrance said the fleet, commercial property and liability accounts failed to deliver a satisfactory return on an accident year basis. “Rate increases well ahead of claims inflation are required to correct this,” Torrance said. “We are prepared to see volumes in these classes decline in 2011 to achieve more attractive returns.”

Retail business top line grew by 7% and saw a 3.2 point reduction in combined ratio. However, Torrance said that significant rate rises in both retail motor and household were required during 2011 to address continuing claims inflation-related losses in motor and the frequency of severe weather events in household.

Torrance predicted a tough 2011, marked by tax hikes, spending cuts and the potential for interest rate rises. These economic pressures will not make securing the necessary rate rises in both the commercial and personal lines markets any easier to achieve,” he said.

Allianz Insurance 2010 results in £m (compared with 2009)

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