Allianz UK profit drops 12% as personal COR hits 102.5%

Allianz UK made an operating profit of £56.5m in the first half of 2015, down 12% on the £64.2m it made a year earlier.

The insurer’s combined operating ratio (COR) was almost unchanged at 98% (H1 2014: 98.1%), despite the lack of weather claims in the first half of 2015.

Allianz’s first-half 2014 COR had been pushed up by winter flood and storm claims, as well as increased spending on personal lines technology and marketing.

The main reason for the high COR in the first half of 2015 was a worse underwriting result in Allianz’s personal lines business. The personal lines COR increased by 2.2 percentage points to 102.5% (H1 2014: 100.3%).

Allianz UK chief executive Jon Dye said the higher personal lines COR reflected “the challenges and competitive dynamics experienced in the private car market”.

He added: “We have been increasing rates ahead of claims inflation all year and we will continue to slow down growth in private car until the loss ratio reaches an acceptable level.

“It remains to be seen whether the hardening in the market is a trend or a temporary adjustment.”

By contrast, Allianz’s commercial lines underwriting profitability improved. The COR fell by 1.3 percentage points to 95.3% (H1 2014: 96.6%).

Continuing growth

Although it slowed growth in personal motor, Allianz continued to grow overall as it pursues its plan to be a £3bn company by 2018.

Gross written premium (GWP) increased by 4.2% to £1.13bn (H1 2014: £1.09bn) driven by growth in both personal and commercial lines.

Personal lines GWP increased by 5.8% to £565m (H1 2014: £534m), while commercial lines GWP was up by a more modest 2.7% to £574m (H1 2014: £559m).

Despite the lower profitability and flat COR, Dye said the first-half COR and GWP growth was “a good result in a challenging and competitive market”.

Allianz UK H1 2015 results breakdown