Allianz Holdings half-year results bolstered by LV=GI

Allianz Holdings, which owns Allianz Insurance and LV= GI, has today reported a strong set of overall results for the first half of the year.

Gross written premium (GWP) was up 98% to £1,981bn from £1bn in the same period last year. Operating profit climbed to £179m from £86m and the combined operating ratio improved by three points.

The company has set aside £80m net of reinsurance to pay Covid-19 business interruption claims, £14m of which has already been paid out.

The insurer has received 950 Covid BI claims to date; the figure it expects to pay out does not take into account its exposure should there be a negative outcome from the FCA test case.

It also took a £10m hit on travel insurance claims from Covid, donated a further £10m to the Covid-19 Support Fund and offered car and motorbike customers £30m in support.

Allianz Insurance

The Allianz Insurance arm of the business posted a 3% decline for the first half of 2020: £967m down from £1bn a year ago. 

Operating profit also fell by 16% to £72m and the combined operating ratio deteriorated marginally from 95.7% to 95.6%.

	HY 2020	HY 2019	Variance
Gross Written Premium	£967m	£1000m	-3%
Operating Profit	£72m	£86m	-16%
Combined Ratio	95.6%	95.7%	-0.1pp

Declines were seen in both its commercial and personal lines businesses, it said.

The business was hit by a combination of increased mid-term adjustments, returns premiums, reduced exposures and lower levels of new business.

The decline in operating profit was accounted for by the business interruption payouts, partially offset by a reduced number of commercial motor and pet claims due to the impact of lockdown, Allianz said.

Overall, commercial saw higher than expected claims numbers, due to the February storms and Covid-19, while motor claims frequency is trending back towards normal levels, it added. 

However the engineering, construction and power insurance book grew strongly during the first half of the year.

Motor fleet, packages, motor trade and casualty lines all saw reduced new business demand in the second quarter, it said, and while demand was “slowly improving”, numbers were yet to return to pre-lockdown levels. 

The company ”remains concerned about recessionary impacts in all aspects of the commercial book”, however.

There was some success in the company’s personal lines business, with positive or resilient performances seen in the Petplan, musical insurance and legal protection books.

LV=GI

LV=GI (including L&G GI, which was incorporated into the business at the start of the year) bolstered the overall business’s performance with a positive set of results for the half.

Operating profit was £106m, up from £34m in the same period of 2019. The combined operating ratio also improved by 8.1 points to 89.8% and GWP grew by 31% to £1.014bn.

	HY 2020	HY 2019	Variance
Gross Written Premium	£1014m	£775m	+31%
Operating profit	£106m	£34m	+209%
Combined ratio	89.8%	97.9%	-8.1pp

It said the improvement in operating profit was a result of lower claims frequency from fewer cars being on the road during lockdown. The impact of its premium refunds given to struggling customers would mainly be seen in the second-half results, it added.

Motor rates “have been moderated” to account for the reduction in claims frequency, but the underlying drivers of claims cost and inflation remain unchanged, the company said.

These include vehicle theft, repair costs going up due to more technology in cars and the delay in the whiplash reforms.

As a result, LV=GI said its approach to motor pricing ”continues to be done on a cautious basis given the uncertain market outlook”.

It also touched on the recently announced business restructuring, which puts up to 600 of the company’s 4,300 roles at risk over the next two and a half years.

It said the measures to reshape the business would ensure ”a greater focus on customer service and technical capabilities in its existing claims function”.

LV=GI chief executive Steve Treloar said: “In the first half of the year LV= GI achieved strong growth through the acquisition of the general insurance business of L&G.

”We have firm foundations as a business with great products and excellent service and we continue to look at ways in which we can adapt our products to ensure we’re meeting the needs of all customers.”

Allianz Holdings chief executive Jon Dye said Covid-19 ”will have an impact on our everyday lives, our business operations and our society for months and years to come.

”The economic outlook is challenging and it is difficult to predict the effects of Brexit.

”However, I believe that Allianz will emerge stronger from the current crisis and our priorities will continue to be the support we can offer to our customers and to our colleagues. 

”We are finding ways to work more efficiently and more productively with our brokers and I believe we are the partner with whom they can change their business for the future.

”The flexible product and service propositions we are introducing will continue to benefit our intermediaries and policyholders.

“This set of results is broadly in line with our expectations and has been achieved against the backdrop of an unprecedented human, economic and social crisis,” Dye added.