Torrance ‘encouraged’ by Allianz UK’s 34% Q1 profit growth

Allianz Insurance made an operating profit of £46.8m in the first quarter of 2013, up 34% on the £34.9m it made in the same period last year.

The combined operating ratio (COR) improved by 1.9 percentage points to 95.2% (Q1 2012: 97.1%), marking Allianz’s forty-first consecutive quarter with a COR below 100%.

Gross written premium increased 7% to £506.6m (Q1 2012: £473.6m).

Allianz Insurance chief executive Andrew Torrance said: “I am very encouraged with the start we have made to 2013. Delivering profitable growth is our mantra and I am pleased that we are continuing to deliver results that live up to this.”

Two years of rate hikes

Allianz Insurance’s commercial COR improved by 1.2 points to 95.1% in the first quarter of 2013 (Q1 2012: 96.3%). Torrance said this reflected the company’s underwriting expertise, as well as the lack of weather losses during the quarter.  

GWP grew 2.4% to £259.3m (Q1 2012: £253.3m) in conditions Torrance described as “having a slightly firmer tone than had been the case”.

Torrance said: “The action programme we started more than a year ago to improve returns in our commercial business is now bearing fruit, which is very pleasing.”

Torrance also said he was pleased with the rate rises that the company was achieving across its commercial business. He added, however, that liability continued to be the most challenged account.

He said: “Two years of double digit rate increases are required to allow an adequate return on capital to be made.”

Personal growth

Allianz Insurance’s personal lines COR improved by 2.5 points to 95.4% (Q1 2012: 97.9%).

GWP grew 12.3% to £247.3m (Q1 2012: £220.3m). Within this, broker business GWP was up 11%, mostly derived from the household portfolio. Allianz is now lead insurer on broker Towergate’s household account. The broker household policy account increased by 7.5% in the quarter.

In broker private motor Torrance said GWP was “a shade behind prior year”, but the policy count grew by 5%.

The Petplan animal health business boosted GWP by 10.3% and policies have hit a record high of 912,000.

However, Allianz reported that GWP in its retail corporate partner business, where it sells insurance through big-brand firms such as BMW, is behind where it was last year, although the motor account continued to grow.

Torrance said: “I expect this position to improve as we proceed throughout the year.”

The company also said the quarter had been “subdued” for direct motor and household as it made improvements to its underwriting algorithms.

But it added: “This work is virtually complete and we will look to expand volumes in Q2 and beyond.”

The company has also announced plans to reshape its legal expenses business to cope with the recent introduction of the Legal Aid, Sentencing and Punishment of Offenders Act (Laspo).

Outlook

While encouraged by the first quarter results, Torrance said that they were just the first leg in what was likely to be a challenging year.

He said: “This will be played out against a backdrop of continuing macro-economic challenges and the ever-present potential for natural forces such as significant bad weather or major fire losses, to cost insurers many millions of pounds in a single stroke.

“Nevertheless, I am optimistic that with our proven track record of delivering year-on-year positive results for all our stakeholders, we will enjoy another successful year in 2013.”