Torrance predicts tough 2012 as Allianz UK profits rise 6.4%

Allianz UK made an operating profit of £168.7m in 2011, up 6.4% on the £158.5m it made in 2010.

The combined ratio was almost unchanged at 95.7% (2010: 95.9%), while gross written premium increased 10% to £1.8bn (2010: £1.7bn).

Today’s UK GAAP numbers from Allianz UK confirm the improvement revealed by the group results, which were released last week.

Allianz UK chief executive Andrew Torrance pointed out that the improvement was achieved in difficult times for UK insurers, marked by a “sluggish” macroeconomy and rising claims costs.

Despite this, the company posted higher gross written premiums in both commercial personal lines, while holding underwriting performance steady. Commercial gross written premiums in 2011 increased 1.4% to £976.2m (2010: £962.6m), while the combined ratio was almost unchanged at 94% (2010: 94.5%).

Personal lines premium grew 22% to £856m (2010: £701.1m) while the combined ratio was static at 97.8%.  

Realised savings from combating fraud of £50m helped the result.

Torrance predicted another tough year in 2012. “Looking ahead more broadly into 2012, it is hard to see anything other than a further challenging year for the industry,” he said. “Economic growth will continue to be sluggish and unemployment is likely to continue to rise which will do nothing to mitigate the pressure of recession related claims. In this environment interest rates will also remain low, placing continuing pressure on the industry’s investment income returns.

However, Torrance noted the efforts aimed at tackling compensation culture in motor claims and banning referral fees. “Effective action across these areas will reduce motor claims costs and

ultimately deliver lower premiums to our policyholders,” he said.

Torrance was also upbeat about his company’s prospects over the next 12 months. “I begin the year with a sense of optimism and confidence in the ability of the organisation to prosper,” he said. “We have in place the right strategy, the right capabilities, the right shareholder and a great track record of delivery through the sustained efforts of the people in this company. I am confident that 2012 will be another successful year.”

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