|Financial Results||HY 2019||HY 2018|
• Gross Written Premium (GWP)
|• Combined Operating Ratio (COR)||95.7%||94.8%|
The second quarter of 2019 saw the announcement of Allianz’s proposed acquisition of both Legal & General Insurance and the remaining 51% of LV= General Insurance Group. When these transactions complete at the end of the year, they will position Allianz as the number 2 general insurer in the UK.
Allianz is already in a process of transition, as it realigns its portfolios and reshapes its organisational structure to accommodate the transfer of Commercial Lines business in from LV= and the transfer of Personal Lines business in the opposite direction, whilst ensuring it competes efficiently and delivers a sustainable service to customers and brokers.
The half year results show that Allianz has already created a robust platform from which to build this expanding business, with strong underlying growth in the key areas of Commercial Lines and Animal Health insurance.
Gross Written Premium has increased by 12.7% over 2018, with the figure for the second quarter alone up 15.8% over last year.
Transfers of Commercial Lines business in from LV= remain at expected levels and the migration of policies from LV= will complete in September. To date, Allianz has written around 50,000 cases from the LV= Commercial book which have shifted the account dynamic and created a strong base from which to trade and expand into new markets.
The underlying Commercial business – excluding the transfers from LV= – has also shown good growth.
At 96.2% the Commercial Combined Operating Ratio is good and has improved on the position at the end of Q1 but remains behind the level achieved in 2018. Property claims for fire and theft in particular have been above expectations.
Allianz continued to review its Commercial branch network in line with changes in local market dynamics and the need to continually evolve in a highly competitive environment. Following a consultation process, the closure of Allianz’s offices at Woking and Luton on 30 September has been confirmed. Of the 97 people placed at risk by these changes, 81 have been offered roles within Allianz.
Allianz’s Commercial teams have been working collaboratively with brokers to ensure a seamless transition and maintain the high levels of local service brokers expect from Allianz. The majority of broker feedback has been positive and brokers appreciate Allianz’s openness, transparency and willingness to include them in the process to determine which branch they’ll be transferring to.
Allianz Engineering, Construction & Power continues to produce an excellent performance with revenue and profit for both the insurance and inspection businesses well ahead of 2018. The new propositions introduced a year ago to cover both the construction and operation of renewable technologies have played a part in this performance. They also helped Allianz win the Sustainability category at the British Insurance Awards, which recognised Allianz’s global programme to combat Climate Change.
The largest contributor to the Personal Lines business is Petplan, which continues to show strong, profitable growth, producing a Combined Operating Ratio of 88.6% and half-year premium income of £229m, which is £14m ahead of 2018.
The transfer of Allianz’s Personal home and motor business to LV= has been largely completed. As the Personal Lines transfer began before the Commercial transfer, this has impacted Allianz’s overall GWP performance against 2018 at the half-year. Overall, the retained Personal Lines business produced a strong underwriting profit, ahead of 2018, with a Combined Operating Ratio of 94.3%, an improvement of 2.6 percentage points over last year.
During Q2, Allianz announced the consolidation of its Claims footprint around two Centres of Excellence at Milton Keynes and Birmingham. This includes the closure of the Allianz Claims Handling Centre at Aztec West in Bristol. Following consultation, this office will close at the end of October 2019.
Along with other insurers, Allianz was disappointed with the change in the Discount Rate to -0.25% announced in July, particularly as the government had indicated to the industry and financial markets that the rate would be set between 0% and 1%.
Whilst we have reserved prudently and the impact of this change on existing reserves is modest, the ongoing impact on claims inflation is clearly unwelcome.
During Q1, Allianz announced its new charity partnership with Mind, the mental health charity. During the first four months, the company has raised £150,000 to support the charity’s work. Recognising the importance of mental health issues, Allianz has also introduced mental health training for managers and mental health first aider training programmes and an employee network available to all colleagues. The company’s objective is to have as many mental health first aiders as it has physical first aiders.
Chief Executive Officer, Jon Dye said: “I am very pleased with the results we have delivered in the first half of this year against the backdrop of business transformation. To achieve profitable growth in our core accounts whilst delivering a programme of change on an unprecedented scale is testament not only to the quality and commitment of our people but also the strong relationships we have developed with our business partners.
The acquisitions of LV= General Insurance and Legal & General Insurance underline the fact that Allianz has great confidence in the UK insurance market. Our half-year results show that we will be building our future business on very strong foundations.”
The information contained in this press release relates to Allianz Insurance plc. Allianz Insurance plc is one of the largest general insurers in the UK and part of the Allianz Group.
About Allianz Holdings plc
Allianz Holdings plc is the non-regulated holding company which owns the principal insurance operations of Allianz SE in Great Britain.
The Allianz Group is one of the world's leading insurers and asset managers with more than 100 million* private and corporate customers in more than 70 countries. Allianz customers benefit from a broad range of personal and corporate insurance services, ranging from property, life and health insurance to assistance services to credit insurance and global business insurance. Allianz is one of the world’s largest investors, managing 790 billion euros on behalf of its insurance customers. Furthermore, our asset managers PIMCO and Allianz Global Investors manage 1.7 trillion euros of third-party assets. Thanks to our systematic integration of ecological and social criteria in our business processes and investment decisions, we are amongst the leaders in the insurance industry in the Dow Jones Sustainability Index. In 2021, over 150,000 employees achieved total revenues of 148.5 billion euros and an operating profit of 13.4 billion euros for the group.
These assessments are, as always, subject to the disclaimer provided below.
Cautionary note regarding forward-looking statements
This document includes forward-looking statements, such as prospects or expectations, that are based on management's current views and assumptions and subject to known and unknown risks and uncertainties. Actual results, performance figures, or events may differ significantly from those expressed or implied in such forward-looking statements. Deviations may arise due to changes in factors including, but not limited to, the following: (i) the general economic and competitive situation in the Allianz Group's core business and core markets, (ii) the performance of financial markets (in particular market volatility, liquidity, and credit events), (iii) the frequency and severity of insured loss events, including those resulting from natural catastrophes, and the development of loss expenses, (iv) mortality and morbidity levels and trends, (v) persistency levels, (vi) particularly in the banking business, the extent of credit defaults, (vii) interest rate levels, (viii) currency exchange rates, most notably the EUR/USD exchange rate, (ix) changes in laws and regulations, including tax regulations, (x) the impact of acquisitions including and related integration issues and reorganization measures, and (xi) the general competitive conditions that, in each individual case, apply at a local, regional, national, and/or global level. Many of these changes can be exacerbated by terrorist activities.
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The Allianz Group assumes no obligation to update any information or forward-looking statement contained herein, save for any information we are required to disclose by law.
*Including non-consolidated entities with Allianz customers.