· Gross Written Premiums up 2.6% to £1880m
· Operating Profit reduced 4.3% to £161.5m
· Combined Ratio an excellent 96.3%
|Gross Written Premium||£ 1879.8m||£1832.2m|
|IFRS Operating Profit (before tax)||£ 161.5m||£168.7m|
Divisional Results Breakdown
|Gross Written Premium||£974.1m||£976.2m|
|Gross Written Premium||£905.7m||£856.0m|
CEO Andrew Torrance said:
“In 2012 we delivered excellent levels of profit and top line growth together with a very pleasing
combined operating ratio. This sustained level of performance is a source of great pride
within our business.”
Statement from Chief Executive Officer, Andrew Torrance
I am very pleased to report that 2012 was another successful year for Allianz UK despite the
dreadful weather and the continuing low interest rate environment in which we operate. Despite both of these unhelpful pressures we have once again delivered excellent results.
The actions we are taking to deliver greater accident year profit from our Commercial Lines business began to produce results in the last quarter of the year. The repositioning of the business portfolio towards more profitable lines continued with Packages and Commercial Motor growing by 5.4% and 6.4% respectively. In contrast, the Liability and Property lines shrank by 7.5% and 5.4% respectively. Rate strength in the last quarter averaged 7.6%, its highest level of the year, which moved the average for the year up to 5.2%, usefully ahead of claims inflation. I believe this Q4 performance is a positive sign for the year ahead. For the year as a whole, Liability rates led the way with a rise of 9.2%. Commercial Motor also delivered a satisfactory 5.9% rise but Commercial Property remains the most difficult line in which to achieve the required rate strength, delivering just a 2.7% increase.
Despite what are now familiar and long-term macroeconomic conditions which are unhelpful for our Engineering business, overall I am very pleased with its performance. Achieving rate strength in the insurance part of the business remains elusive but the fee based inspection part of the business is performing well with revenues up 4.4% for the year and rate strength 4.0%.
Overall the Division improved its COR relative to the level at Q3 by 1.2 percentage points, delivering 97.9% for the whole year – an impressive result in a tough year in the commercial market.
In the Broker segment of the Retail business it proved to be a bridge too far to achieve both an acceptable level of profit as well as to grow our GWP. As I have always maintained, our strategy is to achieve profitable growth, not growth for its own sake. As a result we took the decision to
manage the motor portfolio in a way that focused on generating profit, even if that meant taking a reduction in top line. As a consequence, our private motor broker book GWP was down 5.7% compared to 2011 at £173.0m. The household book also fell by 3.1% to £116.8m as a one year distribution deal ended, but we anticipate renewed growth in 2013.
This tactical management of the broker motor portfolio enabled us to deliver an underwriting profit of £12.7m which was the first underwriting profit seen from this Broker segment since 2006.
Corporate Partner GWP was 3.9% ahead of prior year at £209m. The highlight for this business is the performance of the motor account which delivered an excellent 28.3% growth in GWP as the BMW and VW relationships attracted more customers. Allianz has forged a very favourable reputation in the corporate partner market and we are confident we will grow our portfolio of corporate customers further during 2013.
Animal Health (Petplan) had an excellent year in 2012. GWP grew by 9.3% over 2011 to reach £257m, whilst policy numbers increased by 5.4%, maintaining our clear leadership in this market. The underwriting performance of this business also continued to impress.
The Legal Protection business grew very well with GWP up 44.4% over 2011 and the underwriting performance continued to be strong with a combined ratio of 87.1%. The plans put in place to re-shape this business in the new regulatory environment being implemented on 1 April this year are proceeding well and the details will be announced by the business shortly.
The Allianz Your Cover motor GWP almost doubled in 2012 compared to last year and we are expecting significant top line growth for this business in both motor and household. The latter product went live with GoCompare during Q4 2012 and is planned to appear on CompareTheMarket during 2013.
Prospects for 2013
When asked about the prospects for the business for the coming year, I always reply that I am confident about our ability to deliver a strong financial performance and 2013 is no exception. I partly base my response on the fact that we have delivered exactly that level of performance now
for a decade. Nevertheless, I always add the caveat that our performance will be influenced by factors outside our control, in particular the frequency and severity of bad weather. This issue of control is an interesting one in that I do believe more control must be exercised over the negative impact of bad weather on insurers’ profits and balance sheets.
2012 was the wettest recorded year in England and Wales and the cost of storms and flood claims hit £1.19bn – the highest figure since 2007. Allianz’s share of these losses was c.£50m. More control can be exercised over the financial impact on the industry of such events by reaching a sensible agreement with government over the provision of flood cover to people living in flood prone areas. This agreement must include a commitment relating to government investment in flood defences as well as the implementation of prudent planning choices.
Chief Executive, Allianz Insurance
1. Allianz Insurance is one of the largest general insurers in the UK and part of the Allianz SE Group, one of the leading integrated financial services providers worldwide and the largest property and casualty insurer in the world. With approximately 142,000 employees worldwide, the Allianz Group serves approximately 78 million customers in more than 70 countries.The mission of Allianz Insurance is to be the outstanding competitor in our chosen markets by delivering products and services that our clients recommend, being a great company to work for and achieving the best combination of profit and growth.