PB Week: Allianz reassures brokers of strength

Earlier today I was lucky enough to catch up with Andrew Torrance, CEO of Allianz Insurance, to discuss the company's performance so far this year. What this reporter found interesting was that although third quarter results quote an operating profit (pre tax) of £140.8m Torrance was willing to admit that the result received support to the tune of circa £100m from releases from prior year claims reserves.

Whilst the UK arm reported a commercial lines combined ratio of 88.8%, the combined ratio of 2008 business was a much less attractive figure of around 105%.

Despite the debateable nature of the results Torrance said he was pleased with the insurers performance in testing market conditions. However, he is intent on taking action to make the business more profitable by raising premiums: "Some of our policies distributed by brokers have been really underperforming and we will be looking to push up some of these premium rates by over 7.5%. However the number of our brokers affected will be relatively small and will be mainly the larger players; we can only raise the premiums on a case by case basis for those running on their own systems rather than those operating using software houses."

Torrance is also looking to drive up profitability by cutting some commissions: "During 2008, we have seen commercial commissions rise two percentage points over 2007 levels, whilst by contrast our own expense ratio has fallen by 1%. We will be looking to renegotiate commissions deal by deal and when time bounded broker deals come up for negotiation we will be looking to drive many commission levels down."

Torrance was quick to reassure this reporter that Allianz remains in a strong financial position: "Last year we decided to reduce our equity portfolio by half and this has turned out to be a very wise decision. The majority of our investments are in government bonds and we are extremely strongly capitalised with a shareholder funds figure in excess of £1bn. We have great opportunities for organic growth as in the current economic market brokers look to seek us out as they know we are stable and well financed. We offer a great home for brokers who can have the confidence we will still be around to pay claims in ten or twenty years."

SSP

Another company looking to take advantage of growth opportunities offered by the current economic market is SSP, according to Jonathan Davey speaking to PB at the Future of General Insurance conference last week.

"The money is not committed but it is certainly available and we are actively looking at several possible acquisitions at the moment," he said.

Watch this space.

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