2010 Financial Highlights:

• FRS Operating Profit is ahead of plan result
• Gross Written Premium up 4.8% to £1663.7m
• Combined Ratio stands at an excellent 95.9%
• Commercial business delivered good growth and an excellent Combined Ratio
• Retail business improved its Combined Ratio by 3.2% over 20

Statement from Chief Executive Officer Andrew Torrance

I am very pleased to report that 2010 has been another year of success and achievement for Allianz Insurance. The company achieved an Operating Profit of £158.5million which is slightly ahead of plan.

As I reported consistently during 2010, it was our intention to reduce the level of prior year claims reserves element within our results and this was achieved. This reduction, together with the prevailing economic pressures of lower growth, higher pensions costs and low interest returns, shows that the company performed well in what must now be seen as the ‘New Normal’ economic environment.

Gross Written Premiums rose by 4.8% compared to 2009 which is a satisfactory performance when judged against such a dynamic and competitive market place, coupled with the fact that customers were also facing their own economic challenges and were applying significant pressure of their own to reduce the premiums they were being asked to pay.

The Combined Operating Ratio for the business as a whole was 95.9%, 0.5% points worse than our plan but still a very positive figure that is likely to outperform most, if not all of our peer insurers in the UK.

In a highly competitive market, Commercial Division achieved GWP premium growth of 3.1% compared to 2009. This year, it will be important for our commercial business to address the fact that the 2010 accident year result was below plan and therefore corrective action is needed.

Our engineering and inspection business exceeded the plan for both top line growth and underwriting profit in a negative rate strength market as far as the insurance business is concerned. However, in the fee earning inspection business, it was possible to drive through some rate increase without adversely impacting retention.

Turning to Allianz Retail, I am pleased to report both top line growth as well as a marked improvement in the division’s Combined Operating Ratio (down 3.2% over 2009). Our Retail business continues to steadily improve its position financially and is making good progress towards its GWP profitable growth target of £1bn in 2013.

Within Retail, the Corporate Partner business is achieving a growing reputation for flexibility and customer-focussed solutions. Last year for example, leading brands such as Orange mobile phone account and the recently announced deal with Co-Operative Financial Services to provide pet insurance to its customer base, were notable successes.

Retail Broker was able to achieve reasonable premium growth in the motor account over 2009, whilst the broker household account was ahead of its premium growth targets against prior year. However, we still need to push through significant rate rises in both accounts during 2011 to address the continuing profitability challenge in the motor account, and the frequency of severe weather events which appear to have moved from the occasional to the annual.

The division’s profit highlights last year were posted by Animal Health and the Direct business with significant above plan performance. In addition, both Allianz Legal Protection and Allianz Musical Insurance also performed better than their respective planned for levels of profit.

As a company we can look back on 2010 with a great deal of pleasure and no little satisfaction. In addition to our financial performance, we also won a number of prestigious awards including the General Insurer of the Year at the British Insurance Awards and Commercial Lines Insurer of the Year at the Insurance Times Awards.

As a Group, we start the year in a strong business and financial position. However, 2011 is expected to be another challenging 12 months with tax increases and spending cuts dominating the macro-economic landscape. These economic pressures will not make securing the necessary rate rises in both the commercial and personal lines markets any easier to achieve.

I believe those companies that succeed in what I have already referred to as the ‘new normal’ economic environment will be those organisations that set their sights on being the outstanding competitor in their chosen markets and delivers for their customer. Allianz has a professional, dedicated and focussed workforce and I am confident that the company will again rise to the challenge and deliver another strong performance again this year.

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