Profits up and great news on customer loyalty

Posted on: 13 November 2018

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Allianz UK Financial Results Q3 2018 Q3 2017
Gross Written Premium
(GWP)
£1,534.2m* £1,589.4m*
Operating Profit £113.6m £84.6m
Combined Operating Ratio
(COR)
96.0% 98.5%

Commercial Lines

Gross Written Premium
(GWP)
£856.1m* £822.4m*
Combined Operating Ratio
(COR)
95.8% 95.7%

Personal Lines

Gross Written Premium
(GWP)
£678.0m £767.0m
Combined Operating Ratio
(COR)
97.2% 100.2%
*The GWP figures shown for Q3 2018 (YTD) and Q3 2017 (YTD) exclude income from Engineering Inspection and Special Services. The GWP figures reported at Q3 2017 were inclusive of this income. See Notes for the Media below.

Chief Executive Officer, Jon Dye said:

Profits are up 34.3% over the same period in 2017 and the combined operating ratio has improved by 2.5% compared to this time last year. The revenue position reflects the transfer of Allianz’s personal home and motor business to LV= with all the retained business lines continuing to perform well.
 
"I recently visited our Maidstone office which is the home of the team coordinating the commercial transfers from LV= and I am pleased to report that several months of careful preparation is paying off. The mapping of the e-traded products onto our own product suite is working well, the new taxi and truck products are also performing well in the market and the conversion of cases is good.
 
"A determination to make the process as smooth as possible for brokers has helped significantly in the way we have gone about the transfer of business. We have another 10 months of case by case trading with brokers for previous LV= commercial business but we are undoubtedly off to an encouraging start."

Commercial:

GWP has increased by 4.1% and the COR stands at a steady 95.8%. Achieving rate strength at levels required to maintain a consistent approach to customers relies heavily on the relationship between broker and insurer where trust and respect for each other’s challenges is crucial. 

Relevant to this is the issue of claims inflation which is trending at an adverse level. The increasing cost of repairing motor vehicles and the rise in the cost of labour for repairing damage to property are two examples where costs have risen sharply. The uncertain pre-Brexit environment means these are pressures that are unlikely to diminish in the near term and may well continue beyond the point the UK leaves the EU.

The prospects for Engineering Construction and Power are most encouraging. Underlining its position as a multi-niche insurance and inspection provider, the business has launched a new proposition which covers both the construction and operation of renewable technologies. Targeting the operators of wind, solar and hydro power there is confidence this will land well in the market.
 

Personal:

As at the half year point, transferring the home and motor personal lines business to LV= is having an effect on the top line. Importantly, the COR is 3.0% lower than at the same period last year, which is a further decrease of 0.9% over the figure reported at the half year point this year. 

Petplan continues to deliver very good top line and profit growth with customer retention impressive in a competitive market.
 

Claims:

As well as the financial impact of claims inflation on repair costs, there is also a significant deterioration in theft claims to levels normally associated with pressures on the economy caused by a recession. Having carefully analysed the causes our conclusion is that there has been a move away from lone opportunistic criminals towards planned and targeted theft organised by groups and criminal gangs. 

The importance of having the most effective and up-to-date crime prevention measures is something we would like customers to have front of mind. This is clearly an issue where we can work in partnership with brokers by sharing risk management expertise with customers.
 

Jon Dye concluded:

I have spoken before about our focus on using the Net Promoter Score (NPS) methodology to measure customer loyalty. We have just completed the annual UK research exercise which involves asking brokers questions about business performance compared to our competitors.
 
"I am delighted to say the feedback from brokers means our Commercial business remains a loyalty leader with the highest NPS score among its peers and Engineering Construction and Power also remains the loyalty leader. For Petplan our customers are asked directly for their feedback and we have strengthened our position as number one in this market.
 
"As we enter the last trading quarter we are well positioned to post a good financial performance in 2018 and the continued support of the broker community is important if we are to achieve this goal."