Allianz firms Q3 underwriting results in P&C, on track for top of 2022 target

Insurer  Allianz managed a 16.4% increase in third quarter profits, beating market expectations and inspiring a vow to hit the upper end of its 2022 profit target by year-end.

“We now expect to end up in the upper end of our outlook,” CFO Guido Terzariol told an online press briefing. To date, the group had said it expects an operating profit of €13.4 billion, plus or minus a billion. “This is something that could be a reasonable expectation at this time.”

The P&C segment improved its profit tally for Q3 on a reduction in nat cat, a price-driven rise in premiums and a strong investment result, more than enough to offset the impact of inflation on claims.

Management cited “growth in premiums, lower claims from natural catastrophes and a favourable contribution from the run-off result.”

P&C gross written premium in Q3 rose 14.0% year on year, just ahead of 13.6% growth in net earned premium. Adjusted for FX, internal growth was 8.8%, of which Allianz attributed 6.7 percentage points to price and 1.7 points to volume, ahead of service impacts.

That rate-driven premium growth constitutes “a clear indication we are taking action to offset the inflation we might see coming in our claims,” CFO Guido Terzariol said.

“Changes are going to accelerate as we go into Q4 and also into next year,” Terzariol said of the fight against inflation. “We are going to get more rate change and not less rate change.”

P&C claim expense rose by a slower 12.6% year on year for a 0.6 percentage point reduction in the loss ratio to 67.4%, including a 2.8-point reduction in the nat cat loss ratio to 2.1%. mark the combined ratio in P&C down by 0.7 percentage points to 94.0%.

Underwriting profitability is stretching across regions and lines, Terzariol insisted. “A lot of our entities are providing very good combined ratios.”

Exceptions include Latin America, where deterioration in Brazil is said to be stabilizing, and the United Kingdom, where inflation is rearing its head most severely. With the UK inflation hitting the industry as a whole, Terzariol expects a broad-based pricing initiative to redress the profit concerns.

The life and health segment suffered a downturn in Q3 earnings to offset P&C gains. Management called out variable-annuity products in the United States as well as a softer net harvesting result in Germany. Operating profits were down lightly in asset management.

By the group bottom line, Q3 net profits of €2.60 billion were up 16.4%, ahead of the 7/4% growth in operating profits and the 1.3% annual gain in total revenue.

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