AGCS delivers underwriting profits as it expands in to specialty and North America

Allianz Global Corporate & Specialty (AGCS) posted a dramatically improved underwriting result, a decent increase in gross premiums and improved operating profit in the first quarter of this year compared with the first three months of 2017. The group also saw total revenues slightly up, an improved overall P&C combined ratio and higher net profits attributable to shareholders. The combined ratio for the first quarter of 2018 stands at 94.6% compared to 100.3% in the same period last year. “The loss ratio benefitted from a benign loss environment compared to the first quarter 2017 when AGCS was impacted by several high severity claims,” stated the firm. AGCS’ operating profit reached €139m for the first quarter of this year compared with €109m in the first three months of 2017. “The rise in operating profit is attributed to a profitable underwriting result, which has been partly offset by lower Investment income,” said the company. AGCS increased gross premium written to €2.47bn in Q1 compared with €2.33bn for the same period last year. The Munich-based insurer said growth was driven by “seasonality factors” in its fronting business, and improvement in several lines of business, notably liability and the mid-sized corporate sector. As we reported from the recent annual general meeting (AGM) of the German risk management association GVNW, AGCS will probably not report significant premium growth in its core German and other European traditional property and liability lines this year. Senior executives from AGCS, HDI Global and Gothaer were invited to tell German risk managers during the meeting what they could expect from their leading carriers. Each of the insurers said that terms and conditions need to improve in traditional industrial lines, at least in Germany, and so risk managers need to prepare for tougher negotiations than in recent times. It seems, however, that as with other leading insurers – notably HDI – AGCS does see good growth prospects in North America and specialty lines. Announcing their results, AGCS highlighted three key growth areas that it has acted upon so far this year. In February, Cisco, Apple, Aon and Allianz announced a new cyber risk management solution for businesses in North America. This comprises a set of cyber resilience evaluation services from Aon, the most secure technology from Cisco and Apple, and options for enhanced cyber insurance coverage from Allianz. Also, with effect from Jan 30, AGCS North America acquired the renewal portfolio of Liberty Mutual Insurance’s United States Product Recall and Special Contingency business, written through Liberty International Underwriters (LIU) US. “AGCS began offering product recall insurance in North America in 2016 and is committed to further expanding its business in this segment, with a focus on larger corporate clients,” stated the company. Closer to home, but again in specialty rather than mainstream business, AGCS announced plans in March to expand marine cargo insurance business in its regional unit central and eastern Europe. The new team is based in Munich and consists of five experienced underwriters who are focused on the group’s customer base in southern Germany. AGCS will presumably hope – along with many other insurers currently – that expansion into these specialty lines and the hardening North American commercial insurance market will help maintain improved underwriting results.

AGCS delivers underwriting profits as it expands in to specialty and North America

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