Allianz to shut 'untenable' Australia and New Zealand units as claims mount; Pacific CEO departs
Allianz Global Corporate & Specialty (AGCS), Allianz group's specialist corporate insurer, will cease underwriting long tail risks in Australia and close its operations in New Zealand with effect from September 2019, following a "strategic review" of the business. The decision has led to the departure of its Pacific CEO Willem Van Wyk.
The insurer said it has decided to step out of financial lines and liability business in Australia and New Zealand as this portfolio has been subject to extensive claims activity in recent years and it was no longer sustainable for AGCS to continue the offering.
AGCS’ long tail business in Australia registered €42 million in gross written premiums (GWP) in 2018 and accounted for 0.5 percent of AGCS’ global revenue of €8.2 billion in 2018. AGCS does not have a large presence in New Zealand, with the branch consisting of a team of four and writing €9 million of GWP last year.
Allianz said it will shift its focus to growing other lines of business in the region, including engineering, property, energy, entertainment and alternative risk transfer. These businesses will be written out of AGCS Australia following the closure of AGCS New Zealand operations. Collectively, these portfolios account for 73 percent of total AGCS business in New Zealand.
In line with the strategic changes, AGCS has appointed James Stack as the new CEO of Pacific, replacing Willem Van Wyk who is leaving the group to pursue other opportunities. AGCS Pacific is an embedded team within Allianz Australia. Stack's appointment is effective from August 1, 2019
In addition, Joanna Mercer, previously head of compliance & product development will assume the role of head of claims AGCS Pacific with effect from October 1.
The company noted that these changes will not impact other Allianz global lines entities in New Zealand including Euler Hermes and Allianz Partners. Allianz will also retain its premium funding operation Hunter Premium Funding, along with specialist agencies Club Marine, Allianz Marine & Transit and Primacy.
AGCS said it is working closely with affected employees to support them through this change and to evaluate all options for redeployment. It will also work with its customers and brokers to manage the transition of business to alternative insurers. All other Allianz entities and AGCS lines of business in Australia remain unaffected.
Commenting on the strategic changes, Sinéad Browne, AGCS board member and chief regions and markets officer said: “The rise in legal funders and the ultra-challenging legal environment which drives extraordinary claims levels in our sectors have made it untenable for AGCS to continue offering Long Tail business in the Pacific. As large corporate risks are very much exposed to the alarming increase of class action suits and litigation funders, it was no longer sustainable for AGCS to continue offering coverage for Long Tail risks.”
Mark Mitchell, regional CEO AGCS Asia Pacific said: “As a global insurer focused on large corporate risks, we will continue to invest and expand our Engineering, Property, Entertainment, Energy and Alternative Risk Transfer portfolios in the Pacific. We will also continue to support global clients with exposures in Australia and New Zealand for all lines of business through our Allianz Multinational network.”
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