Allianz sanguine on claims inflation but swears off cyber exposures: CFO

Allianz has avoided major claims inflation to date in 2021 and expects its book will continue to avoid the kinds of cost problems bemoaned by competitors, chief financial officer Giulio Terzariol (pictured) told an investor call today (Wednesday, Nov 10).

“We don’t see a widespread increase in inflation,” Terzariol said under questioning from analysts. “Have we seen any impact in Q3? No. Do we expect it in Q4? Not really.”

Looking closely, Allianz finds “some variation country by country or business by business,” but the business appears “well positioned” to avoid the larger impact, the CFO claimed. Terzariol sees “some cases” in property and suggested he is pleased to be low on workers’ compensation exposure, even though prices haven’t yet shifted into wage inflation.

“It’s not having any impact on our numbers; I think we are well positioned,” he said.

Allianz will remain vigilant on the price outlook. “We are very proactive in monitoring and will be extremely reactive if we see inflation really picking up.”

By frequency and severity, Allianz claims a “normalization, almost across the board” with only a few outlier countries vis-à-vis pre-covid levels.

In contrast, Allianz will avoid the cyber market for the foreseeable future as the balance of risks merits caution despite continuing increases in rates, Terzariol said.

“We are very cautious and I personally am very cautious,” Terzariol said when questioned. “I know that price is going up, but I don’t know who wins between price, frequency, severity and everything else you need to consider.”

Allianz currently writes “very limited amounts” of cyber coverage and currently has “very low capacity.” The insurer further ringfences those exposures with a “pretty strong reinsurance programme.”

“Is cyber an engine of growth and profitability in the next two to three years? The answer is ‘no’,” Terzariol said of Allianz’s policy.  “But that also means it won’t be a cause of risk.”

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