Allianz pads inflation reserves each quarter even as pricing outpaces

Allianz is padding its reserves each quarter on account of unabating inflation readings, CFO Guido Terzariol (Pictured) has indicated.

"We are regularly adding," Terzariol told participants in his company's Q3 earnings call. "There is no release, this is just going in one direction."

Allianz put up new reserves specifically for inflation to account for roughly 2 percentage points of its combined ratio in Q3 after having put neighbourhood 1 percentage point of its combined ratio in Q2, he indicated.

"We are not naively thinking inflation might not have an impact," the CFO said. "We put a sizable reserve for inflation."

Terzariol played down the Allianz level of concern over inflation given actions taken on reserves and accelerating actions on pricing. Long-tail inflation concerns are largely handled by inflation-linked assets.

"We don't have exceptional concerns," Terzariol said.

Premium growth at 8.8% after adjusting for FX and excluding consolidations was 80% driven by rate changes, "a clear indication we are taking action to offset inflation we might see coming in our claims."

Those efforts will only accelerate in Q4, he said.

"Rate changes are going to accelerate as we go into Q4 and also into next year," Terzariol said. "We are going to get more rate changes and not less rate changes."

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