Allianz profit slumps 29% as COVID-19 drags down P&C result

German insurer Allianz said its half-year results were "robust" and "resilient" despite seeing a 29 percent decline in its profits, driven by the impact of COVID-19 crisis and severe financial market turmoil on the property/casualty business segment.

Property/casualty recorded a lower underwriting due to rise in large losses as well as a lower contribution from run-off. This was partly offset by positive internal growth at Allianz Global Corporate & Specialty (AGCS), Germany, and Asia-Pacific.

The group made a net profit of €1.5 billion in the second quarter of 2020, 28.6 percent down from the prior year quarter. For the first half of 2020, it made a net profit of €2.9 billion, also down 28.8 percent compared to the same period of 2019.

In the first six months, the total revenues remained stable at €73.5 billion, while in 2Q 2020 total revenues decreased by 6.8 percent to €30.9 billion.

The P&C combined ratio rose by 1.2 percentage points to 95.5 percent in the second quarter of 2020. Overall, the combined ratio for the first half-year worsened by 2.7 percentage points to 96.7 percent.

In the company's corporate insurance unit AGCS, gross premium written increased by €656 million to €5.520 billion in H1 2020, compared with €4.865 billion in H1 2019. The combined ratio for first half 2020 climbed to 117.2 percent, from 100.4 in the same period a year ago, largely attributed to already incurred as well as estimated anticipated COVID-19 claims of €488 million.

Allianz Holdings, the holding company which owns Allianz Insurance and LV= General Insurance, posted gross premium written of £1.981 billion, up from £1 billion in H1 2019. The combined ratio improves 3 percentage points to 92.7 percent from 95.7 percent in H1 2019.

Oliver Bäte, chief executive officer of Allianz SE, said: “The pandemic continues to be a challenge for all industries. Nevertheless, Allianz has achieved robust results and shown a remarkable resilience in the first six months of 2020. It makes us confident that we will see a solid financial performance also in the second half of 2020.”

"The impact of COVID-19 on Property-Casualty business segment revenues has been more pronounced in the second quarter of 2020 but our franchise has proven resilient in terms of revenue growth," said Giulio Terzariol, chief financial officer of Allianz SE. "Adjusting for the impacts of COVID-19, the underlying performance remains strong with a normalized combined ratio of less than 94 percent as our focus on technical excellence and productivity gains pays off."

Jon Dye, CEO of Allianz Holdings said: “This set of results is broadly in line with our expectations and has been achieved against the backdrop of an unprecedented human, economic and social crisis. Allianz is growing in a way which is making our business more resilient and better prepared to meet the challenges within the market and the wider economy."