Allianz eyes 9.5 billion euro P&C operating profit by 2027

By Rebecca Delaney

Feb 28 - (The Insurer) - Allianz is confident of reaching its P&C operating profit target of around 9.5 billion euros ($9.9 billion) by 2027 despite posting a higher combined ratio of 93.4% for 2024 as a result of a low level of run-off.

Speaking on a media call following Allianz’s results announcement on Friday, CEO Oliver Bäte affirmed that the group is aiming to deliver P&C operating profit of around 9.5 billion euros in 2027, which will require revenue growth of between 6% and 7% per annum.

“We’ve had excellent growth momentum, with strong profitability in both retail and commercial. Don't forget that we've had a positive super cycle in commercial, and a lot of performance pressure in retail fleets and SME,” said Bäte.

P&C operating profit increased by 14% to 7.9 billion euros in 2024, with natural catastrophe claims coming in slightly below budget at 1.8 billion euros. Nat cat claims costs were also lower than the 2.3 billion euros reported in 2023.

The main nat cat events over the year were the floods in southern Germany in Q2 and in Eastern Europe in Q3.

For the fourth quarter of 2024, Allianz posted 11% internal growth across its P&C segment, with price and volume accounting for 6% and 5%, respectively.

“Our combined ratio is at 94.7%, which is higher compared to what we have seen the previous quarter,” commented Claire-Marie Coste-Lepoutre, CFO of Allianz.

“That's entirely linked to the very low level of run-off at -0.4%, which is linked to the fact that we had such a strong performance on the investment results side and positive attritional development, which we used as an opportunity to do some tactical reinforcement of our balance sheet.”

The full-year P&C combined ratio of 93.4% was at the lower end of Allianz’s outlook range for the year, with positive improvement in the expense ratio offset by a negative impact to the undiscounted attritional loss ratio from the New Caledonia riots and the sale of its US midcorp and entertainment business to Arch.

“Our undiscounted attritional loss ratio normalized is more at 71% to 71.5%, which is in line with our expectations,” Coste-Lepoutre explained.

The P&C segment reported internal growth of 8% across the portfolio in 2024, with rates accounting for 6% of the growth.

While motor retail and the midcorp business posted double-digit volume growth, total business volume declined at Allianz Global Corporate & Specialty, which also saw stalling rate momentum in the second half of the year.

Coste-Lepoutre attributed the volume decline to Allianz’s re-focus on underwriting preferred lines of business in the softening rate environment, which has led to “tactical reductions” in financial lines and cyber.

“In P&C, we are clearly well positioned for 2025 as we are going to build on 2024. We have not changed our views compared to the market day. We expect our combined ratio to still be around or below 92% and we also expect to continue seeing growth,” Coste-Lepoutre concluded.

“In retail, we see growth in a supportive rate environment. In commercial, the situation is a bit nuanced by entities, but the level of rates gives room for focused growth.”