Posted on Jul 14, 2010 by Sergio Ulloa
According to an investors report on their website, Allianz Group is planning on their global insurance business lines making a larger contribution to earnings in the next six to twelve months, up from the 15% they contributed towards group revenue in 2009.
Included in Allianz's list of global business lines are health insurance, life insurance, industrial insurance run under the name of Allianz Global Corporate & Specialty, credit insurance, automotive insurance, insurance-bound assistance and asset management.
In total, these lines of business earned the Allianz Group EUR 14.5 billion (USD 18.4 billion) in group revenue in 2009, accounting for 15% of the group's yearly total, and adding EUR 2.5 billion (USD 3.18 billion) to operating profit, making up 34% of Allianz Group's 2009 EUR 7.2 billion (USD 9.1 billion) operating profit.
Allianz gave different targets for each segment of the global business lines, with Allianz Global Investors - Allianz Group's asset management business - aiming for a cost-income ratio below 65%. Their expatriate health insurance division, Allianz Worldwide Care, has seen a combined ratio of about 94% in recent years despite rapid growth and expects to earn gross written premiums of around EUR 240 million (USD 305.3 million) in 2010 based on major business deals.
Euler Hermes, Allianz's credit insurance business which had serious troubles during the economic downturn, is targeting a combined ratio of below 100% with operating profits of EUR 100 million (USD 127 million) in 2010. Banking on an average of 4% return on investments and an average combined ratio of 84%, Allianz sees Euler Hermes making a 15% return on equity over 10 years.
The combined ratio encompasses the claims ratio and expenses ratio and is used as a measure of profitability. The sum of incurred losses and expenses are divided by the earned premium, resulting in the combined ratio. A combined ratio of less than 100% means that the insurer is making an underwriting profit, while a ratio of over 100% means the insurer is paying out more in claims and expenses than it is receiving in premiums.
Allianz's automotive insurance division is looking to expand in either the U.S. or China where there is potential for growth, as much of their automotive insurance business involves partnerships with automobile producers and many of the largest manufacturers maintain strong presences in these markets. The automotive insurance business is intent on bringing in EUR 2 billion (USD 2.5 billion) from existing markets in gross premium income over the mid term.
Insurance Company Mentioned:
Allianz Group is one of the leading global services providers in insurance and asset management. With approximately 153,000 employees worldwide, the Allianz Group serves approximately 75 million customers in about 70 countries. On the insurance side, Allianz is the market leader in the German market and has a strong international presence.
Allianz Worldwide Care
Allianz Worldwide Care was established in 2000 as the international medical insurance specialist of the Allianz Group. Allianz Worldwide Care is dedicated to providing superior health insurance policies to expatriates and their families all over the world. Headquartered in Ireland, this insurer has regional offices in Africa, the Middle East, Europe, and Asia, serving to provide their clients with the most comprehensive support network available.