Allianz in Latin America weathers difficult environment in first half of 2014

Allianz in Latin America delivered solid results for the first half of 2014 in challenging economic circumstances. Total revenues went down to 1,084 (2013: 1,386) million euros – a decline of 22 percent, driven by unfavorable foreign currency exchange effects and volume reductions mainly in Brazil in the property and casualty business.

 

In Latin America, Allianz primarily concentrates on property and casualty insurance but also offers life and/or health insurance in Argentina, Brazil, Colombia and Mexico.

 

Revenues in the property and casualty business were down 23 percent to 923 (1,197) million euros, and down 6 percent after adjustments for foreign exchange effects. This drop was mainly due to negative top-line effects from a migration of the Brazilian IT platform. The revenues in the life and health business went down by 14 percent to 162 (189) million euros.

 

Overall operating profit for the first half of 2014 declined 37 percent to 48 (76) million euros. The main drivers ofthe deterioration were negative foreign currency exchange effects, as well as weak business results in the health insurance segment in Brazil. After adjustments for foreign exchange effects, the operating profit decreased by 20 percent. The combined ratio in Latin America rose to 103.0 (98.1) percent.

 

"We see a temporary impact in Latin America due to the IT migration in Brazil. This is a tough project and a big investment, but in the long run it will help us to optimize our processes and improve our efficiency,” said Helga Jung, member of the Board of Management at Allianz SE. “At the moment we are doing our homework and optimizing our business model to take advantage of the potential in Latin America.”

 

 

Argentina reports above-average growth

 

In Argentina, gross written premiums were up by 17 percent in the first six months to 150 (129) million euros. This increase was primarily attributable to strong growth in the auto segment, driven by a cost rise due to inflation and a luxury car tax which was implemented in January 2014 to help arrest a three-year decline in foreign currency reserves. Taking into account the exchange effects, revenues rose significantly by 86 percent.

 

Operating profit grew by 66 percent to 14.5 (8.7) million euros. After adjustments for unfavorable foreign exchange effects due to the Argentine peso, growth from operating profit came in at 163 percent. Fundamentally, the investment result is the driver of the performance.

 

The combined ratio stood at 99.0 (99.2) percent, an improvement of 0.2 percentage points compared to the end of the first half of 2013.

 

Fabiana Castiñeira, CEO of Allianz Argentina: "We have grown stronger than the insurance market in Argentina. This shows the success and the great efforts made by our employees and agents. For us it is essential that we achieve not only growth, but also profitability, and a market position improvement. Allianz has climbed from the thirteenth position to the fifth over the last two years."

 

 

Brazil impacted by different challenges

 

Weaker growth in Brazil contributed to lower-than-expected economic momentum in the first half of the year. Furthermore, the depreciation of the Brazilian real was a challenge for Allianz.

 

The IT platform transformation in Brazil was the main driver for the decrease in revenues in the property and casualty business. Gross written premiums were at 491 (778) million euros in the first six months of the year, a change of -37 percentaffected by negative development in Motor and other property and casualty lines. After adjusting for foreign exchange effects, gross written premiums decreased by 26 percent.

 

Operating profit declined to 12 (44.2) million euros and the combined ratio was 7.8 percentage points higher at 106.1 percent.

 

Miguel Perez Jaime, CEO of Allianz Brazil, said, “The focus in the first half of 2014 was securing future growth through the implementation of a new IT platform. We have put a lot of resources into this change. We are confident that the new platform will pay off and improve our business processes and profitability.“

 

 

Property and casualty revenues grow by double digits in Colombia

 

The economy in Colombia is improving, recording the highest increase in GDP since 2011. This was mainly driven by stronger construction activity.

 

In the property and casualty insurance segment, revenues increased by 10 percent to 173 (156) million euros. This growth is primarily driven by higher volumes in the motor retail business.

 

At 9.9 (10.1) million euros, operating profit in this segment was at nearly the same level as in the previous year. The combined ratio came in at 98.5 (99.4) percent, an improvement of 0.9 percentage points mainly due to efficiency level improvements and lower expenses.

 

Revenues in the life insurance segment dropped by 13 percent to 34 (39) million euros. The premiums decreased as several large unprofitable contracts were not renewed. Operating profit in the life segment dipped to 0.4 (1.2) million euros, mainly driven by negative run-off claims of canceled policies.

 

“The launch of the IberoLatam business platform last year is paying off – our claims processes clearly improved, and this is reflected in our improving profitability in property and casualty as well as health insurance,” said Ignacio Borja, CEO of Allianz Colombia. “In the life insurance business we are focusing on cleaning the global life portfolio to achieve profitable growth in all business areas.”

 

 

Mexico with very strong combined ratio

 

Revenues in the property and casualty insurance segment fell in the first six months of this year to 108 (134) million euros. This development is explained by the non-renewal of some large accounts in the health and the property and casualty business. Operating profit stood at 8.7 (9.5) million euros. After adjustments for foreign exchange effects, there is no major deviation compared to the first half of last year. The combined ratio improved by 2.5 percentage points to 90.1 (92.6) percent due to positive claims experience and lower expenses.

 

The statutory premiums of the life insurance business were down by 15 percent to 127 (149) million euros due to lower premiums in annuities products. Due to a good investment result, the operating profit remained at almost the same level as in the previous year at 2.3 (2.4) million euros.

 

Sergio Ghibellini , CEO of Allianz Mexico, said "The improvement in the claims handling is a succes, but we are now focussing on profitability in all business areas".

Allianz in Latin America delivered solid results for the first half of 2014 in challenging economic circumstances. Total revenues went down to 1,084 (2013: 1,386) million euros.

As with all content published on this site, these statements are subject to our Forward Looking Statement disclaimer:

 

Stefanie Rupp-Menedetter
Allianz SE
Phone +49.89.3800-2063
Send email

 

Juliana Ferrer
Allianz Colombia
Phone +57.15.600-600
Send email

Julieta Fondeville
Allianz Argentina
Phone +54.11.4320-3822
Send email

Daniella Satake
Allianz Brazil
Phone +55.11.3171-6686
Send email

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