Allianz cedes ~€700m of flood losses to reinsurance

Global insurance and reinsurance group Allianz confirmed that the severe flooding in Europe in July has resulted in a €400 million operating profit impact to its results this morning, suggesting around €700 million of flood losses were recovered from its reinsurance partners.

Allianz had previously revealed its gross losses from the flood would be around the €1.1 billion mark, with reinsurance likely picking up the majority for the company.

Today’s results show that across the third-quarter Allianz suffered a €659 million hit to its operating profit from natural catastrophe events.

The European flooding was the largest catastrophe event for the insurer, driving €400 million of the cat losses for the quarter.

Hurricane Ida drove another €100 million, with the rest from a number of storm and hail events across Europe.

Overall it was a 4.9% nat cat burden for Allianz in the quarter, while non-cat weather losses amounted to another 1.3%.

Despite these major losses, Allianz reported a 93.9% combined ratio for its property and casualty business, an improvement on the prior years 96%, despite the catastrophe loss burden being higher.

Allianz’s reinsurance program has played a significant role in moderating the impacts of Q3 2021 catastrophe loss events for the insurer, particularly for the European floods.

However, it also seems likely Allianz has tapped its reinsurance for hurricane Ida as well, as despite its lower concentration of exposure in the United States, a €100 million loss is very small for a company of its size.

Of course, Allianz will also have had exposure to Ida through the business it fronts for reinsurers and third-party capital partners, including ILS fund managers, so it’s possible more of that loss flowed through these arrangements to other sources of capital.

Allianz’s P&C unit reported an operating profit of €4.158 billion for the first nine-months of 2021, far better than the prior years €3.49 billion, in which its reinsurance protection has clearly played a role.

The AGCS unit experienced a strong negative impact from NatCat, but this was partly compensated by lower weather related and large losses as well as improved underlying loss ratio, Allianz said today.