Continental giants reveal improved solvency ratios for UK units

Published in: Risk, Risk management, Risk Models, Capital, Corporate strategy, Regulation, Solvency II, UK, Rest of Europe

Companies: Axa, Allianz, Axa Insurance plc, Allianz Insurance UK

Europe's two largest underwriters have revealed better 2017 solvency ratios for their UK operations.

Data released in Axa and Allianz's second annual solvency and financial condition reports (SFCRs) shows a variety of reasons behind the rising ratios.

Axa Insurance UK's ratio climbed to 140.2% at the 2017 year-end, up from 123.1% a year previous, while Allianz Insurance plc saw its ratio rise only a tad, from 130% to 131%.

The French giant's UK unit attributed its improving ratio to the capital requirement falling, from £1.8bn ($2.4bn) to £1.7bn, as technical reserves fell on "favourable reserve development on bodily injury claims", and the pension deficit improved.

Allianz Insurance's market risk fell by £281m to £657m, while underwriting risk fell £43m to £680m.

Meanwhile, Allianz Insurance's diversified SCR fell by £88m from £829m to £741m after it made major changes into its internal model in 2017.

But annual re-parameterisation of individual risk types boosted the unit's longevity and operational risks.

All but £20m of Allianz Insurance's £964m eligible own funds, for its SCR of £741m, are tier 1 quality.

The unit also revealed its investment Income fell by £11m mainly due to lower yields, and early repayment of a £340m "high yielding loan" to Allianz SE.

  •  Insurers subject to Solvency II are publishing their second annual reams of data, and narrative business explanations, in their 2017 QRTs and SFCRs. Subsidiaries' deadline has passed, while the group deadline approaches in June.

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David Walker