FRANKFURT (Reuters) - German insurer Allianz will overhaul and may sell parts of its U.S. property and casualty business Fireman’s Fund after struggling for years to bring underwriting losses under control, the company said on Wednesday.
Allianz said its Fireman’s Fund commercial property and casualty (P&C) business would be integrated into the specialty insurance business Allianz Global Corporate & Specialty (AGCS), giving the combined business more than $3 billion in revenues.
“Various options are being considered to also build scale for the personal lines business of Fireman’s Fund,” Allianz said of the remaining Fireman’s Fund business area that concentrates on wealthy customers.
Fireman’s Fund has been a headache for Europe’s biggest insurer for years and has repeatedly needed its reserves for past claims to be topped up, prompting calls by some analysts for a sale of the business.
Germany’s Sueddeutsche Zeitung on Saturday said Allianz was planning to sell the personal insurance business.
Allianz on Wednesday cast the changes as positive for customers.
“The integration of the Fireman’s Fund commercial P&C business into AGCS allows Allianz to focus on opportunities in commercial insurance, operate under the Allianz brand and build upon the range of commercial P&C insurance solutions and relationships,” AGCS CEO Axel Theis said in the statement.
The U.S. insurer had aimed to return to profit partly by turning itself into a niche player, concentrating on six industrial sectors and 17 sub-sectors, and cleaning its books of less profitable business.
But Allianz Chief Financial Officer Dieter Wemmer last month said Fireman’s Fund was a “disappointment” after its underwriting loss widened substantially.
The combined ratio, which measures costs and claims as a percent of premiums, deteriorated to 121.2 percent in the second quarter, after being close to breakeven at 100.2 percent in the year-earlier period.
“The target of making a little underwriting profit this year is completely out of reach,” Wemmer told analysts in the insurer’s second quarter earnings call.
Allianz said last month it was looking to achieve “accelerated improvements” at Fireman’s Fund and would not rule out cost-cutting as part of the effort.
Reporting by Jonathan Gould; editing by Thomas Atkins