Big Interview: Nadia Côté and Serge Raffard, Allianz

Development and growth are the order of the day for the recently appointed managing directors of Allianz Commercial and Personal. Having been in their respective roles for eight and six months, Nadia Côté (Allianz Commercial) and Serge Raffard (Allianz Personal) say it has been a busy start for them, with many changes going on.

“It’s been a busy six months, but a great busy six months,” says Côté.

Commercial restructure

Back in March, Allianz Commercial unveiled a new integrated approach for Allianz Global Corporate & Specialty, and mid-sized country-based accounts.

It brought together the broker-facing propositions of the specialty business and the rest, so brokers can all approach the same firm for whatever risk they are trying to place rather than being transferred to a completely different entity within the group.

As Côté explains: “For us, the change was to make sure that when we go to market, we are one message, one voice, offering the best to our clients.”

As part of that move, Côté moved over from regional managing director for London & Nordics with AGCS to take over as managing director of Allianz Commercial. She took over the role from Simon McGinn, who has since resurfaced at Howden-owned Dual.

Côté continues: “Since May, I've been in the role of leading all of the commercial business across the UK, which includes the large corporates, the mid-corp, the SME digital business and the motor – all of the commercial world.”

Since her first day, Côté says the changes have not stopped.

“There has been a lot going on in the first stages internally, but also externally,” she notes.

Reorganising the team

Côté explains that the first thing the business did was to streamline and reorganise the commercial distribution team.

She explains: “Now, we have one distribution team that covers all of the segments. Nick Hobbs is now chief distribution officer, and he is really setting the strategy across all segments of the commercial business in the UK.

“We also announced Alistair Warren-Upham as the head of distribution for London as well, also covering all segments. So that was a key appointment and is part of the restructure to have one face to the market. “

Côté says the aim is to “triage the business opportunities that come in to where the solutions are. It is key that our distribution structure is joined up”.

The aim is to triage the business opportunities that come in to where the solutions are. It is key that our distribution structure is joined up.

Nadia Côté

However, while in one area, Allianz Commercial is joining up operations, in another it has done the opposite.

“Before, we had the distribution and the underwriting operations embedded together in all the branches. We have now split it up. Distribution is under Nick [Hobbs], and Dave Carey, who joined us in April, is now in charge of all the underwriting operations,” Côté continues.

Creating competition

Côté says the reason for this is to create “competition” between the segments, and explains: “We think it is beneficial to have this competition between underwriting and distribution in terms of generating business and profitable growth.”

Catherine Dixon, who is listed as chief underwriting officer for Allianz Insurance, is still with the business, Côté confirms, but her role is slightly changing.

“Catherine will be in charge of all the portfolio steering – how the functional rules define the risk appetite. She will be the guardian of the temple on everything, and then also the highest authority when we deviate from the stand out rules at head office and branch level,” she says. 

Personal changes

Raffard joined from Allianz Group, where he was group strategy, marketing and distribution officer. He took over from Steve Treloar, who announced he was leaving the role of LVGI and Allianz Personal CEO.

Raffard explains how he knew Treloar, as he had dealings with him during his time at group.

“As part of the group strategy, we wanted to grow in the UK market, and the acquisition of LV was one component of that strategy. It is great company with some very strong leadership from Steve.”

However, Raffard says the market has changed recently, so the company must change with it.

“The market has changed a lot, so we need to change as well. There have been a lot of changes on the personal side, and we are still building on the strategy passed down from group,” he explains, referring to the Allianz mission statement: ‘We secure your future’.

Motor premium levels

The Association of British Insurers recently reported record motor premium levels, while the likes of EY and Oxbow Partners labelled 2022 “the worst-performing year in a decade” for motor.

Meanwhile, Pearson Ham recently found that combined buildings and contents policies had also experienced an exceptional surge, with prices soaring by 10% in the third quarter of 2022 and by 33% annually.

The personal lines market has been tough for all players in the industry, and Allianz Personal was no exception. LV, for 2022, held a combined operating ratio of 110%, compared to 93% in 2021.

Raffard is well aware of the issues.

“Motor is a very competitive market. The prices started from a much lower base than in other countries, and then you have the UK inflation that is higher than anywhere else in Europe. Then you had the spare parts issue and issues resulting from Brexit, so it took longer to get repairs done," he explains.

“Also, the longer it takes to repair means you have to provide a courtesy car for longer. That’s another layer of costs. With inflation increases, it creates this compound effect.”

Price increase

As a result of the continued tough market, Raffard admits LV, along with the rest of the players in the personal lines space, had to increase prices.

“We are trying to contain cost so we can continue to leverage this to keep the price as low as we can for our customers. But at the same time, we need to pass on quarterly price increases, and that's where the people part and the customer engagement part is so critical to keep maximum renewals,” he says.

Raffard explains the main change he is trying to implement is ensuring a customer-first approach, adding: “ 'We secure your future’. You take this precedent and instil a great culture, with good people thinking of the customer.”

He explains how he wants to create extra value for the customer to keep them coming back.

“We are still reinforcing this. This transformation is to have the customer at the heart of what we do, but indeed, we still need to make money. We are not a non-profit organisation.”

Committed to lines

Recent times have seen some personal lines providers pull back capacity on certain lines, with some stopping cover on particular risks, and some even exiting this part of the market altogether.

John Lewis recently revealed it was no longer offering insurance for electric vehicles, and Aviva had stopped cover for certain Tesla models.

An Aviva spokesperson said: “Although we insured the Tesla Y model last year, during the year we changed this acceptance criteria and we were no longer able to offer a policy at renewal.”

However, Raffard said LV, which launched its own bespoke EV proposition back in 2019, is still very much committed to the markets in which it operates.

“Personal lines has some of the thinness margins in the world, then if you include shocks such as [the] Covid-19 [pandemic], inflation, GIPP [General Insurance Pricing Practices]. Then the large weather events that happened last year in a market with already very thin margins – everybody was affected.

“That's why many people have withdrawn capacity, either with full exits or with partial exits of entire lines of business, or of some segment such as EV or the riskier segments.

“We're really committed to these market and to expand. But still, there needed to be some adjustment, and more pricing sophistication. Allianz is known for being in markets for the long term.”

Growth

Raffard’s plan is not to hold back in the motor or home space. He wants to grow.

“It's full of opportunity. I still see areas where we can do so much more than what we do today," he says.

With his experience in other territories around the world, Raffard says the UK has some catching up to do in terms of the sophistication of the home insurance market.

“In home, I think it's a largely underdeveloped market in terms of prevention and protection of the customer. Even the best in home I'm not sure are so strong compared to what I've seen elsewhere in the world.”

He also wants to leverage the diversification of risk appetite to sell different lines of business.

This transformation is to have the customer at the heart of what we do, but indeed, we still need to make money. We are not a non-profit organisation.

Serge Raffard

“Allianz is not geared at competing to be the best at just one product in one channel. Typically, mono-liners will be better because they will be really focused on that segment,” he highlights.

“We don’t secure your future by just selling you a motor insurance policy. It is more about what the customer needs in the insurance and asset management space. We can address those needs more than anybody else in the market.”

Raffard wants to be a jack of all trades insurance provider, providing cover for various different aspects of the customer’s life, rather than focusing all its attention on one thing.

Commercial

Côté says the commercial side of the business has seen similar issues as the personal side, with inflation being the overarching struggle.

“Inflation has been on the top of the agenda in terms of commercial motor because of the access to parts component, supply chain issues, etc.”

But she says the business has been working to increase discipline around its pricing.

“We’ve spent a lot of time in getting a better association in our pricing, and I think that we’ve done the right thing.

“There’s quite a lot of discipline that you need to have in these lines because of the impact of these issues. As Serge says, we’re there for the long run, but, at the same time, [we] need to pay a bit more attention to what inflation means to our portfolio.”

Côté believes the “benign” weather so far this year has helped the performance of the business in 2023.

“We have strong fundamentals. Inflation has been the key focus of attention for the commercial book. The weather has been quite benign this year so far, so it has been a very solid year,” she notes.

Road ahead

Looking ahead to 2024, Côté and Raffard want to focus on growth, and view the way to do this is to just be out in the market more and building on the changes they have been making in their first months in their respective roles.

Côté says: “[Next year] 2024 will be when we put into play all the growth opportunities we think we have in combining and joining our focuses.”

Meanwhile Raffard says: “We hope to be bearing the fruit of what we have done this year. It takes time for the earnings to flow through, so hopefully next year should be a better year for the industry and for us.”

For Côté, she wants to accelerate certain lines of business, killing the perception she believes Allianz Commercial currently holds.

“We are perceived as a commercial motor insurer. While we are big on wheels, I want to change those perceptions and accelerate the other lines.

“Obviously, I want to keep growing motor and empowering the book, but I want to accelerate the progress in other lines, and bring about more balance and diversification to the portfolio.”

Competitive markets

When asked what lines in particular she wants to grow, Côté explains: “One of the things that is really important for us is the upper middle market, at the lower end of the larger corp, where there is around the £500m turnover. We saw [that] penetration was not really there, so now we want to focus on that segment.”

However, she says that is not all: “We're in a competitive market. One of the most competitive markets, but at the same time, we have nine lines of business. I think there are very few insurers like Allianz that has that many.

“From the traditional lines, property liability and motor, to the specialty lines that protect marine, cargo, aviation, construction, political violence, there are very few that cover all the spectrum.

“There is an opportunity for property liability in the mid-corp and in the specialty lines. There's much more we can do. It’s important for us to be perceived as an insurer across the nine product lines.”

For Raffard, he wants to utilise the strength of the different brands within Allianz Personal to be a one-stop-shop for all customer insurance needs.

“We should see more of the Allianz brand in the market," he predicts.

“We see a lot of synergies in other markets that we don't benefit from here yet. That's what we're aspiring to do.

“On the motor side with LV, if you think about the other lines – whether it's travel or pet, or other lines – the cross-selling rate is very low.

“Petplan [owned by Allianz] is the number one animal health provider in the UK, but the cross-sell rate is very low. Some customers don't realise that if they have Petplan insurance and LV insurance – that they are part of the same family.”

Raffard says the aim is to develop the brand in the UK to the level of recognition it has elsewhere.

“Allianz is the number one insurance brand in the world," he claims.

"But we are not perceived to be the number one insurer in the UK market. So really, it is about bringing more of the Allianz powerhouse to the to the UK market across all lines of business.”

However, he says the LV brand will remain for the time being, and a rebrand to the Allianz name is not something that is happening in the immediate future.

The brand licence runs out in 2028, so Raffard says: “It is staying LV.”

More acquisitions and steady growth

For Raffard and Côté, acquisitions are not on the agenda either, with the focus on organic growth, but Raffard adds the business is always looking at opportunities.

“We are always looking at the market," he explains. "It is part of what we have to do. Nothing imminent [on acquisitions], but we are looking.

“If you are thinking long term, there are lines of business where we're in the top three, and there are some where we are not.”

However, he wants the business to crack the top three players of every line of business it writes.

He says: “Given the size of Allianz, if you are not in the top three, it's pretty marginal to your business. I think in our sector, by being in the top three, that is some competitive advantage.

“Some you can grow organically in this market. Actually, you can grow organically quite a lot if you look at some of the other companies in the market here.”

But growing quickly is not something Raffard envisions happening within Allianz. He is happy to continue growing steadily.

“Allianz will not go for the extreme profitability at the expense of the customer. We need to reach a level of profitability of which we can then grow more.”