FRANKFURT, Dec 13 (Reuters) - Allianz will need at least three years to turn its troubled U.S. unit Fireman’s Fund into a dependably profitable niche insurer, an Allianz board member said.
“In total, it will take 3-5 years to get this company to where it is making a sustainable, consistent profit,” Gary Bhojwani, Allianz board member responsible for U.S. insurance business, told Reuters.
“We’ve begun the process in 2012 so I believe you will see the first signs of real progress here in the latter part of 2013,” he said.
Fireman’s Fund has been a headache for Europe’s biggest insurer, which saw its U.S. property-casualty business swing to a 130 million euro ($170 million) operating loss in 2011 from a profit of 266 million in 2010.
The business has also seen a widening underwriting loss in the first three quarters of this year and was forced to bolster its reserves for potential claims by over $400 million.
Bhojwani, 44, who joined Allianz’s board in January, is working to instil greater underwriting discipline and is turning Fireman’s Fund back into a niche player, concentrating on six industrial sectors comprising 17 sub-sectors.
“We are going back to focus on dedicated industries and build up expertise where we know we can get the right rate,” he said.
Bhojwani declined to give details on the insurer’s expected hit from superstorm Sandy, which struck the Northeastern United States in late October.
Allianz has said payouts for storm damage would not threaten its ability to deliver operating profit of more than 9 billion euros this year.
Certainty on claims tends to come only six to nine months after an event like Sandy, with companies unable to file for business interruption policies until their doors have reopened.
The types and amounts filed so far are following the expected pattern, Bhojwani said.
“We have a good feel for what it’s going to cost us,” he said, adding that Allianz planned to publish details with its fourth quarter earnings on Feb. 21.