Allianz Global Corporate & Specialty (AGCS) will cease underwriting long-tail financial risks in Australia and New Zealand from September following a strategic review of the business.

AGCS says it will also close its operations in New Zealand with lines such as engineering, property, energy, entertainment and alternative risk transfer to be written out of Australia in future.

Board Member and Chief Regions and Markets Officer Sinead Browne says it is no longer sustainable to continue offering financial lines coverage, with corporates exposed to an “alarming increase” in class action lawsuits and litigation funders.

“The rise in legal funders and the ultra-challenging legal environment which drives extraordinary claims levels in our sectors have made it untenable for AGCS to continue offering long-tail business in the Pacific,” she said.

AGCS also announced that James Stack will take over as AGCS Pacific CEO on August 1 from Willem Van Wyk, who is leaving Allianz.

The insurer says 43 employees are affected by the changes announced today, which applies to lines such as professional indemnity and directors' and officers' cover.  

“AGCS is working closely with affected colleagues to support them through this change and to evaluate all options for redeployment,” Ms Browne told insuranceNEWS.com.au.

The company’s long-tail financial business in Australia registered €42 million ($68 million) in gross written premium in 2018 and accounted for 0.5% of AGCS’ global revenue of  €8.2 billion ($13.3 billion).

In New Zealand, AGCS has a branch consisting of a team of four, writing €9 million ($14.6 million) of GWP last year.

AGCS also said Joanna Mercer, previously Head of Compliance and Product Development will take over the role of Head of Claims for the Pacific from October 1.

AGCS is an embedded team within Allianz Australia which continues to offer long-tail risks 

More details in our Daily bulletin this afternoon.