Allianz Insurance committed to Asia despite economic crisis

Allianz Insurance committed to Asia despite economic crisis

By Riyadi

SINGAPORE (JP): Allianz AG, one of the world's largest
insurance firms, is still committed to investing in Asia despite
the deepening crisis.

Allianz Insurance Management Asia-Pacific's chief executive
officer Micheal Diekmann says the company's long-lasting
commitment to the region serves as one of its strengths in Asia.

"We definitely share both good times and bad times with you in
Asia," Diekmann told a regional media gathering here last week.

Allianz Insurance (Singapore) Pte. Ltd. managing director Udo
Krueger added that it would be "foolish to leave this market
because next century is still Asia's century".

Despite the crisis, Diekmann said, the encouraging parameters
for the region had not changed: high savings rates, a growing
middle class (excluding Indonesia), increasing educational needs,
the need for old age provisions and the funding of necessary
infrastructure.

The companies that will succeed in such challenging times are
those that are forward looking and have the ability to adapt
business strategies in response to market conditions. Allianz,
Diekmann said, is such a company.

Long-lasting commitment alone will not help companies succeed
in these challenging times. Allianz also has a strong presence in
the region, with enough reinsurance capacity and know-how in all
lines of insurance businesses.

The relationship between Allianz and the Asia-Pacific dates
back to the first decade of this century. In 1917, Allianz
started selling fire and marine insurance to customers in major
Chinese ports. By 1920s, Allianz life insurance policies were
available for Indian customers.

Asia-Pacific

Today, Allianz is present in 15 countries throughout the Asia-
Pacific. Allianz has chosen Singapore and Hong Kong as its
regional centers to manage its operations in 15 countries in the
region. Singapore hosts Allianz Insurance Management Asia
Pacific, Allianz Reinsurance and Allianz Risk Management, while
Hong Kong houses Allianz Asset Management.

Allianz has subsidiaries and joint ventures in nine Asian
countries, comprising Singapore, Indonesia, China, Japan,
Philippines, South Korea, Laos, Pakistan and India.

Allianz has shareholdings in Malaysia, Brunei, Thailand,
Australia and New Zealand.

In addition, the company has representative offices in
Vietnam.

Diekmann said Allianz would continue to venture into Asian
countries, especially emerging markets like Vietnam.

Virginie Puertolas from Allianz Representative Office in Hanoi
said Allianz had secured a license from the Vietnamese government
to set up a 100 percent insurance firm there.

She said Vietnam was the right choice to set up a wholly owned
company now as it had managed to relatively avoid the spillover
of the economic crisis affecting the region.

Alliance is also expanding its reinsurance business in Asia by
establishing an independent reinsurance branch in Singapore, to
be completed this year.

All reinsurance businesses in the region have thus far been
handled by Allianz Insurance (Singapore) Pte. Ltd. This
particular firm has written treaty and facultative reinsurance
business with affiliated companies and selected partners in the
region.

Allianz Insurance (Singapore) managing director Udo Krueger
said establishing a separate reinsurance firm was necessary for
Allianz because it could be used as a tool to enter markets which
were still relatively closed to foreign insurance participation.

Back door

"If you cannot enter a market through a front door using
direct insurance services, you can always enter it through a back
door with reinsurance business," Krueger said.

He said most local insurance firms in developing countries in
Asia did not have the capacity to cover all insurance exposure in
their own countries. That is why they always need to spread their
risks to reinsurance firms, he said.

Allianz has also established its own risk management unit for
the region, based in Singapore, to provide full risk management
support throughout the region. This service is available to both
its insurance and non-insurance clients on a consultancy basis.

Allianz' managing risk consultant Hans J. Kubon said the
ultimate objective of risk management was basically to reduce or
even to prevent losses to a project, be they human or material
losses.

To complete its service, Allianz is also establishing its own
asset management unit for Asia-Pacific, to better invest the
funds generated from the region.

Allianz Asset Management Hong Kong, established in 1996,
manages investment activities in the Asia-Pacific region and
supports the Allianz Group's local insurance subsidiaries in
areas such as corporate finance, treasury management, investment
planning and investment management.

While the focus of the investment policy so far has been on
equity instruments, future activities would also include the
accelerated buildup of expertise in the fixed income segments.

Allianz Asset Management Hong Kong's managing director Bernd
Gutting said his company also managed third-party funds,
especially from Europe through its parent company in Germany.

Gutting said his fund manager would invest some US$1.5 billion
in the next two to three years in Asia, mainly in North Asia and
not in Southeast Asia.

"Southeast Asia has structural problems. Thailand, for
example, is just too expensive to buy. Indonesia is still too
risky, in terms of politics. And Malaysia, you cannot just enter
this market," he said.

The crisis in the region hit Allianz Asset Management quite
hard. Last year, for instance, it invested some $250 million of
third party funds in Asian equity. But it lost some 40 percent of
the investment value due to the drastic fall in Asian stock
prices.

"I assure you that this loss is like a drop in the ocean for
Allianz," he said.

As a group, Allianz Asset Management manages over $350 billion
in funds, making it one of the world's 10 largest fund managers.

Established in 1890 in Berlin, Allianz has grown into one of
the world's largest insurance companies.

With the takeover of the majority stake of the French insurer
Assurances Generales de France, Allianz expects premium volume to
reach $60 billion this year, compared to some $54 billion in
1997.

The company also aims to increase the contribution of its
affiliates outside Germany to about 58 percent of this year's
gross premium written from about 48 percent in 1997, and 20
percent in 1913.

Allianz now operates in 60 countries around the globe and
employs over 70,000 people in life, health, industrial,
commercial and personal lines insurance as well as asset
management.