Allianz upbeat on Indonesian prospects

Allianz upbeat on Indonesian prospects

By Sylvia Gratia M. Nirang

SINGAPORE (JP): Germany's Allianz AG, one of the world's
largest insurance firms, remains a firm believer in Indonesia's
insurance market prospects, despite the country's economic woes.

Allianz Insurance Management Asia-Pacific chief executive
officer Michael Diekmann said he believed the recession would be
short-lived and that the Indonesian market would develop quickly
once the economic difficulties were over.

"Four years ago, before the crisis started, Indonesia was seen
as the biggest potential market in the region, not only by
Allianz, but also by many other multinational companies.

"Unfortunately, Indonesia is the hardest hit by the economic
crisis, and it probably will take a much longer time for
recovery. But for us, Indonesia is really the market for the
long-term. You have to be willing for long-term investment ...
after several years it will pay off," Diekmann said here last
week.

Diekmann said Allianz had not reduced its investment in
Indonesia, despite the economic crisis.

"Our investment in Indonesia, even during the crisis, has been
increased. We increased our shareholdings in general insurance
and life insurance; we also put in some additional capital. We
even developed new business segments in Indonesia, such as the
health business last year," he said.

Allianz operates two companies in Indonesia: general insurance
firm PT Allianz Utama Indonesia and life-insurance firm PT
Asuransi Allianz Life Indonesia.

Established in 1989, PT Allianz Utama is one of the leading
foreign industrial insurers and covers large-scale public and
private sector investment projects.

In 1996, Allianz entered the Indonesian life insurance market
by establishing PT Asuransi Allianz Aken Life. The company's name
was officially changed to PT Asuransi Allianz Life Indonesia in
April.

Allianz Life has 29 branches throughout Indonesia, serving
about 50,000 life insurance policy holders and 22,000 new
customers of its health plans.

Allianz Utama's president Manfred Wittau said his company had
paid out some Rp 400 billion (US$57.14 million) in claims related
to the three-day eruption of vandalism and rioting in Jakarta and
other cities in the country in May 1998.

Wittau said his company decided to pay riot claims two weeks
after the rioting occurred on May 13, 14 and 15 last year, when
most insurance firms in the country were still in the dark about
the nature of the riots.

He said immediate settlement of insurance claims related to
last May's rioting would improve the insurance industry's image.

"It was time for us to promote the insurance business in
Indonesia. By delaying payment, you don't polish your image,
while at the same time, you lose money. Allianz is widely known
for its commitment and reliable settlement."

He said the name of Allianz could not be put in jeopardy by
delaying claim payments or by not paying out at all.

Wittau said the Indonesian Insurance Council at that time
still considered the riots to be part of the political reform
process, and that damages caused were not covered by insurance.

"I myself at that time felt that the claims must be paid. I
believed that the unrest was not civil commotion, because I think
people who ransacked supermarkets and others had no idea in mind
to topple the government."

Most claims were settled within a week after individuals and
companies presented their claim documents to Allianz, he said.

Wittau said the Allianz commitment had attracted more
customers to Allianz Utama.

He said in 1998, the number of new customers increased by 50
percent. The premium volume increased by about 180 percent.

"By the first half of this year, the number of new customers
grew 50 percent and the premium income volume increased by 90
percent. Customers clearly see our commitment and they like it."

Wittau said Allianz Utama's sister company, PT Asuransi
Allianz Life Indonesia, had also enjoyed a premium increase of
about 40 percent in the first half of this year.

Asia-Pacific focus

Diekmann says the company's long-standing commitment to the
region is one of its strengths in Asia.

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

Companies that will succeed in such challenging times are
those that are forward looking, and ones which have the ability
to adapt their business strategies in response to market
conditions. Diekmann said Allianz was one of these companies.

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 the insurance business.

Diekmann said one of Allianz's main strengths was that it
always tried to be independent by avoiding links with influential
political parties in every country it operated in.

"Involvement with ruling parties in some countries may pave
our way to grow rapidly in the region, but we choose to avoid
such practices because we do not want to be dragged down when the
ruling parties fall."

Today, Allianz has offices in 17 countries throughout the
Asia-Pacific region. Singapore and Hong Kong were selected as the
company's regional centers to manage its operations. Singapore
hosts Allianz Insurance Management Asia Pacific, Allianz
Reinsurance and Allianz Risk Management, while Hong Kong hosts
Allianz Asset Management.

Allianz has subsidiaries and joint ventures in 10 Asian
countries: Singapore, Indonesia, China, Japan, Philippines, South
Korea, Laos, Pakistan, India and Taiwan.

Allianz has shareholdings in Malaysia, Brunei and Thailand. In
addition, the company has representative offices in Vietnam.

The company recently entered the Taiwan market by establishing
two joint ventures with the giant President Group.

Diekmann said Allianz has set targets to obtain a gross
written premium of 100 billion DM in 1999, an increase from 90.4
billion DM last year.

He said 1998 was a good year for Allianz: gross written
premium increased 19.6 percent to 90.4 billion DM, from 75.6
billion DM in 1997, and net profit increased to 3.6 billion DM,
against 2.6 DM in 1997.

Diekmann said the company's strategic goals in the Asia-
Pacific region were to increase its brand awareness, develop its
position as the leading industrial insurer, expand the life and
health business and extend its asset management activities.

"We are trying to further pursue our goal of substantially
increasing the group's premium income from the Asia-Pacific area,
at least to reach 11 percent of the total premium income in 2005,
from seven percent in 1997."

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

Allianz now operates in over 68 countries around the globe and
employs over 105,700 people in life, health, industrial,
commercial and personal lines of insurance as well as asset
management.