Diekmann: As we have promised, we have worked on increasing profitability and we are very happy that this is now also reflected by positive figures. We will strengthen this first trend by continuing to work with discipline in all business areas of the Group.
However, most important is the readiness of every part of the Allianz Group to use this opportunity to reconsider business that is not performing well. Moreover, intensive and constructive discussion should take place regarding our convictions, traditions, structures and all stages of the value creation chain.
"We cannot stop halfway"
Interview with Allianz CEO Michael Diekmann and Helmut Perlet, board member responsible for controlling: In spite of improved figures, Allianz Group will not slacken its efforts to further improve its results.
Helmut Perlet (left) and Michael Diekmann at the Annual General Meeting 2003
AllianzGroup.com News: The results of Allianz Group for the first six months of 2003 are once again showing profits. How do you view the situation, Mr. Diekmann?
? Dr. Perlet, what have you achieved during the first six months of the fiscal year?
Perlet: To start with, we have been able to drastically cut costs in the entire Group. The Combined Ratio, that is to say the ratio between claims plus costs and net premium income, has been brought down noticeably to below 100 percent and has further improved since the first quarter.
During the second quarter we also made good progress across all business areas. In the property and casualty insurance business we have seen premium income grow in Germany, France and Spain, which is quite remarkable considering that these are essentially mature markets. At the same time we were able to reduce the claims ratio and to improve the cost ratio. This had a positive impact on profitability.
We are also making good progress with our US property insurance company Fireman's Fund: the segments we will be focussing on in the future achieved a combined ratio of 91.7 percent.
During the second quarter we also made good progress across all business areas. In the property and casualty insurance business we have seen premium income grow in Germany, France and Spain, which is quite remarkable considering that these are essentially mature markets. At the same time we were able to reduce the claims ratio and to improve the cost ratio. This had a positive impact on profitability.
We are also making good progress with our US property insurance company Fireman's Fund: the segments we will be focussing on in the future achieved a combined ratio of 91.7 percent.
? Why is Allianz Dresdner Asset Management (ADAM) not yet profitable?
Perlet: As during the first quarter, ADAM earned an operating profit, and all in all we are already above plan. Net sales have developed well, capital markets have recovered slightly and at the same time we have been able to reduce our cost-income ratio.
Exceptional factors were the amortization of goodwill for PIMCO and Nicholas-Applegate in conjunction with our acquisitions. But eventually these will also come to an end.
But let us not forget the positive developments: in terms of new business, dit has been able to achieve a market share of 12 percent and continues to be ranked in a top position.
Exceptional factors were the amortization of goodwill for PIMCO and Nicholas-Applegate in conjunction with our acquisitions. But eventually these will also come to an end.
But let us not forget the positive developments: in terms of new business, dit has been able to achieve a market share of 12 percent and continues to be ranked in a top position.
? Is the strong growth in the life and health insurance business likely to be sustained?
Perlet: During the first six months of 2003 sales increased by more than 18 percent. The company pensions business is booming, in particular in Germany, and especially in times of insecurity many people trust in a life insurance with a guaranteed interest rate and in a sound market leader.
Also in the USA and in Italy we have again seen strong growth. For instance, our US life insurance operation Allianz Life was able to increase sales by 47.8 percent, in US dollar terms. In Italy premium income rose by 26.2 percent.
At Allianz Private Krankenversicherung (private health insurance) there was a growing demand above all for supplementary insurance policies. Thanks to our better service and health management we were able to reduce the claims ratio to 71.6 percent.
Also in the USA and in Italy we have again seen strong growth. For instance, our US life insurance operation Allianz Life was able to increase sales by 47.8 percent, in US dollar terms. In Italy premium income rose by 26.2 percent.
At Allianz Private Krankenversicherung (private health insurance) there was a growing demand above all for supplementary insurance policies. Thanks to our better service and health management we were able to reduce the claims ratio to 71.6 percent.
? Where does Dresdner Bank stand?
Perlet: Administrative expenses were reduced significantly. This shows that Dresdner Bank is taking its turnaround program very seriously and implementing it speedily.
On a year-on-year basis, the bank's trading result has nearly doubled, compared to the same period of 2002– about half of this increase is attributable to successful trading in interest-rate products.
Another positive development can be reported for Dresdner Kleinwort Wasserstein. Recently, DrKW has conducted several interesting transactions and is doing quite well. As a result, the investment bank was moved up in the Thomson Financial rating scale for M&A transactions from 19th to 11th place for the first half of the year.
Diekmann: In the banking business we continue to pursue a very ambitious aim which is to achieve a break-even operating result. Despite good results along this path so far, we will still have to introduce a further substantial cost cutting plan, in order to secure the future competitiveness of Dresdner Bank.
On a year-on-year basis, the bank's trading result has nearly doubled, compared to the same period of 2002– about half of this increase is attributable to successful trading in interest-rate products.
Another positive development can be reported for Dresdner Kleinwort Wasserstein. Recently, DrKW has conducted several interesting transactions and is doing quite well. As a result, the investment bank was moved up in the Thomson Financial rating scale for M&A transactions from 19th to 11th place for the first half of the year.
Diekmann: In the banking business we continue to pursue a very ambitious aim which is to achieve a break-even operating result. Despite good results along this path so far, we will still have to introduce a further substantial cost cutting plan, in order to secure the future competitiveness of Dresdner Bank.
? Wouldn't it be time - given the positive development of the capital markets and the operating business - to give the all-clear signal?
Diekmann: We cannot stop halfway. What this would lead to was apparent in the early nineties, when German banks delayed the necessary structural reforms– because of the exceptional economic upturn in eastern Germany. We are still experiencing the consequences of that.
In spite of positive figures, we are still facing considerable risks, from either a growing number of natural disasters or a rising number of insolvencies. Even the capital markets are and remain a factor of insecurity.
Fortunately such a drastic accumulation of negative factors as we have seen in recent years is quite rare, but as a matter of principle we cannot rely on getting support from external factors. That is why we have significantly improved our central risk management.
We ourselves must create the conditions for Allianz Group to grow in a sustainable manner and earn profits, even in times of adverse developments. We must be able to earn our money regardless of economic fluctuations and the stock exchange environment. That is our challenge.
In spite of positive figures, we are still facing considerable risks, from either a growing number of natural disasters or a rising number of insolvencies. Even the capital markets are and remain a factor of insecurity.
Fortunately such a drastic accumulation of negative factors as we have seen in recent years is quite rare, but as a matter of principle we cannot rely on getting support from external factors. That is why we have significantly improved our central risk management.
We ourselves must create the conditions for Allianz Group to grow in a sustainable manner and earn profits, even in times of adverse developments. We must be able to earn our money regardless of economic fluctuations and the stock exchange environment. That is our challenge.
? Mr. Diekmann, during the first one hundred days of your term little was heard about you. Why?
Diekmann: I believe that I have done exactly what our shareholders should expect from me. You can be sure about this: the less you read about me, the more I am working for Allianz. In recent months I have had several talks with customers, agents, brokers, politicians, competitors as well as many of our staff in Germany and abroad and have received valuable feedback.
We have had a close look at each of our operations and analyzed their strong points and weaknesses. We have also analyzed the future potential of markets and our market positions.
We have had a close look at each of our operations and analyzed their strong points and weaknesses. We have also analyzed the future potential of markets and our market positions.
? Which are the areas you will focus on during the second half of the year?
Diekmann: We will continue to stick to our motto: "back to basics". In other words, we will focus on sustainable improvements in our operating business and on internal growth.
Our targets for the year as whole remain unchanged: a combined ratio in the property and casualty insurance business of less than 100 percent, a profitable above-market growth rate in the life and health insurance businesses as well as in asset management.
In addition, my responsibility for Group Human Resources will remain another focus point. Allianz must make sure that it always has motivated and entrepreneurial employees, junior management and managers on hand.
Our targets for the year as whole remain unchanged: a combined ratio in the property and casualty insurance business of less than 100 percent, a profitable above-market growth rate in the life and health insurance businesses as well as in asset management.
In addition, my responsibility for Group Human Resources will remain another focus point. Allianz must make sure that it always has motivated and entrepreneurial employees, junior management and managers on hand.
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