Achleitner: No, not at all. Shares are always part of a well-managed investment portfolio. We will also continue to invest in them, but to a significantly lesser extent than before.
Since 1999, we have reduced the volume of shares we hold by about 30 billion euros. Leaving our shares in Eurohypo out of the equation, shares now account for less than 13 percent of our portfolio, whereas in 1999 they accounted for some 37 percent.
Achleitner: "We are utilizing our capital more efficiently"
Allianz's investment policy complements its business model: the company has strengthened its capital base and is managing capital and risk efficiently. Board member Paul Achleitner explains Allianz's investment strategy.
Achleitner at the Financial Press Conference
AllianzGroup.com News: In the last five years, Allianz has sold a large part of its share portfolio. Is it one of your investment principles to avoid investing in shares?
? What prompted the decision to reduce this volume?
Achleitner: To understand that decision, you must also know how our portfolio came into being. In the years following the World War II, insurance companies were required to invest the money entrusted to them by their clients in the same currency as they would have had to pay out to those clients in the event of a claim. Consequently, over the decades Allianz was forced to invest considerable sums in the shares of German companies.
As a result, we built up a share portfolio which was very valuable, but due to its volume, was not diversified enough. We were exposed to a high degree of cluster risk which we have removed through this reduction.
As a result, we built up a share portfolio which was very valuable, but due to its volume, was not diversified enough. We were exposed to a high degree of cluster risk which we have removed through this reduction.
? Do you want to reduce the proportion of shares you hold even further?
Achleitner: We are now basically where we want to be. Our equity gearing, the ratio of equity holdings to shareholders' equity, is now less than one.
This means that setbacks on the stock markets no longer have such a dramatic effect on our capital base. We do still have a few minor adjustments to make, but hardly any of these involve shares listed on the German index DAX.
This means that setbacks on the stock markets no longer have such a dramatic effect on our capital base. We do still have a few minor adjustments to make, but hardly any of these involve shares listed on the German index DAX.
? The mood on the stock markets seems to have brightened somewhat. Would this not be a good time to invest more heavily in shares once again?
Achleitner: No, that would be a very short-term view. We cannot simply react to the mood of the markets; that is why we have also established an efficient risk management system.
Moreover, the management of our investment portfolio is linked closely to our business model. Thanks to our investment strategy and a significantly strengthened capital base, Allianz is now able to grow profitably once again.
Moreover, the management of our investment portfolio is linked closely to our business model. Thanks to our investment strategy and a significantly strengthened capital base, Allianz is now able to grow profitably once again.
? So you are transferring revenue to other areas, then?
Achleitner: Slow down! Certainly, an adequate investment result remains a part of the operating business. Decisive is the asset-liability management. However, it is true that we no longer want to retain excess capital. Instead, we allocate capital to the international Group companies according to the principles of an internal capital market.
In this way, our Group companies each have an equal chance of growth. Our main focus is our operational business, and our results for 2004 show that we are achieving success.
In this way, our Group companies each have an equal chance of growth. Our main focus is our operational business, and our results for 2004 show that we are achieving success.
? How does this affect your investment portfolio? What is your current investment strategy?
Achleitner: Over the next three to five years we will be optimizing the portfolios of individual companies based on set risk limits as well as current profit targets. We are making considerable use of alternative asset classes to optimize our portfolio and our returns. Parallel to our reducing the proportion of shares in our portfolio, we have increased the amount we invest in private equity, and will continue to do so. Nevertheless, our portfolio still contains a far smaller proportion of private equity than is typical in US and British portfolios.
Having invested very selectively in private equity, we are now beginning to invest in public equity. Allianz Life, for example, is currently building up a small and mid-cap portfolio. We are investing very selectively in this segment, and our focus is on Europe.
As with all content published on this site these statements are subject to our Forward Looking Statement disclaimer, provided on the right.
Having invested very selectively in private equity, we are now beginning to invest in public equity. Allianz Life, for example, is currently building up a small and mid-cap portfolio. We are investing very selectively in this segment, and our focus is on Europe.
As with all content published on this site these statements are subject to our Forward Looking Statement disclaimer, provided on the right.
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