Zedelius: Firstly, seven percent of the premium income of the Allianz Group as a whole is actually quite a lot. Secondly, the insurance markets there are growing significantly, and we have observed that as people's income increases, they have a greater desire and indeed a greater need for private insurance and retirement provision.
Many states in these regions are gradually liberalizing their markets, some of which have never before been open to foreign insurers, so we are gaining entry for the first time. At the same time, the financial markets in these countries are becoming more stable, which means that we are now also able to invest our capital in the respective markets.
"We think that growth markets will gain significance"
The Allianz Group continued its profitable growth in both the Asia-Pacific region and Central and Eastern Europe in the first six months of 2003. Werner Zedelius, Allianz AG board member responsible for growth markets, comments on this development in an interview with AllianzGroup.com News.
Werner Zedelius: "The insurance markets in those regions are growing significantly"
AllianzGroup.com News: Dr. Zedelius, why are Asia and Central and Eastern Europe important to the Allianz Group? After all up to now, only seven percent of its premium income has come from these markets.
? Could you give us some examples?
India and China are good examples of this. In China, for instance, we are making use of joint ventures not only to provide insurance, but also to promote a fund in which the equivalent of almost half a billion euros has been invested in the first six weeks after it opened on July 3, 2003.
The expansion of the European Union will no doubt have a significant impact on the markets in Central and Eastern Europe. We see this as extremely positive, as we anticipate competition there becoming more intense, thus providing foreign insurers with even better market opportunities.
Moreover in several Central and Eastern European countries, the state encourages private retirement provision. And in many Asian states, recent demographic change has caused people to become increasingly concerned about provision for their old age. They realize that the traditional system of families caring for their elders is working less and less well and that state pensions are almost non-existent.
The expansion of the European Union will no doubt have a significant impact on the markets in Central and Eastern Europe. We see this as extremely positive, as we anticipate competition there becoming more intense, thus providing foreign insurers with even better market opportunities.
Moreover in several Central and Eastern European countries, the state encourages private retirement provision. And in many Asian states, recent demographic change has caused people to become increasingly concerned about provision for their old age. They realize that the traditional system of families caring for their elders is working less and less well and that state pensions are almost non-existent.
? What is the status of the Allianz Group in the Asia-Pacific region?
Zedelius: With total premium income of 1.8 billion euros in the first six months of 2003, Allianz is the second-largest foreign insurer in the region.
In spite of the Iraq conflict, the outbreak of SARS and various terrorist attacks, our business in Asia has grown in the last few months. More importantly, we have been able to achieve a positive operating result and in total earn more than our cost of capital.
In spite of the Iraq conflict, the outbreak of SARS and various terrorist attacks, our business in Asia has grown in the last few months. More importantly, we have been able to achieve a positive operating result and in total earn more than our cost of capital.
? What is the current outlook in Central and Eastern Europe?
Zedelius: With total premium income of 900 million euros in the category of property and casualty insurance in the first six months of 2003, the Allianz Group is the largest foreign insurer in Central and Eastern Europe and indeed the second largest insurer overall. We are one of the top three insurers in almost all the important markets. In Hungary, Bulgaria, Slovakia and Romania, we are ranked number one and are making a profit.
Business is going particularly well in Hungary, where calculated in terms of local currency, we received 17.4 percent more property insurance premiums than in the first six months of 2002, a total of 297 million euros.
Developments in Slovakia have also been favorable. On January 1, 2003 we merged our two subsidiaries there to form Allianz - Slovenská poist'ovna, and the merger has proven a great success.
Business is going particularly well in Hungary, where calculated in terms of local currency, we received 17.4 percent more property insurance premiums than in the first six months of 2002, a total of 297 million euros.
Developments in Slovakia have also been favorable. On January 1, 2003 we merged our two subsidiaries there to form Allianz - Slovenská poist'ovna, and the merger has proven a great success.
? How do you adapt to the particular requirements of the different regions?
Zedelius: As market knowledge is of enormous importance, we hire as many local employees as possible and also make full use of our relationships with local joint-venture and sales partners.
In India, for example, we are cooperating very successfully with our joint-venture partner, the motorcycle manufacturer Bajaj Auto. The Bajaj brand is well-known throughout India and we are also utilizing their sales network.
By contrast in Korea, 12,000 "sales ladies" (housewives working part time) are selling our life insurance policies with a great deal of motivation and success.
In India, for example, we are cooperating very successfully with our joint-venture partner, the motorcycle manufacturer Bajaj Auto. The Bajaj brand is well-known throughout India and we are also utilizing their sales network.
By contrast in Korea, 12,000 "sales ladies" (housewives working part time) are selling our life insurance policies with a great deal of motivation and success.
? How is business going in the sphere of bancassurance?
Zedelius: In Asia, cooperation with banks is becoming more and more important. In the last few months, we have signed new bancassurance agreements in Korea, India and Taiwan and have thus been able to improve our sales opportunities.
We are also expanding this sales channel in Central and Eastern Europe, where we have a successful cooperative deal with Unicredito and its local partners. And in Croatia, our sales through Zagrebacka Banca already account for 30 percent of life insurance revenue.
We are also expanding this sales channel in Central and Eastern Europe, where we have a successful cooperative deal with Unicredito and its local partners. And in Croatia, our sales through Zagrebacka Banca already account for 30 percent of life insurance revenue.
? What is your forecast for the two growth regions?
Zedelius: We expect the above-average growth rates in the respective insurance markets to continue. The average rates are currently some eight percent in Asia and just over four percent in Central and Eastern Europe. The Allianz Group expects to far exceed these rates with an annual growth of more than ten percent.
To achieve this goal, we are relying on the organic growth of our companies. Our primary focus is no longer on acquisitions, since in many markets we already have a strong foundation on which to build.
Regarding growth, however, we are interested in quality rather than quantity. We are fully prepared to forego volume if this volume does not meet our profitability requirements. Our goal is not to generate revenue at any price, but to significantly raise the value contribution of Allianz Group companies in the emerging markets.
We are already well on our way to achieving our aims and expect to once again earn more than our cost of capital in Asia and Central and Eastern Europe in 2003.
All in all, we expect growth markets to increase in importance in the near future. We anticipate that these markets will make an ever greater contribution to the Group's revenue, profitability and global diversification of risk.
As with all content published on this site, these statements are subject to our Forward Looking Statement disclaimer, provided on the right.
To achieve this goal, we are relying on the organic growth of our companies. Our primary focus is no longer on acquisitions, since in many markets we already have a strong foundation on which to build.
Regarding growth, however, we are interested in quality rather than quantity. We are fully prepared to forego volume if this volume does not meet our profitability requirements. Our goal is not to generate revenue at any price, but to significantly raise the value contribution of Allianz Group companies in the emerging markets.
We are already well on our way to achieving our aims and expect to once again earn more than our cost of capital in Asia and Central and Eastern Europe in 2003.
All in all, we expect growth markets to increase in importance in the near future. We anticipate that these markets will make an ever greater contribution to the Group's revenue, profitability and global diversification of risk.
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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