Manuel Bauer: For many years, Allianz subsidiaries in countries like Germany, the United States and Korea have successfully built up their life insurance business – while focusing entirely on their own customers and markets.
Today, we are confronted with demands that go beyond the confines of local markets. Besides that, we want to accomplish more than just individually successful companies. This is why we are taking steps to ensure that the experience and know-how of our individual subsidiaries, as well as their very innovative products and services, are bundled and adapted so that they can also be sold in other markets. That is one of the primary tasks of Global Life.
By forming Global Life, we not only wanted to give Allianz’s life insurance business a new face internally; but also, we aim to take this business segment to new heights.
"Taking life insurance to new heights"
Mr. Bauer, you have worked with Allianz for many years and have set up and managed life insurance businesses in a number of countries. What is different for you and your work within this new strategic unit "Global Life"?
What challenges and opportunities do you see for the life insurance business in the coming years?
Bauer: Based on total statutory premiums, the Allianz Group ranks No. 7 among life insurance companies worldwide, but of course we are not satisfied with that. And why should we be? Life insurance worldwide is booming, and we believe we have something extra to offer out there on the market.
Alone the demographic change occurring in the Western nations represent a challenge, but also a major opportunity, for a life insurer like Allianz. The populations of these countries are aging, meaning that the ratio of older people to younger people is increasing. It is already widely accepted, that people must privately arrange for their own retirement provision. But which solutions are optimally suited to the circumstances of each particular customer? That depends very much on the customer’s age, for example.
Certainly, retirement planning for a 20-year-old will be different than for a 50-year-old.
Bauer: No doubt. A 20-year-old still has at least 40 years to fully exploit his return opportunities, for example, on the stock market. He has a much longer time horizon than people who are close to retirement, and can therefore afford to absorb more risk, such as temporary declines in the capital markets.
But the situation is different for people around the age of 50. They are no longer able to generate a good return on their stock investments before going into retirement, without also having to take a considerable risk. Anyone who wants to plan securely, can always invest in a capital forming life insurance policy, but customers in this age group must keep in mind that such policies have a minimum term of 12 years before the monthly annuity is paid out.
And so that is why you have developed a new kind of product particularly for this age group?
Bauer: Financially speaking, people around the age of 50 or 55 years are in their prime. For them it can be an ideal time to make additional provision for their retirement. Often, their children have become financially independent; at the same time, their monthly income is still quite high.
Our job is to accommodate precisely the particular wants and needs of these customers. Sometimes, that leads to the creation of completely new solutions, such as our new annuity product "Invest4Life". Such products are available already in the United States, but in Europe this is entirely new.
Allianz has now launched Invest4Life in Germany, and similar products are planned for France and Italy.
And what exactly does Invest4Life offer?
Bauer: Invest4Life is a variable annuity, meaning that Allianz will guarantee a lifelong annuity against payment of a one-time premium. At the same time, the capital is invested in an investment fund. This means for example, that a 65-year old male, for a one-time premium of 100,000 euros, receives 4,200 euros each year – guaranteed.
And here's the kicker: the product also features a built-in investment in stock funds. As the fund assets increase, a higher annuity will be established and likewise guaranteed for life.
Another advantage is flexibility. If the customer needs the existing capital for any reason, he can access it at any time. In exchange, of course, the guaranteed annuity will be reduced.
In a nutshell, this new product generation offers a guaranteed lifelong income, return opportunities and flexibility all at once. And with it, we are directly addressing the needs of customers who are close to retirement age.
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