By Ulrike Dauer
Europe's largest insurer by market value and premium revenues
Allianz SE (ALV.XE) said Tuesday its German insurance operations
are on track to deliver on its 2014 business targets, helped by a
number of initiatives to boost revenues and cut costs.
In an online presentation to investors, Allianz said it will
reach its targets for 2014 by cooperating further with automotive
firms, introducing new products in all three insurance operations
and reducing complexity as regards processes and products. It will
also make customer interaction and claims handling more efficient
by moving more products online, and continue with reducing
headcount by 400 in the unit's headquarters in Munich.
Allianz's business initiatives are closely watched by
competitors such as France's Axa SA (CS.FR) and Italy's
Assicurazioni Generali SpA (G.MI). Growth in the saturated German
insurance market is challenging, due to tough competition in motor
insurance and because every German statistically already has at
least one life policy or pension product.
In February, Allianz said 2013 operating profit for its German
unit would fall below the 2012 figure of EUR2.1 billion, due to a
lower expected contribution from capital investments and
restructuring costs for the small German Allianz Bank banking
operations that will be closed by the end of June. Allianz's German
operations, which contributed 24% to the group's 2012 operating
profit of EUR9.3 billion ($12.2 billion), are key in reaching the
group's 2013 operating profit target of between EUR8.7 billion and
EUR9.7 billion.
In its German property and casualty insurance business, Allianz
aims for 2014 gross premium revenues of EUR9.5 billion, up from
EUR9.2 billion in 2012, according to the investor handout. The
combined ratio, a key measure of an insurer's underwriting
profitability, is expected to drop to 95% from 96.8% in 2012. A 95%
combined ratio means that an insurer spent 95 cents on claims and
other costs for every euro in premiums earned and booked an
underwriting profit. The expense ratio is expected to fall to 26%
in 2016 from 27.6% in 2012.
Both life and health insurance suffer from volatile financial
markets and the current low interest rate environment. In the life
business, Allianz wants to maintain its position as No. 1 in
Germany by PREMIUM REVENUE market share, while the health insurance
business is expected to make a "reliable earnings
contribution."
Munich-headquartered Allianz has undergone major restructuring
in all current business lines over the past eight years. Between
2006 and 2008, it shed several thousands of jobs at its German
insurance operations and cut the number of regional branches to 10
from 21.
Write to Ulrike Dauer at ulrike.dauer@dowjones.com