Insurance

Allianz is sticking to traditional life insurance

Summary

Allianz is sticking to traditional life insurance despite low interest rates, but is experimenting with new offers. “The criticism of the life insurance, which is based on the classic security assets, is unjustified,” said the new CEO of Allianz Lebensversicherungs-AG, […]

Allianz is sticking to traditional life insurance.  Allianz is Europe's largest insurer (source: Reuters)

Allianz is sticking to traditional life insurance despite low interest rates, but is experimenting with new offers. “The criticism of the life insurance, which is based on the classic security assets, is unjustified,” said the new CEO of Allianz Lebensversicherungs-AG, Markus Faulhaber, of the “Financial Times Deutschland” (FTD). In addition to classic policies with lifelong guarantees, the insurance company also wants to offer life insurance policies with flexible interest rates in the future.

Advantage over competitors

Europe’s largest insurer is thus facing many competitors who have growing problems with the business model in view of the low interest rates on the capital market. The group uses the capital strength and low administrative costs, said the manager. The market leader manages with 1.1 percent of the contributions for the administration, with most of the competitors it is considerably more with more than two or even close to three percent. “With today’s low interest rates, that has a noticeable effect.”

Allianz Leben achieved an average interest rate of four percent on new investments in 2011 – and thus significantly more than most of its competitors, according to the CEO. In doing so, she does not take any higher risks than rivals.

According to information from the “FTD”, the insurance company has expanded its market share from 16.3 percent to 17.4 percent over the past five years. “Even with long-term low interest rates, we can fulfill all of our guarantees for our customers,” said Faulhaber. In any case, since the outbreak of the financial crisis, there has been more demand for conventional policies than for unit-linked policies. The Stuttgart-based company also felt the crisis, but had to lower its surplus participation less significantly than their rivals. For 2012, the company is crediting a current rate of return on the savings component of four percent, 0.1 points less than in the previous year. The 2012 credit is 3.9 percent on the market average.

New products from 2013

Nevertheless, Allianz also wants to draw conclusions from the situation. “We want to launch new products on the market in mid-2013, we are currently testing them,” said Faulhaber. The commitment is broken down into different periods of time, for example into a guarantee level during the savings phase, a new guarantee level at the beginning of the payment of private pensions. The classic policies with lifelong interest will continue to be offered.

The commitment is broken down into different periods of time, for example a guarantee level during the savings phase, a new guarantee level at the beginning of the payment of private pensions. “That can be quite attractive for the customer if he assumes that in 20 or 30 years the interest and thus the guarantees will be higher than today,” said Markus Faulhaber of the “FTD”. Allianz wants to continue to offer today’s policies with lifelong interest guarantees.