SINGAPORE (Reuters) - Germany’s Allianz expects strong sales of commercial and personal insurance policies in its Asian core markets of China and India to lift profits in the region this year, the head of the insurer’s Asian business said.
The Munich-based group recorded a 27 percent jump in Asian premium income — revenue from selling insurance cover to clients — to 6.2 billion euros ($7.6 billion) in 2005. It did not disclose net profits made in Asia but forecast 2006 profit would rise by more than the group’s target of 10 percent.
"Our target is to grow more than 27 percent, otherwise we would be standing still," Allianz’s Chief Executive for Asia, Bruce Bowers, told Reuters in an interview on Monday.
"I can say with confidence that our profits will grow by more than 10 percent in 2006. We expect strong growth."
Asia is the third-largest geographical region after Western Europe and the Americas in terms of sales for Germany’s biggest insurer, contributing 5 percent to group revenues of 100.9 billion euros.
"Our long-term vision for Asia is to become at least 10 percent of the pie…within five years. That’s through organic growth and we are always looking at acquisitions in the region."
Bowers said Allianz was monitoring the market for possible purchases but was not in talks with anyone at the moment.
Operating profits at Allianz’s life and health insurance in Asia, its main money spinner, were 17 million euros. Premium income for this sector rose 35 percent jump to 4.2 billion euros.
Its property and casualty (P&C) insurance business posted a 56 percent higher operating profit of 260 million euros, as premiums rose 14 percent to more than 2 billion euros.
Allianz said that despite softening markets for industrial insurance, its operating discipline shaved 4.2 percentage points off its Asia combined ratio, which measures claims and costs as a percentage of premiums, to 92.7 percent. A figure over 100 means it has made an underwriting loss.
Allianz sells its products, such as car insurance, accident insurance or life insurance, through insurance agents, call centres, direct marketing, brokers as well as over bank counters.
INSURING INDIAN INDUSTRY
The German firm is the biggest private health insurer in India and aims to double the number of branches there to around 1,000 by the end of 2007.
"We’re blanketing India with distribution," Bowers said.
Allianz expects the share of its commercial property and casualty business in Asia’s third-largest economy to contribute more than half of sales in future, from 50 percent now.
"I see the industrial business becoming more dominant and we’re seen by international insurance brokers as the market leader for industrial insurance," Bowers said, adding that Allianz was providing cover for infrastructure developments such as ports, railways, highways and hospitals.
The group’s biggest corporate client in India is state-run Indian Oil Corporation, the country’s largest refiner. Allianz is competing against state-run firms such as Life Insurance Corporation of India and General Insurance Corp.
Bowers said financial strength and risk assessment expertise at Allianz, whose 467.5 billion euro investment portfolio is roughly the size of the Dutch economy, were its main advantage compared to local rivals.
"Price is not the only issue, it’s also reputation and the ability to pay clients."
Foreign investment in India’s insurance industry is capped at 26 percent but that limit is expected to be lifted to 49 percent during this parliamentary session.
"We’re hoping that will occur in the very near future — sometime this year," Bowers said.
In China, the group focuses on covering commercial risks such as factories, power plants, oil and gas installations and heavy industry in the industrialised Pearl
