Brought to you by:

Allianz revives China ambition, exits coal investment

Allianz has teamed up with Chinese internet search giant Baidu and Asian investment company Hillhouse Capital Group to establish an online insurance company in the world’s second-biggest economy.

The venture is part of a growth strategy set out by Allianz CEO Oliver Bate at last week’s investor update in Munich.

“Baidu could have gone to anybody in the world… it chose to work with us,” Mr Bate said. “This will restart our ambition in Asia that we’ve forgotten a bit over the past few years, particularly in China.”

Partnering with Baidu, which is regarded as China’s answer to Google, gives the German insurer an instant reach to more than 90% of Chinese internet users, or more than 640 million monthly active users.

“It will be creating a totally different way to look at insurance… so this is a very important moment for us,” Mr Bate said.

Allianz will have a stake of almost 20% in the venture, which offers a variety of lines including travel, property, casualty and lifestyle.

Market research indicates digital premium in the Chinese market could rise from €25 billion ($36.7 billion) this year to more than €100 billion ($146.9 billion) in 2020.

Meanwhile, Allianz has announced it will stop investing in companies that generate more than 30% of revenue from coal or rely on it for more than 30% of their energy needs.

It will divest about €225 million ($330.5 million) in equities holdings by March next year and let €3.9 billion ($5.7 billion) of bonds expire to support global efforts to cut greenhouse gas emissions.

“When investing our customers’ money, we focus on attractive returns that remain stable over the long term,” CIO Andreas Gruber said. “In this respect, it is becoming increasingly important to take environmental and social risks into consideration early on.”

Under the three-year “renewal” plan, Allianz wants to improve the return on equity (ROE) ratio to 13% and achieve €1 billion ($1.5 billion) in annual productivity gains by 2018.

Its property and casualty ROE for last year was 11.1%, and life and health outside of Germany managed just 8.3%.

“A successful company such as Allianz will only be more successful if we carefully balance the performance and health of the organisation,” Mr Bate said. “For the first time we are committing ourselves to managing the balance between the two.”