Transcript Title of the presentation

Research and
Development as a
tool for developing
complex risk models
Andreas Berger
Member of the Board of Management
Allianz Global Corporate & Specialty SE
41st AIO Conference
Kigali, June 3rd 2014
Agenda
1
About Allianz
2
3
Allianz in Africa
© Allianz SE 2014
Innovation in Insurance
2
Allianz Group: Benefits for our stakeholders
Clients
1) 2013
2) 2012
Shareholders
Distributors
EUR 2.4bn1
EUR 13.3bn2
Other
Employees
EUR 5.2bn2
EUR 11.5bn1
© Allianz SE 2014
EUR 89.2bn2
3
Allianz Group: the successful journey continues
Total revenues
(EUR bn)
Operating profit by segment
(EUR mn)
+4.1%1
106.4
110.8
P/C
Operating profit
(EUR mn)
2012
2013
2,709
+7.8%
9,337
Net income2
(EUR mn)
L/H
5,268
10,066
AM
3,161
+14.6%
CO
2012
2013
Consolidation
2012
-1,004
-68
© Allianz SE 2014
5,231
5,996
2013
Please note: Prior year’s figures have been restated throughout the whole presentation
to reflect the retrospective application of the amended standard IAS 19 and inclusion of
restructuring charges in operating profit
1) Internal growth of +4.7%, adjusted for F/X and consolidation effects
2) Net income attributable to shareholders
Group 2013
10,066
4
Allianz holds top global positions in all business segments
(EUR bn)
1.
2.
3.
4.
5.
Allianz
AIG
AXA
Zurich
Generali
47
29
29
26
21
1.
2.
3.
4.
5.
Japan Post Insurance1
Aegon
Allianz
AXA
Generali
Asset management, AuM
82
562
57
54
45
1.
2.
3.
4.
5.
Black Rock
Allianz AM
BNY Mellon
AXA AM
Amundi
3,143
1,770
1,151
893
777
#1 Global
Non-life insurer
#3 Global
Life insurer
#2 Global
active AM
Basis: 2013
Basis: 2013
Basis: 2013
Credit, total revenues
Assistance, revenues
Global corp., revenues
1. Euler Hermes
2. Atradius
3. Coface
2.5
1.6
1.4
1. Allianz Global Assistance 2.2
2. Europ Assistance
1.4
3. AXA Assistance
1.0
Worldwide leader in
Credit insurance
Worldwide Leader in
Assistance Services
Basis: 2013
Basis: 2012
1) Financial year 01.04.12-31.03.13
2) Basis: 2012
Source: company reports
Applied FX rates: EUR/USD = 1,3756; YEN/EUR = 144,85
1.
2.
3.
4.
AIG Commercial
Zurich Global Corp.
AGCS
XL P&C Insurance
16.8
6.7
5.0
4.0
#3 Global Corporate
Solutions insurer
© Allianz SE 2014
Life, GPW
Non-Life, GPW
Basis: 2013
5
Consistently at the top in terms of operating profit
(EUR bn)1
2009
2010
2011
2012
2013
1. Allianz
.
7.2
1. Allianz
.
8.2
1. Allianz
.
7.9
1. Allianz
.
9.5
1. Allianz
2. AXA
5.7
2. AXA
6.0
2. AXA
5.9
2. AIG
7.2
2. AXA
7.3
3. Zurich
4.6
3. Zurich
5.1
3. Zurich
5.0
3. MetLife
6.3
3. AIG
6.8
4. Generali
3.7
4. MetLife
4.1
4. MetLife
4.8
4. AXA
6.3
4. MetLife
6.4
5. MetLife
2.3
5. Generali
4.1
5. Generali
3.9
5. Generali
4.2
5. Generali
4.2
6. AIG
1.4
6. AIG
3.0
6. Prudential 2.1
6. Prudential 3.5
6. Zurich
3.4
7. AIG
7. Zurich
7. Prudential 2.0
7. Prudential 1.7
0.3
3.2
© Allianz SE 2014
7. Prudential 0.8
10.1
1) F/X conversion rates as of Dec 31, 2008, 2009, 2010, 2011, 2012 and 2013; operating profit according to company specific definition. Limited comparability among peers and years.
Definition changes are not reflected in the operating profit figures retrospectively.
6
Source: Figures for this ranking are derived from publicly available company reports and own analysis
Underpinned by best in class ratings1
S&P
Allianz
Stable outlook
 Upgraded in July 2007
 Outlook improved to “stable” in
March 2013
 Report of March 2013:
- capital adequacy: “very
strong level commensurate
with a AA rating”
- “very strong competitive
position, reflecting very
strong segmental and
geographic diversity in
revenues and profits”
- “very favorable risk-return
profile of asset management
operations”
AAA
Aa1
Aa2
Aa3
A1
A2
A3
Baa1
Baa2
Baa3
Ba1
Ba2
Ba3
B1
B2
B3
Caa1
Caa2
Caa3
Ca
C
A.M. Best
A++
A+
Allianz
Stable outlook
 Rating on Aa3 level
since July 2003
 Report of January 2013:
- “strong franchise”
- “very large diversification”
- “good capitalization and
financial flexibility”
 Outlook turned to stable (from
negative) in March 2014
A
Allianz
Stable outlook
AB++
B+
B
BC++
C+
 Rating on A+ level since
March 2003
 Press release of June 2012:
- “very strong
business profile”
- “very high degree
of diversification”
C
CD
E
F
© Allianz SE 2014
AAA
AA+
AA
AAA+
A
ABBB+
BBB
BBBBB+
BB
BBB+
B
BCCC+
CCC
CCCCC
R
Moody’s
Allianz
1) Financial strength ratings
7
Agenda
1
About Allianz
2
3
Allianz in Africa
© Allianz SE 2014
Innovation in Insurance
8
Allianz in Africa today amounts to ~0.61 bn USD GWP
Tunisia
Morocco
Algeria
Lybia
Mali
Egypt
Niger
Senegal
AZ Entity
Focus
AGCS of Africa
Corporate &
Specialty
Chad
Burkina
Faso
Guinea
Cote D'Ivoire
AZ Africa Network Retail &
Commercial
Nigeria
Cen.
African Rep.
Cameroon
Ghana
Togo
Benin
Uganda
Kenya
Congo Brazz.
Gabon
AZ Egypt
Retail &
Commercial
AZ Re
Reinsurance
solutions
Euler Hermes
Trade credit
insurance
Allianz Global
Investors
Asset Mgmt.
AZ Africa
Malawi
Angola
Zambia
AZ Egypt
AGCS
Euler Hermes
Namibia
Asset Management
Zimbabwe
Botswana
Global Assistance
South
Africa
Mozambique
Madagascar
1 Total based on 2013 Forecast, including AZ Africa, AZ Egypt, AZ Re, AGCS and Euler Hermes; FX rate: 1EUR=1,32USD
© Allianz SE 2014
Tanzania
9
Africa’s growth prospects are promising for investors
Strong
economic
growth with
positive
outlook
▪ Compound annual real GDP growth 2000-2011: 4.7%; by 2020
GDP to be at 2.6 trillion $ (vs. ~1.6 trillion $ today)
▪ 2nd fastest growing region in the world in terms of GDP over last
15 years (after Middle East)
▪ Massive ongoing urbanization, 50% of Africans living in cities by
2030
Selected
trends
boosting
business
opportunities
▪ Promising infrastructure development with ~1.5 trillion $ of
investments planned until 2020
▪ Emerging consumers with rapidly growing middle-class, by 2020:
– ~128 mn households earning >5000 $ are expected
– Consumer spending to be at ~1.4 trillion $
▪ Product and distribution innovation such as mobile/internet
insurance
▪ Stronger and more stable insurance regulation
▪ Compulsory insurance on certain products (e.g. MTPL, employers
© Allianz SE 2014
Regulatory
reforms
boosting
penetration
liability, etc. in Nigeria)
Total African insurance market expected to grow by 9% p.a. until 2020
Source: Team analysis
10
Agenda
1
About Allianz
2
3
Allianz in Africa
© Allianz SE 2014
Innovation in Insurance
11
© Allianz SE 2014
The Lifecycle of Innovation – it all starts with an idea
Source: Skydeckcartoons.com
12
Exchange platforms
like Napster threaten
the existing music
distribution model
The Fraunhofer
Institute develops a
new standard to
music compression
Apple Inc. suffers
from rather low
profitability
Safe methods of
online payment
become available
First iPod
Mobile chips reach
capacity of former
desktop PC chips
Source: Team analysis
Increased Internet
speed for private
customers enables
bigger downloads
13
© Allianz SE 2014
Observing and interpreting trends is a prerequisite to
successful technology-driven innovation
Major trends in Africa enable insurance solutions one
could not have imagined a decade ago
Massive ongoing
urbanization and
infrastructure
development5
Substantial
infrastructure
investments like into
fibre optic network4
How do insurers
like Allianz
respond and
what innovation
can we offer?
Up-to-date satellite
data for Africa can
be obtained at small
cost6
1 “South Africa: Severe Weather May Affect Underinsured Farmers” (Jan 26th 2012 , www. allafrica.com)
2 “Safaricom upgrades system to fast-track M-Pesa transactions“ (May 8th 2014, www.standardmedia.co.ke)
3 “Connecting Africa - The Next 10 Years of Mobile Growth” (2011, www.strategyand.pwc.com)
4 “Rwanda completes $95 mln fibre optic network“, Mar 16th 2011, www.reuters.com)
5 “The urbanisation of Africa - Growth areas (Dec 13th 2010, www.economist.com )
6 “Satellite data helps make drought insurance affordable for African farmers” (Sep 11th 2012, www.artemis.bm)
Mobile technology
enables leapfrogging to
ubiquitous
communication3
Easy-to-use payment
methods (mainly
mobile) become
available in Africa2
14
© Allianz SE 2014
Adverse weather is
a significant risk and
highly influences
farmers’ income1
Adverse weather induces significant costs worldwide
The cost of the weather on business
Routine weather
variance on the US
economy is as
much as
3.4%
This equates to
$534bn
Routine weather
variance costs
the EU
€406bn
of GDP
Weather is
responsible for
approximately
Source: AGCS The Weather Business Brochure
70%
of the delays in the National
Airspace System (NAS).
© Allianz SE 2014
Weather is the cause of
approximately
delay hours per month in the
National Airspace System
15
The same underlying risk (weather in our case) can impact
in multiple settings
Allianz Risk Transfer Examples
Protecting maize crops in Benin
 Maize crops go through three distinct phases, one being the
germination of the seed, the second being the growth of the
plant and third being the time just before the crop is harvested.
 Weather risk management products can help protect against
variances in weather that can determine whether it is a good
harvest or not.
Protecting the cost of keeping roads clear in Budapest
© Allianz SE 2014
 The municipality has enquired about operational cover,
protecting it from the cost of salt it would have to put on the
roads to help keep them clear in the event of a very cold winter.
Source: AGCS The Weather Business Brochure
16
Visual exposure tools, like Allianz A-MAP, can help support
modelling by giving an overview of risks and exposures
 A-MAP is the AGCS compilation of
visual exposure views
 Identification, monitoring & managing
of exposure accumulations
 Nat Cat Event response
© Allianz SE 2014
 Identification of hazard area and affected
exposure
Source: AGCS NatCat Team
17
Use of optical or radar data from satellites as new source
of information to feed models
synthetic aperture radar
(SAR)
Recently
launched:
Sentinel-1
Meteosat derived relative
evapotranspiration (RE), averaged for the
period 2003-2012. Scaled from 0 (black)
to 100% (blue). The relative
evapotranspiration (RE) is a measure of
plant available water and crop growth.
Daily and 10-daily RE data are available
from 1982 to date. They are used by
EARS for crop yield forecasting and index
insurance
Source: AGCS The Weather Business Brochure
Technology is an
important enabler in crop
insurance
Through its partnership
with Sarmap, Allianz is
able to deploy remote
sensing technology for
loss adjustment,
provided that the
technology had been
tested for several crop
seasons using a specific
crop in a specific
geography. Maize,
wheat and rice have
been tested so far.
© Allianz SE 2014
Optical remote sensing
18
© Allianz SE 2014
The RIICE initiative - supported by Allianz - is a good example
for the use of innovation…
Source: RIICE Project
19
…supporting and covering 5 million Asian rice farmers
Risks of
flood,
Asian
governments
Information
drought,
lack of irrigation,
pests and disease
Reduce poverty
through equal
supply of rice
7
Countries
RIICE
Satellite technology monitors rice growth,
triggering payouts to smallholder farmers
for crop shortfalls, and informing
governments of low
yield forecasts.
farmers
Protects smallholder
farmers from risk
3-year
pilot
Insurance
*Partners:
Allianz Re
Deutsche Geseltschaft
fur Internationale Zusammenarbeit
International Rice Research Institute
sarmap SA
Swiss Agency for Development and Cooperation
Rural banks
deliver insurance
and financial
education
70%
Of the world’s
lower income
people
live
Asia
© Allianz SE 2014
www.riice.org
Source: RIICE Project
5 million
Asian rice
RIICE
Partnership*
in
20
African Example: Crop Index in Burkina Faso and Mali
Voice of the customer
“I was reluctant at first, but now I appreciate crop
insurance. When the rains failed I was really surprised
when the insurance company came the long way to my
village to bring me the news that I receive an insurance
payment for my seed loan. I wish that the crop
insurance will become a great success because it is a
good product for us, the farmers.”
BARTHELEMEY KOHOUN
A FARMER FROM POUNDOU,
A VILLAGE OF 4,000 PEOPLE IN BURKINA FASO
OVER
24mn
© Allianz SE 2014
people protected by our
microinsurance products
SEED LOAN AND INSURANCE PAYOUT IF CROP FAILS
Source: Allianz Sustainability report 2013
21
Allianz entity
in market X
Partner Type
Group
insurance
contracts
Distribution
partners
 Distribution
 Collection
 Claim assistance
Membership
Certificates
2013
Share
MFI (Non-Bank Microfinance
Institutions)
274
50%
Commercial Banks
207
38%
13
2,4%
Telecommunications
2
0,4%
Postal Operator
2
0,4%
44
8,1%
542
100%
Productive Cooperatives
Others
(e.g. NGOs, Corporates etc.)
Low-income Customers
Global Total
© Allianz SE 2014
Technology is an enabler for new means of distribution
like the Telecommunications channel
Allianz’ local entities are the drivers & business owners of microinsurance.
They work with over 500 experienced partners to reach out to customers.
Source: Allianz Sustainability report 2013
22
Africa Distribution Example: Mobile Funeral in Ivory Coast
© Allianz SE 2014
Product brochure
Source: Allianz Sustainability reporting
23
A broader perspective – Microinsurance has the
potential to cover 2.7bn people worldwide
World population by income1
2.7bn
Low income
Microinsurance offers
protection
against the risks in life,
specifically for low-income
people in developing
countries and emerging
markets, with customized
products and processes.2
Microinsurance
Market size:
Extremely
poor
1.2bn
Social
protection
 2.7bn people
 USD 40bn potential
premium per year3
Classic
insurance
© Allianz SE 2014
3.0bn
Middle &
high income
1) 2010 data, based on World Bank PovcalNet (2014), World Bank World Population Dataset (2014); Income measured at Purchasing Power Parity (PPP) per capita per day.
2) The Allianz Group microinsurance definition may differ from local regulatory definitions. See our more detailed Allianz operational microinsurance definition.
3) SwissRe Sigma (2010)
24
With 25mn insured lives worldwide we already made a big
step forward – so far Asia has the highest share at Allianz
GWP1 (EUR mn)
No. of insured lives2 (mn)
+46%
+10%
+37%
24.9
86.1
78.6
57.4
8.5
2.5
+340%
9.1
3.7
17.1
5.7
1.4
67.6
73.3
50.4
3.9
2012
2013
'31-Dec-11
Asia
Africa
31-Dec-12
31-Dec-13
© Allianz SE 2014
2011
Latin America
1) GWP = Gross Written Premium
2) Insured assets, e.g. cattle, homes and motorcycles are not included in the count of insured lives
Source: Allianz Sustainability report 2013
25
Microinsurance activities in Africa at the beginning with
significant upside potential – let’s start!
started 2008
100,000
0
Egypt
started 2007
Credit Life
10,000
Credit Life
100,000
Burkina Faso
120,000
2,0001
started 2009
10,000
0
Africa 2013
Markets: 7
Insured lives: 0.35mn
Insured assets: 15,000
€ Premium: 3.7mn
Mali
Credit Life
60,000
started 2011
Savings Life
60,000
Cameroon
started 2008
started 2009
13,0001
Crop Index
13,000 small farms1
Crop Index
2,000 small farms1
Ivory Coast
0
95,0002
0
Funeral Insurance
95,000
Credit Life
30,000
Mobile Funeral
<1,000
Click product names for more details
<1,000
0
Credit Life
<1,000
Madagascar
started 2008
20,000
0
© Allianz SE 2014
Senegal
Credit Life
20,000
Mobile Personal Accident
<1,000
1)
2)
Number of crop index policies sold in 2013. All policies have expired upon harvest time, i.e. prior to 31-Dec-2013.
Numbers of insured lives per product may add up to more than the stated total number of lives per country because double counting is factored out,
i.e. persons with two or more Allianz life insurance products (although some double counting cannot be entirely ruled out).
Source: Allianz Sustainability report 2013
26