Insurer of the Year: Allianz
Insurers are facing several regulatory and market challenges: regulatory capital requirements such as Solvency II, low interest rates, a higher risk of asset bubbles and market corrections.
To successfully confront them, insurers have to set an appropriate solvency target, allocate capital effectively and be transparent to shareholders with regards to capital management commitments and progress.
Allianz has led and significantly influenced the industry in terms of risk-based capital management frameworks and disclosures, which justifies its recognition as insurer of the year.
The German insurer developed its management ratio framework for aligning risk and capital via stress scenarios: it defined its target management ratio as the solvency ratio needed to survive the worst-case scenario (e.g. between 2008 global crisis, the 2012 European crisis, 2001 tech bubble) and still meet a 135% solvency ratio, a level which would not require raising capital.
In terms of providing greater transparency, Allianz's Solvency II reporting includes the impact on solvency capital requirements, which can be material given the negative convexity of most long-term guaranteed life businesses.
The firm has taken a series of tough management actions to improve life profitability and turn around its US asset management division.
These actions include disposing underperforming businesses, as demonstrated in the sale of AZ Korea Life; acquiring or developing joint ventures; enhancing its offering in alternatives through the teams Allianz Capital Partners, Allianz Real Estate and AGI Infrastructure; and shifting from capital-intensive traditional retirement products reliant on investment margin to other sources of profit, for instance, fee-based sources via more unit-linked products without guarantees.
Allianz's US-based asset manager Pacific Investment Management Company (Pimco) enjoyed significant success, with four consecutive quarters of net inflows including €52bn of net new inflows in Q2 2017.