Allianz boss bate wants to thin out management

Allianz boss bate wants to thin out management

At europe’s biggest insurer allianz, management must be more worried about jobs than the general public.

On friday in munich, ceo oliver bate announced a further simplification of the organization and the elimination of hierarchical levels. "It’s not about cutting indians," said bate. "Over time, we want to make the management structures more and more efficient."

Ten years ago, there were still twelve management levels between the local CEO and the employees in the call center at allianz’s major national companies. "In some cases, we still have seven or eight subsidiaries today. And I bet in ten years there will only be five or six," said bate. At the same time, the alliance announced a higher profit for the past fiscal year.

The munich-based group employs 147 people worldwide.000 people, compared with just under 27 at the german national company.000. The insurance industry is under pressure to save money from two sides: zero interest rates are eating away at profits, and digitalization could make many jobs redundant. "The dream i already have is that we translate this (digitization) into growth in market share and customers, and then our jobs will also be secure," said bate.

The group CEO ruled out job cuts purely in the interests of the company’s course: "the goal is not job cuts, but efficiency gains for the sake of efficiency gains. Doesn’t make sense either, you can’t motivate people with that either."

At allianz, the board of management set the direction for decades, but did not run any operations itself. This is largely left to the subsidiaries in the individual countries, which in many respects operate autonomously. Bate has changed its structure in recent years, and product development is now largely managed centrally.

In a departure from tradition, the online insurer allianz direct, which has been active since last year, has also been assigned to the munich head office. Whether there could also be a fundamental reform of the structure in the long term, with the abolition or extensive disempowerment of national companies, is something bate would prefer to keep open: "there has been no change in principles. But every principle is a principle, not a law," the CEO said in response to questions about the matter.

Bate has faced resistance from within his own ranks in recent years, but is unchallenged because the allianz under his leadership regularly reports good numbers. In 2019, operating profit rose by three percent to just under 11.9 billion euros, although the restructuring of the loss-making industrial insurance business and high levels of major damage took their toll on earnings. Sales increased by almost eight percent to 142.4 billion euros, while net income rose by six percent to 7.9 billion euros. Bate reported that for the first time it had more than 100 million customers worldwide.

For 2020, bate expects an operating profit of 11.5 to 12.5 billion euros. The evening before, the insurer had announced a further share buyback. By the end of 2020, the group plans to acquire its own securities on the market for 1.5 billion euros. Since 2017, allianz has already spent 7.5 billion euros on this project. Shareholders are to receive a dividend per share increased by almost seven percent to 9.60 euros.

Allianz has hopes in china, where foreign insurers and financial services providers have been largely excluded from the market until now. The alliance has a license for its own umbrella company there. "The chinese market has tripled in the last eight years, from 200 to 600 billion euros in sales," said bate. "In such a gigantic market there is a huge amount of growth potential, even if you say i’m only in a niche market."

A rather rough chinese niche is what allianz has in mind with its second asset management business. In the people’s republic there are many companies and a very rich upper class looking for investment opportunities for their money. "We suspect that we have very, very good growth opportunities (in china) in the medium term in asset management and capital investment," bate commented.

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