Handelsblatt: Allianz Aims to Strengthen its Market Position in Asia

The Asian market is strategically important for global insurers due to its sheer size alone. What goals has Allianz set for the region?

The takeover in Singapore fell through, the joint venture in India failed – Allianz has recently suffered setbacks in Asia. This is likely to hurt CEO Oliver Bäte. The DAX-listed company has set ambitious growth targets for Asia – a region that could become the world's largest insurance market in the future, even overtaking the USA. The Allianz Supervisory Board expects progress from the Management Board this year, especially in India, one of the world's largest economies.

According to an analysis by the Swiss Re Institute, the insurance industry in the Asia-Pacific region generated around $1.8 trillion (approximately €1.6 trillion) in premium income in 2024, roughly a quarter of global revenue. Due to its sheer size alone, the Asian market is therefore strategically important for global insurers. "By 2030, 64 percent of the world's population will live in Asia, 60 percent of whom will be under 40 years old," predicted Anusha Thavarajah, Head of Allianz Asia Pacific, in an interview with Handelsblatt.

So far, however, Allianz has only been able to claim a fraction of the growing Asian market for itself: the Allianz Asia Pacific unit has forecast €8.8 billion for 2024, meaning its market share is less than one percent. The market is dominated by local companies such as Ping An in China or Nippon Life in Japan. However, these groups either operate only in individual countries or are pure life or property insurers.

In the ranking of insurers that offer both life and property insurance, Allianz ranks fifth in Asia, behind other global players such as the former AIG subsidiary AIA, the insurer Prudential, and the French Axa Group.

Thavarajah announces: "By 2030, we aim to be among the top three providers in all Asian markets in which we operate." Allianz has been present in Asia since 1910. The Allianz Group, including asset management and specialty insurance, is now represented in 15 markets and, according to its annual report, employs nearly 16,000 people in the region.

Jerome Haegeli, Chief Economist at Swiss Re, sees great opportunities for global insurers there. Many people are still underinsured, while at the same time the middle class is growing: "There's a lot of catching up to do in terms of insurance in many Asian countries." Many Asian countries have recognized that a well-functioning insurance market can be a decisive factor for the stability of societies and financial systems, says Haegeli. Allianz Asia CEO Thavarajah also emphasizes this aspect: "Social security systems in many Asian countries are not as developed as in Europe. Private companies therefore play a significant role in the region when it comes to providing financial security for people."

Thavarajah intends to leverage this even more in the future, especially in the life and health insurance business, which has already seen significant growth recently. Of the total business volume of the unit for which Thavarajah is responsible, €6.8 billion was accounted for by life and health insurance and €2 billion by property and casualty insurance last year. "We are one of the few providers in Asia active in both segments," says Thavarajah. This hopes to attract even more customers in the future – the goal is around ten percent customer growth per year.

The unit currently contributes five percent to the group's profit, and according to Thavarajah, this figure should rise to ten percent in the near future. This is not unrealistic, as LBBW analyst Werner Schirmer agrees: "Growth in Asia-Pacific was strong in the 2024 fiscal year and above average compared to other Allianz units." Thavarajah sees an advantage in Allianz's broad positioning: "Some of our international competitors concentrate their business primarily on China and Hong Kong, while we have a strong market position in Southeast Asia." French competitor Axa generates the majority of its premiums in the Asian market, for example, in Hong Kong and Japan, as the group confirmed upon request.

However, the great diversity of the respective national markets also presents a challenge for insurers. "Different regulations, different needs, different economic dynamics," says economist Haegeli. This is also reflected in Allianz's differing growth forecasts: While the group expects growth of around four to five percent for so-called developed Asia, i.e., Taiwan, Singapore, South Korea, Japan, and Hong Kong, it expects approximately ten percent for Southeast Asia and China.

Allianz's growth in the region has so far been primarily organic. The group also aims to grow through acquisitions, as Renate Wagner, member of the Group's Board of Management, emphasized again at the Annual General Meeting. However, the planned takeover of the insurer Income Insurance in Singapore fell through last year due to resistance from the Singapore government. Allianz has left open whether there will be a new attempt to complete the transaction. A deal would significantly strengthen Allianz's presence in Singapore, with what Allianz claims will be a double-digit return on investment in the medium term.

The group has an open flank in India. Allianz sold its 26 percent stake in its Indian joint venture to the Bajaj Group this spring. The search for a new partner is ongoing. Allianz declined to provide any information on the current status. However, it is clear that a solution must be found quickly to gain a foothold in the rapidly growing economy.

Partners are important for Allianz's expansion in Asia not only because of economies of scale and regulatory requirements, but also because local providers often have a head start in digitalization. Haegeli of Swiss Re says that customers in Asia are not only more open to digital insurance solutions, but often even expect them. This presents European corporations with an opportunity to successfully apply the experience gained there in their own markets.

The capital market has so far shown little reaction to Allianz's efforts and expansion plans in Asia. This was also evident during the attempt to acquire Income Insurance. Allianz shares barely reacted—neither to the announcement nor to the cancellation of the transaction. Allianz is perceived primarily as a European player, one analyst told Handelsblatt. It is now time to change this perception.