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Allianz AG’s Annual General Meeting (AGM) formalized a number of management changes. Michael Diekmann officially takes over today as the new Allianz Group CEO. His predecessor, Henning Schulte-Noelle, who agreed to step down last December, will succeed Klaus Liesen as Chairman of the Group’s Supervisory Board. Diekmann also becomes Chairman of the Supervisory Board of Allianz’ P/C Unit, a position formerly held by Schulte-Noelle.
The 48-year old Diekmann is seen as bringing new blood and fresh ideas to Europe’s largest P/C insurer, and will be expected to address a number of ongoing problems. A “portrait” on the Allianz website (www.allianzgroup.com), noted that he “knows Allianz from many sides: the German market, the sales organization, Asia, Central and Eastern Europe, America and the globe-spanning network of managers.” His most recent assignment, head of Allianz American P/C business, which included successfully running Fireman’s Fund, has somewhat distanced him from recent management decisions, notably the takeover of Dresdner Bank and its investment banking unit Dresdner Kleinwort Wasserstein, which has so far cost Allianz a lot of money.
He seems ready to deal with the problems. “Allianz has such a wealth of resources,” Diekmann indicated, “The potential and energy that come from people wanting to do the right thing is incredible.” He’s said that there are “no taboos” concerning Dresdner, leading to speculation that his intentions to more fully integrate the bank’s operations into Allianz may include a sale of Kleinwort.
Schulte-Noelle will not be an easy act to follow. Frequently acknowledged as the most powerful figure in German finance, he led Allianz on a 12-year growth spurt during his term as CEO. He successfully took over state-owned insurers of the former East German Republic, dealing with the considerable problems of transforming an overburdened government bureaucracy into a western style insurance company.
He acquired Swiss Re’s primary insurance group, adding ELVIA in Switzerland, Lloyd Adriatico in Italy and Vereinte in Germany to the Allianz Group. In 1997 Allianz took over France’s AGF, not only gaining a good market position in that country, but also gaining or consolidating market access to 24 other countries. He expanded Allianz operations in the Far East, and led the Group’s expansion into economic services founding Allianz Asset Management GmbH in 1997. “It was an inevitable and logical step if we were going to be a reliable partner for pensions and capital growth in the private and commercial sectors,” Schulte-Noelle indicated.
Allianz built on this by acquiring California-based PIMCO, a leading fund manager, specializing in bond transactions, and Nicholas Applegate. Finally he led the takeover of Dresdner Bank, which might yet prove to have been “a bridge too far,” rather than the “quantum leap forward” Allianz called it.
In his final appearance as CEO, Schulte-Noelle sounded an optimistic note. Addressing the AGM, he described fiscal year 2002 as an unsatisfactory and disappointing year, stating: “There is no positive gloss to be applied here: this result must remain an isolated event. We have learned the right lessons from this experience.” He then noted that the accumulation of financial burdens from environmental catastrophes, the collapse in the capital markets, and the depressed economy had left a deep impression in the consolidated result that concluded with a loss of 1.2 billion euros ($1.32 billion). He also said that the costs and risks in some divisions had not been adapted quickly and consistently enough to changes in the economic environment.
Schulte-Noelle said 2002 was therefore “an ambivalent, but not a wasted year. We laid groundwork of fundamental importance and began numerous initiatives. Their common aim is: reinstatement of profitability.”
He cited the following initiatives, which are to be continued during the course of 2003:
– Turnaround programs were successfully initiated in areas with unsatisfactory profitability. Costs were reduced, tough goals were formulated and new people were recruited to take on management functions. This program had already yielded its first successes, notably at Dresdner Bank, Fireman’s Fund and Allianz Global Risks where the industrial insurance business of the Group is bundled.
– Internal procedures had been tightened, complexity reduced and risk management significantly improved.
– Unprofitable business areas and markets had been abandoned, for example in the Philippines.
– Premiums and prices had been adjusted to take account of the increased risks and had been accepted by the market.
– The proportion of equities had been further reduced and the existing portfolio protected to a large degree by hedging measures.
– The capital measures already introduced during the autumn of last year had considerably strengthened the capital base. This secured important competitive advantages and opportunities for growth. The current capital increase of 4.4 billion euros [$4.84 billion] had been positively accepted by the market. This underlines the ongoing trust that capital markets put in Allianz.
At the very least he has left Diekmann a strong legacy to work with, and a sound basis to return Allianz to its preeminent position among the world’s global insurers. As Schulte-Noelle indicated the Group’s “capital improvement plan,” aimed at shoring up its balance sheet and cash reserves, has been well received. According to reports, 98 percent of its shareholders intend to exercise their rights to acquire additional shares. At least Diekmann shouldn’t have to worry about money for a while.