Allianz’s new three-year plan sets targets to increase earnings and profitability, implement digital processes

Allianz SE plans to meet the transforming insurance industry head-on by strengthening resilience and creating scale in important markets in a bid to achieve new growth and profitability targets.

The insurer “will strengthen its foundations with a multi-year Renewal Agenda, positioning itself as a digital leader, investing in promising business models, and pursuing consolidation opportunities with high strategic fit,” notes a statement Tuesday from Allianz, the world’s largest global insurer. The plan was detailed during Allianz’s Capital Markets Day 2015.

“The Renewal Agenda is a comprehensive roadmap detailing how we will strengthen, both the performance and the organizational health of Allianz to better serve customers, employees and shareholders,” company CEO Oliver Bäte says in the statement.

The insurer is targeting average annual earnings per share growth of 5% from 2016 to 2018, and return on equity (ROE) of 13% by 2018, adjusted to exclude unrealized capital gains and losses on bonds and other items. To achieve that, Allianz’s Property-Casualty segment will seek to deliver a combined ratio of 94% or better, and the Life/Health segment an RoE of at least 10% in all of its operating entities.

In addition, the Group will actively manage its balance sheet to improve capital efficiency and resilience, as well as “will also seek 1 billion euros in recurring, annual productivity gains by 2018, especially by implementing digital processes globally. Those gains will be reinvested in technology, human resources and growth,” the statement adds.

“The world around us is changing rapidly and financial services along with it,” Bäte says. “Allianz is well-positioned to take the lead in this industry transformation by getting even closer to our customers, driving performance and investing in digitalization,” he maintains.

Getting closer to customers is also behind the insurer’s decision to “fortify its most competitive businesses and scale up smaller, high-performing operating entities by creating regional platforms. Less-profitable businesses will refocus on productivity and efficiency and release capital that can be deployed to fuel growth elsewhere.”

Allianz will further make its Net Promoter Score – which measures customers’ willingness to recommend the company to friends and colleagues – a set part of the Group’s planning process with direct bearing on incentives.

“The goal is that at least 75% of the Group’s businesses score better than the market average. Alone by lifting this score, Allianz sees the potential to attract an estimated additional 5 million customers and 6.5 billion euros in additional annual premiums,” the company reports.