* Allianz launching new insurance savings products in July
* German Life to double alternative investments mid-term
* Plans to expand direct debt financing
(Adds CFO and other comments, investment targets)
FRANKFURT, June 25 Allianz said its
new life insurance products without long term interest rate
guarantees will require less capital backing, benefiting both
policy and share holders.
Europe's biggest insurer is launching the savings products
in Germany early next month in response to low capital market
interest rates and tighter European Union insurance regulations.
The policies will give the insurer more flexibility in using
its risk capital than classical life insurance savings products
that carry guaranteed interest rate, Allianz said on Tuesday.
"When we have more flexibility and less capital constraint,
we can share more return with the customer," Allianz's Chief
Financial Officer Dieter Wemmer said in a presentation to
analysts and investors.
Wemmer said the new products combined the customer's
perspective with that of the shareholder.
"We're offering a better deal for both of them," he said.
Low interest rates in the wake of the financial crisis have
slashed the income insurers can earn from their investments in
safe assets like government bonds, making the burden of meeting
past pledges to policy holders increasingly onerous.
In addition, new EU safety rules for insurers known as
Solvency II, due to come into force in the next few years, are
expected to place a heavier capital burden on business with
returns that are guaranteed over the lifetime of the policy.
Allianz, by far the biggest life player in its home market,
will offer the new policies alongside traditional guarantee
products and was not reacting to Solvency II in a "slavish" way,
For several years, German insurers have been required to
trim the minimum interest rate they are allowed to offer on the
The rate now stands at 1.75 percent for new policies, which
further reduces to around 1 percent once insurers' costs have
"Many customers ask if that's really a worthwhile promise,"
said Alf Neumann, a board member at Allianz's German life
Rival insurer Ergo has also reworked its product
Allianz hopes its new policies will attract customers
because they can offer a higher overall return if capital is not
tied up to meet the annual guarantee.
As well as revamping its product line, Allianz is also
seeking better yields from its investments.
In the presentation, Allianz's German life business said it
aimed to double its exposure to alternative investments such as
real estate, private equity funds, infrastructure and renewable
energy to roughly 20 billion euros ($26.2 billion) in the medium
It also expected to ramp up its activity in direct debt
financing in areas such as residential and commercial mortgage
lending, as well as in corporate and infrastructure loans,
bringing the total volume to around 25 billion euros in the
medium term, from 16.3 billion euros now.
($1 = 0.7637 euros)
(Reporting by Jonathan Gould and Ludwig Burger; Editing by