Life insurance firm Allianz Lebensversicherung, a subsidiary of Allianz, plans to expand its investments beyond equity holdings, said Andreas Wimmer, chair of the executive board, in an interview with the Tagesspiegel newspaper.
The company already has over a quarter of its total assets under management worth €308bn invested in non-equity assets, he added. Its equity allocation is between 8-10%, he added.
Allianz Leben’s strategy is changing through an increasing amount of investments in alternatives. It has recently announced plans to allocate €860m of clients’ funds in infrastructure in Germany and Portugal.
It also wants to invest in long-term ventures that avoid fluctuations in value on a daily basis but “generate solid returns over decades,” Wimmer said.
Allianz Leben also supports the energy transition process by investing in wind and solar parks, or by focusing on technologies such as hydrogen systems, he added in the interview.
Asked about minimum returns expected from new forms of investment, the chair said the risk of investing in fibre optic networks “must be covered”, and the company expects a “reasonable premium for tying up money in these investments for 30 or 40 years.”
Wimmer said returns for Allianz Leben are “not at all low”, over 3%, which in a low interest rate environment is an “achievement.”
The firm will continue to “stay in the [real estate] market”, even if certain segments of the market, such as shopping centres, are currently a source for concern, he said. It invests in offices, commercial, but also residential and logistic properties, among others, the chair added.
New pension concept
Allianz Leben would continue to provide retirement provisions amid low interest rates but by creating a space for capital investments. This would mean saying goodbye to 100% guarantees on pension contributions, Wimmer explained.
From 2021, Allianz Leben will guarantee 60, 80 or 90% of the amount of pension contributions paid instead of the full 100% on new contracts for investment products including KomfortDynamik, InvestFlex and IndexSelect.
Members can opt in the future to continue to invest part of their premium in security assets and, as before, receive an annual benefit, he said. Alternatively, they can also decide to deploy capital in a special fund that invests looking at returns.
In Wimmer’s view, security assets provide an anchor of stability that compensates for fluctuations within equity markets.