DAVOS-Allianz in strong position for buys; won’t rush

* Allianz board member says sees opportunities

* Says needs more clarity on rules, could do small buys

* Regulators should differentiate between banks and insurers

* Outlook for insurers good in risk-averse environment

By Lisa Jucca

DAVOS, Switzerland, Jan 28 (BestGrowthStock) – Europe’s top insurer
Allianz (ALVG.DE: ) is in a strong position in the face of expected
consolidation but won’t rush big buys while the regulatory
landscape remains uncertain, a senior board member said.

Large financial conglomerates such as the Royal Bank of
Scotland (RBS.L: ) and ING (ING.AS: ) are spinning off their
insurance assets to raise cash to pay for state aid they got in
the crisis.

And upcoming tougher rules for banks that hold insurance
companies may force them to sell those assets, providing buying
opportunities for players with deep pockets.

“Patience will win,” Paul Achleitner, a board member of
Allianz in charge of finance told Reuters in an interview at the
sidelines of the World Economic Forum.
“There are going to be many opportunities. We will look at
these very carefully as we think we are in a strong position.

“Our business is a long-term business. As long as you do not
know what the rules are going to look like, any big move would
be risky,” he added.

He did not, however, rule out small opportunistic buys,
should an opportunity arise.

DIFFERENT BREED

Achleitner predicted the financial world would dramatically
change in the face of regulatory action. But said regulators
needed to be more careful at not bundling all different
financial actors together.

“There is a tendency to talk about financial institutions in
totality. We think that meaningful regulation will have to focus
on the fact that business models are very different.”

On accounting rules, for instance, he said that forcing
banks to constantly update the value of their financial holdings
— a practice known as mark-to-market — made sense as they are
engaged in day-to-day trading activity. But the same was not
true for insurers, which have by default a longer-term view.

Governments should also avoid introducing national add-ons
that could result in imbalances.

“We have to make sure to put the regulatory focus on things
that really matter and create a regulation that is stringent and
not multi-layered (and) complex, and does not allow for
regulatory arbitrage,” he said.

Achleitner was upbeat on the outlook for the insurance
industry as investors had become more risk averse and valued the
steady returns that insurance products could provide.

“The insurance industry is currently undervalued. Because of
uncertainty over Solvency II and given it is not easy to
understand, people tend to put their money in other businesses,”
he said. “But investors will start to realize the insurance
fundamentals are very good, that there is risk aversion and that
customers value the stable income.”

“A life insurance policy may not yield as much as a complex
structured product but after the crisis people suddenly realize
it is still there while the complex vehicle is gone,” he said.

Investment Basics

(Editing by Hans Peters)

DAVOS-Allianz in strong position for buys; won’t rush