Press | Press Releases | Press releases 2000 | Aachener und Münchener | AM Versicherungen newly positioned in terms of substance and structure
Both companies show outstanding business success/Higher dividend/ Sound growth expected for 2000
AM Versicherungen newly positioned in terms of substance and structure Both companies show outstanding business success/Higher dividend/ Sound growth expected for 2000
Aachener und Münchener Versicherungen have newly positioned themselves in terms of substance and structure to further strengthen their good market position exceeding the industry’s even now and above all to realize further growth potentials in the future. This was what Dr. Michael Kalka, managing board chairman of the two companies Aachener und Münchener Lebensversicherung and Aachener und Münchener Versicherung, pointed out at the first joint balance sheet press conference of the two companies in Cologne. Said Dr. Kalka: ”The joint policy for the two companies was adopted out of a position of strength which is expressed by our outstanding business success in 1999. The leaner management, the setting up of joint management divisions and the drastic reduction of the administrative apparatus have been realized or will be implemented by the end of 2000. This will save us a high two-digit million amount over the medium term without terminating jobs or neglecting the quality of our business. On the contrary: The future joint appearance as Aachener und Münchener Versicherungen which also includes a joint attractive marketing concept, will give rise to an identification, a new motivation for our employees, and above all it will create substantial new synergies in the competition for the clients.” At the same time, AMLeben and AMVers achieved an outstanding business success in 1999 and gained additional market shares. Said Dr. Kalka: ”Aachener und Münchener Versicherungen are standing on a very sound footing.”
Higher dividends and AMVers’s additional anniversary bonus
Due to the good business results it will be proposed to the respective General Meeting of Shareholders of AMLeben and AMVers to increase the dividend by DEM 3 to DEM 18 per itemized share. Before the background of the 175th anniversary of AMVers in 2000 the company’s shareholders will receive an additional anniversary bonus of DEM 5 per itemized share. Further it will be proposed to the General Meeting of Shareholders of AMVers to increase the company’s share capital out of retained earnings without the issue of new shares in the proportion of 10:1 from EURO 103.3 million to EURO 113.7 million.
Lean management
The structural changes mentioned are the following: The boards of management of the two companies which for legal reasons are not merged in the usual sense, hold their meetings jointly. For both companies now there is just one director of finance and one director of staff. Also, the public relations were concentrated in one department. On the department management level, all divisions from accounting and controlling to staff development and administration – with the exception of the sales structures – were combined. Simultaneously, at AM Versicherung a reduction of the number of administrative offices existing in Germany from 11 to 5 was initiated with a concentration on the remaining business sites Cologne, Stuttgart, Nürnberg, Hamburg and Frankfurt.
The sales channels of the two companies will remain independent. They will continue to operate separately, since the diversity of the marketing activities makes the companies’ material strength. This implies, however, that new opportunities to increase efficiency are permanently looked for also in this field.
The structural decisions were made out of a position of strength with the objective to secure the jobs at AM Versicherungen over the long term and to meet the related business-economic expectations. At the same time, the companies’ significance within the group was increased.
Business results of AMLeben
In 1999 Aachener und Münchener Lebensversicherung achieved the best business result in its 131 years of history. This shows in particular in the company’s persistently strong growth. Again, the company clearly outperformed the industry which also recorded an extraordinarily good year due to special political effects. But it was not only the erratic political course of the Federal government on the issue of taxation of capital-building life insurance policies which led to the high business level. The decisive factor was that the general awareness of the necessity of private old-age provision increased substantially. At AMLeben, this is also reflected by the fact that the boom was not followed by a wave of withdrawals. In other terms, the clients make their decisions in a deliberate and targeted manner, refuting by the way all those in politics who intended to control the citizens’ provisioning by decisions.
Basic key figures
The new business in terms of regular annualized premiums of AMLeben increased by more than 81 percent to almost DEM 1.1 billion in 1999. The corresponding figure for 1998 was DEM 593.9 million. The industry stated an increase of 68.8 percent.
The sum insured went up by 58 percent to DEM 28.5 billion. The corresponding figure for 1998 was DEM 18 billion. The industry stated an increase of 42.8 percent.
The total premium sum of the new business of AMLeben grew by almost 73 percent to DEM 1.2 billion. In 1998, the total premium sum came to DEM 696 million.
The industry recorded a growth of 58 percent.
The insurance portfolio of AMLeben exceeded the threshold of DEM 150 billion. In 1999 it increased by 13.7 percent to DEM 153.5 billion (1998: DEM 135.1 billion).
The annualized regular premiums increased by 18.5 percent to DEM 4.7 billion (1998: roughly DEM 4 billion).
Decreasing lapse rate
The development of the premature withdrawals was quite noteworthy. The lapse rate was 6.2 percent, while it had been 7 percent in 1998.
Expenses reduced
Despite the strong growth the company succeeded in reducing the expense ratios further. The acquisition expenses ratio went down from 5.8 percent to 5.3 percent and the administrative expenses ratio decreased from 3.5 percent to 3.4 percent.
Investments
As far as the investments are concerned, AMLeben also stated a very satisfactory result. In 1999 the investment volume grew by 13.6 percent to DEM 29.5 billion (1998: DEM 26 billion). The net result achieved on these investments was increased by 16.3 percent to DEM 2 billion (1998: DEM 1.7 billion). The net interest yield went up to 7.9 percent.
The gross surplus of the company which including the direct credit for the clients had gone up substantially in the preceding years, was further increased in the business year 1999, namely to DEM 1.4 billion.
Before this background AMLeben will keep its participation in profits on a high level also in 2000, although the low of interest rates still persists.
All these achievements would not have been possible without our efficient sales networks. Again Deutsche Vermögensberatung AG, Frankfurt, ranked first with its more than 21,000 financial consultants and outstanding record results.
The rating agency Standard & Poor’s acknowledged the strong upward development of AMLeben by the recent upgrading to AA rating. The financial strength of the company was assessed as ”very substantial”, underlining the excellent market position. This makes AMLeben one of the few top performers among the German life insurance companies.
Outlook for 2000
The boom of the year 1999 will be impossible to repeat in 2000, but AMLeben made a good outset into the New Year, as the figures for January show. On balance it is our goal to pursue the high-level growth. The new development and/or supplementing of products (pension rates, disability insurance, unemployment component) as well as additional marketing efforts are a good foundation for achieving this goal.
AMVersicherung separated from the industry
An outstanding business development was also displayed by AMVersicherung (AMVers.) which separated clearly from the negative tendency of the industry particularly in the motor business and states a remarkable positive growth. It is common knowledge how fiercely and with what high losses the industry fights for market shares in the motor insurance, industrial and transport insurance. This is also where the industry records the sharpest premium decline.
AMVersicherung is in good contrast to this, since the company states an upward tendency in almost all sectors of the insurance business and in addition a marked improvement of the company’s earning power. AMVers’s volume of direct premiums written in Germany rose by 1.9 percent to DEM 2.05 billion. This is evidence of an excellent distribution performance, with Deutsche Vermögensberatung AG again being of particular importance.
At the same time the company succeeded in reducing the expenses ratio in the direct business written from 30.9 percent to 29.8 percent while the market recorded increasing expenses ratios. Add to this the success in the non-underwriting business: the net result from investments increased by 13.1 percent to DEM 320.1 million. So on the whole the tendency is clearly upwards.
Particular key results
The motor business accounting for a share of 41 percent is the most important insurance line of AMVers. In 1999 the market recorded a decline in premium income by roughly 1 percent. However, AMVers was able to achieve a premium growth of roughly 3 percent and to gain additional market shares. This was possible because the company offers an attractive and risk-adequate insurance cover as compared with the market which in addition to the standards also covers individual risk factors and establishes appropriate premium discounts.
AMVers shows a very substantial growth in the motor third party liability insurance. The premium increase achieved here was 3.2 percent to DEM 516.3 million. The market decreased by 0.5 percent. In the comprehensive own-damage motor insurance the premium income of the company went up by 6 percent to DEM 228.1 million in a stagnant market. However, the premium income in the partial own-damage motor insurance fell 2.9 percent to DEM 83.3 million.
As far as the number of contracts in the motor third-party liability insurance is concerned, AMVers of achieved a growth of 3.9 percent to approximately 952,000 contracts (without mopeds, without suspended contracts), enabling AMVers to continue the growth tendency of the preceding years. Here again, the company outperforms the market with a growth of just 2.5 percent. In the comprehensive own-damage motor insurance the number of contracts of the company went up for the third consecutive time by a two-digit percentage, namely by 10.1 percent to 326,700 contracts in 1999.
On the claims side 1999 brought an unexpected turn of tendency in the claims frequency. After falling continuously over several years, it increased by an average of 3 percentage points in the market. AMVers’s claims expenditure per risk in the motor third-party liability insurance went up slightly to DEM 585, which is in line with the market.
The development of the average premiums was unsatisfactory, although we observe a turn of tendency in the premium decay primarily in the motor third-party liability insurance. That development was caused by the discounts for statistically good risks without the required calculatory extra premium for bad risks. It should be called to mind that five years ago the average premiums were 11 percent higher than today. Unfortunately, in the comprehensive own-damage motor insurance an analogous development is taking place. Even though part of the discounts may be quite justified due to the decrease of car thefts, so-called ”vague features” have caused profitability losses. In order to counter that development we increased the premiums in the motor third-party liability insurance and in the comprehensive own-damage motor insurance for the major part of the portfolio and for 01.04.2000 we will recalculate the rate for the new business.
Private customer business (excluding motor)
This business sector also recorded a remarkable growth. The number of contracts rose by 75,000 units (+ 2.5 percent) as compared with the preceding year. The growth was particularly strong in the personal accident business which increased by 29.000 contracts (+ 3.2 percent). But also the private third-party liability insurance showed a very satisfactory development with a growth of 22,000 contracts (+ 2.9 percent).
Furthermore these figures reflect the successful customer retention due to the ”KundenBONUS” gaining not only new customers but also policyholders with expiring contracts for taking out long-term insurance cover with the company. With the top modern private customer products underpinned by the KundenBONUS discounts (10 or 15 percent on the premiums for three or more contracts) the sales channels of the company meanwhile acquired more than 1 million contracts with a duration of five years providing optimal insurance cover.
From the private customer business AMVers earned gross premiums written of DEM 722.3 million last year, which is an increase of 2.8 percent or DEM 19.9 million over 1998. The claims side further improved as compared with the preceding year. Since the number of reported losses went down by 1,282 (0.6 percent) and the average claims expenditure also showed a downward tendency, the claims ratio dropped to an outstanding 36.0 percent (preceding year 39.9 percent).
Commercial and industrial corporate customer business (excluding motor)
In the commercial business AMVers also improved its market position. The fully revised products meet the current requirements and therefore find a ready market. As a consequence, the premium income in this segment went up by 2.0 percent to DEM 302.4 million.
In the industrial and large commercial business the keen competition and the related decrease of premium rates continued at the same pace. This led to substantial premium losses in the entire market. AMVers was affected by this development to a much lower extent so that the premium decline of 5.7 percent to DEM 203.0 million suffered by the company was only about half of what the market had to face.
These results are accompanied by an excellent claims ratio in the commercial and industrial corporate customer business of 55.7 percent, going on from the positive results achieved in the preceding years and proving that with cautious underwriting and appropriate risk selection by the sales channels of AMVers the corporate customer business may still generate profits.
Investments
In 1999 the company achieved a net investment result of DEM 320.1 million, which is an increase of DEM 37 million over the preceding year. The capital investments grew by 10.5 percent or DEM 360.8 million, making the investment volume rise to DEM 3.8 billion. The net interest yield of 8.8 percent even exceeded the preceding year’s level.
Improved underwriting business
Due to the reduction of the expenses ratio and the claims ratio, the total underwriting result for own account before allocation to the equalization reserve again improved. After the loss had reduced by DEM 31.7 million in the preceding year, a further reduction by DEM 51.8 million to DEM 41.2 million could be achieved in the business year 1999. After allocating DEM 4.4 million to the equalization reserves, the underwriting account closed with a total loss of DEM 45.6 million (loss 1998: DEM 118.3 million).
To sum up it can be said that AMVers achieved an excellent business result and separated distinctly from the downward tendency of the market. Also here the signs point to continued sound growth and further gains of market shares. But one thing is clear: we do not intend to grow at any price but definitely with a view to earnings and this also includes, in addition to many other factors, the goal of further reducing the expenses ratio.
Joint marketing concept
Said Dr. Kalka: ”I mentioned the uniform appearance of Aachener und Münchener Versicherungen as a consequence of the joining of the two companies. This concept finds its expression in the joint TV advertising campaign which was launched on January 31 and features Mario Adorf as our partner. Mario Adorf is at our exclusive disposal. So far the spots were produced by Dr. Dieter Wedel. The advertising efforts in other media will remain unaffected by this. With this campaign we intend to put ourselves forward in the general public in accordance with our size and market position.”
Cologne, 16.02.2000
Higher dividends and AMVers’s additional anniversary bonus
Due to the good business results it will be proposed to the respective General Meeting of Shareholders of AMLeben and AMVers to increase the dividend by DEM 3 to DEM 18 per itemized share. Before the background of the 175th anniversary of AMVers in 2000 the company’s shareholders will receive an additional anniversary bonus of DEM 5 per itemized share. Further it will be proposed to the General Meeting of Shareholders of AMVers to increase the company’s share capital out of retained earnings without the issue of new shares in the proportion of 10:1 from EURO 103.3 million to EURO 113.7 million.
Lean management
The structural changes mentioned are the following: The boards of management of the two companies which for legal reasons are not merged in the usual sense, hold their meetings jointly. For both companies now there is just one director of finance and one director of staff. Also, the public relations were concentrated in one department. On the department management level, all divisions from accounting and controlling to staff development and administration – with the exception of the sales structures – were combined. Simultaneously, at AM Versicherung a reduction of the number of administrative offices existing in Germany from 11 to 5 was initiated with a concentration on the remaining business sites Cologne, Stuttgart, Nürnberg, Hamburg and Frankfurt.
The sales channels of the two companies will remain independent. They will continue to operate separately, since the diversity of the marketing activities makes the companies’ material strength. This implies, however, that new opportunities to increase efficiency are permanently looked for also in this field.
The structural decisions were made out of a position of strength with the objective to secure the jobs at AM Versicherungen over the long term and to meet the related business-economic expectations. At the same time, the companies’ significance within the group was increased.
Business results of AMLeben
In 1999 Aachener und Münchener Lebensversicherung achieved the best business result in its 131 years of history. This shows in particular in the company’s persistently strong growth. Again, the company clearly outperformed the industry which also recorded an extraordinarily good year due to special political effects. But it was not only the erratic political course of the Federal government on the issue of taxation of capital-building life insurance policies which led to the high business level. The decisive factor was that the general awareness of the necessity of private old-age provision increased substantially. At AMLeben, this is also reflected by the fact that the boom was not followed by a wave of withdrawals. In other terms, the clients make their decisions in a deliberate and targeted manner, refuting by the way all those in politics who intended to control the citizens’ provisioning by decisions.
Basic key figures
The new business in terms of regular annualized premiums of AMLeben increased by more than 81 percent to almost DEM 1.1 billion in 1999. The corresponding figure for 1998 was DEM 593.9 million. The industry stated an increase of 68.8 percent.
The sum insured went up by 58 percent to DEM 28.5 billion. The corresponding figure for 1998 was DEM 18 billion. The industry stated an increase of 42.8 percent.
The total premium sum of the new business of AMLeben grew by almost 73 percent to DEM 1.2 billion. In 1998, the total premium sum came to DEM 696 million.
The industry recorded a growth of 58 percent.
The insurance portfolio of AMLeben exceeded the threshold of DEM 150 billion. In 1999 it increased by 13.7 percent to DEM 153.5 billion (1998: DEM 135.1 billion).
The annualized regular premiums increased by 18.5 percent to DEM 4.7 billion (1998: roughly DEM 4 billion).
Decreasing lapse rate
The development of the premature withdrawals was quite noteworthy. The lapse rate was 6.2 percent, while it had been 7 percent in 1998.
Expenses reduced
Despite the strong growth the company succeeded in reducing the expense ratios further. The acquisition expenses ratio went down from 5.8 percent to 5.3 percent and the administrative expenses ratio decreased from 3.5 percent to 3.4 percent.
Investments
As far as the investments are concerned, AMLeben also stated a very satisfactory result. In 1999 the investment volume grew by 13.6 percent to DEM 29.5 billion (1998: DEM 26 billion). The net result achieved on these investments was increased by 16.3 percent to DEM 2 billion (1998: DEM 1.7 billion). The net interest yield went up to 7.9 percent.
The gross surplus of the company which including the direct credit for the clients had gone up substantially in the preceding years, was further increased in the business year 1999, namely to DEM 1.4 billion.
Before this background AMLeben will keep its participation in profits on a high level also in 2000, although the low of interest rates still persists.
All these achievements would not have been possible without our efficient sales networks. Again Deutsche Vermögensberatung AG, Frankfurt, ranked first with its more than 21,000 financial consultants and outstanding record results.
The rating agency Standard & Poor’s acknowledged the strong upward development of AMLeben by the recent upgrading to AA rating. The financial strength of the company was assessed as ”very substantial”, underlining the excellent market position. This makes AMLeben one of the few top performers among the German life insurance companies.
Outlook for 2000
The boom of the year 1999 will be impossible to repeat in 2000, but AMLeben made a good outset into the New Year, as the figures for January show. On balance it is our goal to pursue the high-level growth. The new development and/or supplementing of products (pension rates, disability insurance, unemployment component) as well as additional marketing efforts are a good foundation for achieving this goal.
AMVersicherung separated from the industry
An outstanding business development was also displayed by AMVersicherung (AMVers.) which separated clearly from the negative tendency of the industry particularly in the motor business and states a remarkable positive growth. It is common knowledge how fiercely and with what high losses the industry fights for market shares in the motor insurance, industrial and transport insurance. This is also where the industry records the sharpest premium decline.
AMVersicherung is in good contrast to this, since the company states an upward tendency in almost all sectors of the insurance business and in addition a marked improvement of the company’s earning power. AMVers’s volume of direct premiums written in Germany rose by 1.9 percent to DEM 2.05 billion. This is evidence of an excellent distribution performance, with Deutsche Vermögensberatung AG again being of particular importance.
At the same time the company succeeded in reducing the expenses ratio in the direct business written from 30.9 percent to 29.8 percent while the market recorded increasing expenses ratios. Add to this the success in the non-underwriting business: the net result from investments increased by 13.1 percent to DEM 320.1 million. So on the whole the tendency is clearly upwards.
Particular key results
The motor business accounting for a share of 41 percent is the most important insurance line of AMVers. In 1999 the market recorded a decline in premium income by roughly 1 percent. However, AMVers was able to achieve a premium growth of roughly 3 percent and to gain additional market shares. This was possible because the company offers an attractive and risk-adequate insurance cover as compared with the market which in addition to the standards also covers individual risk factors and establishes appropriate premium discounts.
AMVers shows a very substantial growth in the motor third party liability insurance. The premium increase achieved here was 3.2 percent to DEM 516.3 million. The market decreased by 0.5 percent. In the comprehensive own-damage motor insurance the premium income of the company went up by 6 percent to DEM 228.1 million in a stagnant market. However, the premium income in the partial own-damage motor insurance fell 2.9 percent to DEM 83.3 million.
As far as the number of contracts in the motor third-party liability insurance is concerned, AMVers of achieved a growth of 3.9 percent to approximately 952,000 contracts (without mopeds, without suspended contracts), enabling AMVers to continue the growth tendency of the preceding years. Here again, the company outperforms the market with a growth of just 2.5 percent. In the comprehensive own-damage motor insurance the number of contracts of the company went up for the third consecutive time by a two-digit percentage, namely by 10.1 percent to 326,700 contracts in 1999.
On the claims side 1999 brought an unexpected turn of tendency in the claims frequency. After falling continuously over several years, it increased by an average of 3 percentage points in the market. AMVers’s claims expenditure per risk in the motor third-party liability insurance went up slightly to DEM 585, which is in line with the market.
The development of the average premiums was unsatisfactory, although we observe a turn of tendency in the premium decay primarily in the motor third-party liability insurance. That development was caused by the discounts for statistically good risks without the required calculatory extra premium for bad risks. It should be called to mind that five years ago the average premiums were 11 percent higher than today. Unfortunately, in the comprehensive own-damage motor insurance an analogous development is taking place. Even though part of the discounts may be quite justified due to the decrease of car thefts, so-called ”vague features” have caused profitability losses. In order to counter that development we increased the premiums in the motor third-party liability insurance and in the comprehensive own-damage motor insurance for the major part of the portfolio and for 01.04.2000 we will recalculate the rate for the new business.
Private customer business (excluding motor)
This business sector also recorded a remarkable growth. The number of contracts rose by 75,000 units (+ 2.5 percent) as compared with the preceding year. The growth was particularly strong in the personal accident business which increased by 29.000 contracts (+ 3.2 percent). But also the private third-party liability insurance showed a very satisfactory development with a growth of 22,000 contracts (+ 2.9 percent).
Furthermore these figures reflect the successful customer retention due to the ”KundenBONUS” gaining not only new customers but also policyholders with expiring contracts for taking out long-term insurance cover with the company. With the top modern private customer products underpinned by the KundenBONUS discounts (10 or 15 percent on the premiums for three or more contracts) the sales channels of the company meanwhile acquired more than 1 million contracts with a duration of five years providing optimal insurance cover.
From the private customer business AMVers earned gross premiums written of DEM 722.3 million last year, which is an increase of 2.8 percent or DEM 19.9 million over 1998. The claims side further improved as compared with the preceding year. Since the number of reported losses went down by 1,282 (0.6 percent) and the average claims expenditure also showed a downward tendency, the claims ratio dropped to an outstanding 36.0 percent (preceding year 39.9 percent).
Commercial and industrial corporate customer business (excluding motor)
In the commercial business AMVers also improved its market position. The fully revised products meet the current requirements and therefore find a ready market. As a consequence, the premium income in this segment went up by 2.0 percent to DEM 302.4 million.
In the industrial and large commercial business the keen competition and the related decrease of premium rates continued at the same pace. This led to substantial premium losses in the entire market. AMVers was affected by this development to a much lower extent so that the premium decline of 5.7 percent to DEM 203.0 million suffered by the company was only about half of what the market had to face.
These results are accompanied by an excellent claims ratio in the commercial and industrial corporate customer business of 55.7 percent, going on from the positive results achieved in the preceding years and proving that with cautious underwriting and appropriate risk selection by the sales channels of AMVers the corporate customer business may still generate profits.
Investments
In 1999 the company achieved a net investment result of DEM 320.1 million, which is an increase of DEM 37 million over the preceding year. The capital investments grew by 10.5 percent or DEM 360.8 million, making the investment volume rise to DEM 3.8 billion. The net interest yield of 8.8 percent even exceeded the preceding year’s level.
Improved underwriting business
Due to the reduction of the expenses ratio and the claims ratio, the total underwriting result for own account before allocation to the equalization reserve again improved. After the loss had reduced by DEM 31.7 million in the preceding year, a further reduction by DEM 51.8 million to DEM 41.2 million could be achieved in the business year 1999. After allocating DEM 4.4 million to the equalization reserves, the underwriting account closed with a total loss of DEM 45.6 million (loss 1998: DEM 118.3 million).
To sum up it can be said that AMVers achieved an excellent business result and separated distinctly from the downward tendency of the market. Also here the signs point to continued sound growth and further gains of market shares. But one thing is clear: we do not intend to grow at any price but definitely with a view to earnings and this also includes, in addition to many other factors, the goal of further reducing the expenses ratio.
Joint marketing concept
Said Dr. Kalka: ”I mentioned the uniform appearance of Aachener und Münchener Versicherungen as a consequence of the joining of the two companies. This concept finds its expression in the joint TV advertising campaign which was launched on January 31 and features Mario Adorf as our partner. Mario Adorf is at our exclusive disposal. So far the spots were produced by Dr. Dieter Wedel. The advertising efforts in other media will remain unaffected by this. With this campaign we intend to put ourselves forward in the general public in accordance with our size and market position.”
Cologne, 16.02.2000
