Allianz SE : "The course we set will prove decisive"

Mr. Heise, the euro debt crisis looks set to remain with us this year, too. Where do you think the crisis is headed in 2012?

Michael Heise: Getting to grips with the euro debt crisis is a long-term undertaking. The course that we set in 2012, however, will prove decisive, and I am cautiously optimistic in this respect. Although we shouldn't turn a blind eye to the risk that the crisis could escalate further, I believe that it is more likely that the progress made in tackling the crisis will become more evident as the year progresses. This includes the conclusion of Greece's debt restructuring, actually implementing the rescue funds in their current form and enacting the fiscal agreement, including the "debt brake" mechanisms.

What is more, the economic data do not, in my opinion, suggest imminent recession across the entire euro area. This means that the austerity measures implemented by the EMU countries will also push new government borrowing down. That should, at least gradually, help to alleviate market mistrust.

Let's put financial matters aside - which other areas do you think will prove challenging this year?

Heise: Increasing urbanization and the emergence of "megacities" will pose a major challenge, also for the insurance sector. First of all, risks tend to be concentrated in these urban areas. As was the case last year, we will have to be prepared for an increase in the number of claims linked to natural catastrophes. There is a massive need for investment to put appropriate infrastructure in place, but also to reduce CO2 emissions. Finally, social changes are far more apparent in urban areas. Digitalization means that people, but also products and services, are becoming increasingly interlinked. This will also influence and change consumer behavior, especially in urban regions.

And where do you see the main challenges for Allianz?

Heise: We can see that our customers are becoming more independent in the decisions they make and that their expectations in terms of speed and service quality are higher. Price comparison websites, for example, provide customers with fast, straightforward access to a market overview, while the recommendations made by friends and acquaintances in social media networks are becoming increasingly important to younger customer groups.

Reacting to these changes will be one of the challenges for Allianz. This is why the ongoing digitalization projects are so significant. These projects are designed not only to boost efficiency, but also to ensure that we can meet the new demands of our existing and potential customers. We have to keep a very close eye on such developments.

What would have to happen in 2012 for us to call it a good economic year?

Heise: Sometimes, a year turns out for the better when not too much happens. We can only hope that 2012 will not bring any natural or nuclear catastrophes like the events we saw in Japan in 2011. As far as economic policy is concerned, I hope to see policymakers establish a clear course with medium-term objectives. Hectic decisions made under pressure from the markets will not help matters.

If we can get through 2012 without encountering any shocks - such as the bankruptcy of an EMU country and its departure from the euro or an oil price spike triggered by political tension - then I am confident that the economy will prove to be robust this year. Germany should be able to maintain its solid economic position in an international comparison.

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