Shifting market prompts Allianz investment fund
Allianz Polska is seeking to capitalize on local investors becoming less risk averse and changing personal pension laws, as it launches its first ever investment fund company (TFI) and three investment funds, which it hopes will allow it to maintain client numbers.
Early next year, Allianz will begin selling units in investment funds, which it will capitalize with roughly zł.25 million (€5.5 million), following Securities and Exchange Commission approval. The move will put it in a better competitive position with larger insurance companies in the country, such as Commercial Union and ING, who have already successfully introduced their own investment funds.
Andrzej Burża, vice president of Allianz Insurance, says the company had been considering entering the investment fund market for a while in order not to "surrender clients" to competitors. He explains that across the entire industry, life insurance policyholders have been canceling unit-linked policies - in which policy performance is linked to investment fund performance - because of product "mis-selling" on the part of insurance agents.
As a result policyholders, shying away from the unit-linked policies, have begun to eye investment funds as a high yielding alternative for their capital, he says.
While he says Allianz never partook in "mis-selling" of unit-linked life insurance products, many potential clients have been put off them altogether. And, if insurance companies are without investment fund options, they risk losing clients.
"Our main goal is to secure existing clients," he says. He expects most insurance companies to do the same as Allianz. "They will be doing something shortly," Burża says.
By the same token, he adds that Allianz is anticipating positive changes to the country's law on personal pension accounts, whereby Poles will be offered tax incentives to open investment accounts wholly separate from the country's existing three-pillar pension system.
However, Sławomir Solarz, director of the Insurance and Pension Funds Supervisory Office (KNUiFE), warns that fund companies shouldn't place bets on a windfall from the new personal account law.
"I don't think this is any major breakthrough," he says, noting that there is not enough of an incentive for potential investors. He says that at present the legislation proposes that individuals will be able to invest without having to pay capital gains taxes, and there would be limits on the investment amount per year.
While it may lure more funds into the already growing investment fund industry, the government needs more tax incentives before Poles decide to lock up more of their money in accounts, Solarz says.
Nonetheless, Allianz has set its goals. Burża said he expects to manage zł.200 million (€44 million) by the end of the first year across all three funds and gain 100 clients. The funds would be broken down into an equity, bond and balanced fund, he says. To reach these numbers, he says he would marshal Allianz's 2,500 sales agents to sell the fund units along with the insurance policies.
Early next year, Allianz will begin selling units in investment funds, which it will capitalize with roughly zł.25 million (€5.5 million), following Securities and Exchange Commission approval. The move will put it in a better competitive position with larger insurance companies in the country, such as Commercial Union and ING, who have already successfully introduced their own investment funds.
Andrzej Burża, vice president of Allianz Insurance, says the company had been considering entering the investment fund market for a while in order not to "surrender clients" to competitors. He explains that across the entire industry, life insurance policyholders have been canceling unit-linked policies - in which policy performance is linked to investment fund performance - because of product "mis-selling" on the part of insurance agents.
As a result policyholders, shying away from the unit-linked policies, have begun to eye investment funds as a high yielding alternative for their capital, he says.
While he says Allianz never partook in "mis-selling" of unit-linked life insurance products, many potential clients have been put off them altogether. And, if insurance companies are without investment fund options, they risk losing clients.
"Our main goal is to secure existing clients," he says. He expects most insurance companies to do the same as Allianz. "They will be doing something shortly," Burża says.
By the same token, he adds that Allianz is anticipating positive changes to the country's law on personal pension accounts, whereby Poles will be offered tax incentives to open investment accounts wholly separate from the country's existing three-pillar pension system.
However, Sławomir Solarz, director of the Insurance and Pension Funds Supervisory Office (KNUiFE), warns that fund companies shouldn't place bets on a windfall from the new personal account law.
"I don't think this is any major breakthrough," he says, noting that there is not enough of an incentive for potential investors. He says that at present the legislation proposes that individuals will be able to invest without having to pay capital gains taxes, and there would be limits on the investment amount per year.
While it may lure more funds into the already growing investment fund industry, the government needs more tax incentives before Poles decide to lock up more of their money in accounts, Solarz says.
Nonetheless, Allianz has set its goals. Burża said he expects to manage zł.200 million (€44 million) by the end of the first year across all three funds and gain 100 clients. The funds would be broken down into an equity, bond and balanced fund, he says. To reach these numbers, he says he would marshal Allianz's 2,500 sales agents to sell the fund units along with the insurance policies.
