Allianz sows seeds in Greater Kuala Lumpur, Malaysia to reap regional harvest

From left: Joseph Gross, CEO, Allianz Life Insurance Malaysia Bhd and Zakri Khir, CEO, Allianz Malaysia Bhd

For a nation blessed with natural resources galore, there is only one resource in particular in Malaysia that caught the eye of multinational financial services company Allianz.

And that coveted resource is people, says Allianz Malaysia Bhd CEO Zakri Khir — specifically, highly skilled and highly trained actuaries.
It is why the German multinational, the world’s largest insurance company, decided to invest in a Center of Competence (COC) right in the heart of Malaysia’s capital city, Kuala Lumpur.

“Malaysia has a great talent supply for actuaries. We have a lot of good higher learning institutions that are producing quality actuaries here, and they are so in demand globally.”

“But because there are not enough opportunities for all these talent domestically, we see young Malaysians leaving to seek opportunities elsewhere and that is why today we see Malaysian-trained actuaries in high-ranking positions across the globe,” says Zakri.

With an initial investment of RM3.5 million between January and September 2019, the COC today counts a workforce of 23, out of which 19 are Malaysians.

They support the insurance behemoth’s number-crunching needs across seven countries in Asia.

Though the headcount may appear small, the value of tapping the burgeoning talent pool for Allianz cannot be overstated in the context of its exposure to the region, says Zakri.

To date, Allianz’s exposure to the region is still relatively small compared with other markets. However, that low base means Asia is its biggest growth segment globally, Zakri adds.

The Allianz Group closed another successful quarter with a strong business performance. The group reported strong operating profit of €3.0 billion in 3Q2019.

Internal revenue growth, which adjusts for currency and consolidation effects, was 6.4% with positive contributions from all business segments, in particular the Life/Health business segment. Total revenues increased 8.1% CITy of opportunity to €33.4 billion (third quarter of 2018: €30.9 billion).

Operating profit was strong at €3.0billion. “So from that perspective, the COC in Kuala Lumpur could be considered the engine in the larger regional growth drive,” says Zakri.

The team, split into seven work streams, undertakes high-value and high-skilled work on a daily basis, which includes underwriting, actuarial analysis, compliance and risk management and claims.

That said, Malaysia is not the only country in the region with a respected conveyor belt of well-trained actuaries.

Joseph Gross, CEO of Allianz Life Insurance Malaysia Bhd, acknowledges that the consideration process had reviewed multiple candidate countries.

Even then, the decision was not easy — the COC was to be the first of its kind in Asia for Allianz. And the consolidation in Kuala Lumpur of the actuarial brainpower, so to speak, away from the head office in Singapore was “counter-intuitive” and took some convincing before it was greenlit, Gross recalls.

“We had three key criteria that we placed the highest importance on and Kuala Lumpur fit the bill perfectly. First was competency in the skillset we needed; second, value for money; and third was multi-lingual capabilities to support our operations across Asia-Pacific,” says Gross.

Given instant connectivity in this day and age of rapidly advancing technology, the fact that Kuala Lumpur is geographically smack in the heart of Asia-Pacific and within just hours of flying to most of the continent was not critical but a pleasant bonus too, Gross adds.

However, it was not plain sailing to set up the COC even after the decision was made. One of the key challenges from Allianz’s perspective was to convince the local financial services regulator, Bank Negara Malaysia, that the idea benefits the country as much as Allianz.

That was where InvestKL came in and played a pivotal role, Gross reminisces. The agency facilitated communications and discussions between the two parties and smoothed over the transpicuousness. In fact, the presence of InvestKL as a facilitative body to aid multinational investors looking to come in also lent weight to the choice of Malaysia over other competing nations in the region, Zakri acknowledges.

An agency under the Ministry of International Trade and Industry, InvestKL is tasked to attract 100 multinational companies (MNCs) to invest in a regional hub in Kuala Lumpur by 2020. Allianz is part of 78 MNCs that it had wooed over between 2011 and 2018.

In the end, both InvestKL and Allianz successfully convinced the regulator and the rest is history. In addition, InvestKL also aided Allianz in navigating other forms of red tape and in procuring much-needed incentives to get the COC off the ground.

In hindsight, it was not difficult to see how the COC would be good for Kuala Lumpur. Among others, its establishment means the transfer of high-value skills, knowledge and best practices to local talent in a
multinational work setting — a rare combination that is difficult to obtain elsewhere.

That in itself also became a slight problem in the early days, Gross points out. As the COC trained a specialist, other competitors came knocking and, as a result, the COC initially had a relatively high churn rate,
he says, adding that things have stabilized in more recent times.

At present, the COC costs approximately RM5 million to operate on an annual basis. In return, however, it delivers a highly technical supporting function to seven markets in Asia-Pacific worth many times more, Zakri says.

“We are still working out how to measure the value of the support from the COC to the regional operations, but what is clear to us is that the COC has given Allianz value for money from a big-picture perspective,” says Zakri.

“That is why we are still planning for further investments in the COC, which will mostly go towards developing the talent and human capital,” Zakri adds.

While plans are fluid, Allianz is firm on growing the COC’s headcount to north of 50 in the coming years, he adds, especially as companies across the region prepare for the looming implementation of IFRS17, the international financial reporting standard set to kick in in 2022.

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