Dr. Olaf Kliesow, president and chief executive of Allianz PNB Life, has recently presented the results of the Allianz “Global Wealth Report”, which puts the asset and debt situation of households in more than 50 countries under the microscope.
Kliesow, who brings with him a wealth of experience from over two decades of career in global finance and investment, is set to grow the 300-man Allianz PNB Life to a 3,000-strong company to become one of the top 10 performing life insurers in the country by 2020.
He said the focus of the company is to expand its agency force to complement its primary bancassurance distribution network with the Philippine National Bank and another regional deal with the Hong Kong Shanghai Bank.
“With the Philippines, we started about a year ago, firstly focusing mainly through PNB. We are looking at a very positive result for 2017. We have expanded our reach with a recent partnership with HSBC. We have also started growing our agency distribution, which will be the focus in 2018,” he said.
Global report shows recovery
He said that 2016 was politically a very turbulent year, but private wealth shrugged it off, after a weaker 2015 (+4.7 percent), financial assets grew again by 7.1 percent last year, more or less matching the post-crisis average.
The study also revealed that Asia (excluding Japan) was once again the uncontested leader in 2016, with growth of 15 percent; in China financial assets increased by 17.9 percent. In a long-term comparison, too, Asia (excluding Japan) is the dominant region, particularly when inflation is also taken into account.
“Worldwide, financial assets climbed to a new record high of almost 170 trillion euros. Last year’s acceleration in growth came mostly from industrialized countries, where growth doubled to 5.2 percent. Bank deposits remain popular – despite real losses owing to inflation,” he said.
Gross per capita financial assets in Asia (excluding Japan) grew by almost 11 percent per year in real terms in the last decade. The other two emerging regions, Latin America and Eastern Europe, achieved growth of only about 5 percent, which was still more than twice as fast as the growth rates in North America (+2.1 percent) and Western Europe (+1.4 percent).
Debt growing faster
The study likewise cited that global household liabilities increased by 5.5 percent in 2016, the highest rate of growth since 2007. That means that debt also rose faster than nominal economic output for the first time since 2009, and the global debt ratio increased by almost 1 percentage point to 64.6 percent. In Asia (excluding Japan) debt growth rose sharply by a further 4 percentage points to just under 17 percent, pushing the debt ratio to 46.3 percent.
At the top were Chinese households which ratcheted up their liabilities by a whopping 23 percent (debt ratio: 45.1 percent). That means that this region accounts for almost 20 percent of global private liabilities of just under 41 trillion euros, compared with less than 7 percent ten years ago.
Despite the steep rise in debt, global net financial assets—gross financial assets minus debt—reached a new record high of 128.5 trillion euros at the close of 2016. That represents an increase of 7.6 percent year-on-year.
PH has huge pent-up demand
“The Philippines still has huge pent-up demand when it comes to access to financial services and financial deepening,” said Kliesow, adding that, “less than a third of the population aged 15 and older have an account at a financial institution.”
The study also took note of aging populations and low protection provided by social security systems pose a challenge in the development of financial systems in Asia, which also reflects on the Philippines.
In India for example, more than 53 percent of the population aged 15 and older and in China 79 percent of the respective age group have an account at a financial institution. It is therefore not surprising that asset diversification is as good as non-existent among Philippine households: only 0.2 percenthold securities or other investment products.
The same holds true with respect to insurance coverage: Despite the fact that 24.2 percent of households are reported to have retirement insurance and 27.5 percent percent are said to own a car, insurance penetration is also still rather low in comparison to the regional average, with premium income in life insurance amounting to 1.3 percent of GDP and that of property and casualty insurance to 0.5 percent of GDP.