New Boy

Gearing Up for the Fast Lane

Source: Michael Elleray
Full speed ahead but don't underestimate the competition.
  • Why it matters

    Why it matters

    Insiders wonder whether Oliver Bäte, a trained banker and former McKinsey consultant, will be a safe pair of hands or take the insurance giant down a riskier path.

  • Facts

    Facts

    • Oliver Bäte will take charge of Allianz in May 2015.
    • He will become the group’s 10th chief executive.
    • The insurer has said it expects full-year operating profit to be in the upper end of its €9.5 billion to €10.5 billion forecast range.
  • Audio

    Audio

  • Pdf

Oliver Bäte is about to become the most powerful insurer in Europe.

The 49-year-old will take over the helm of one of the world’s largest insurance companies, Allianz.

On Thursday, current Chief Executive Michael Diekmann announced that he would retire in May 2015, just a few months after turning 60, instead of extending his contract by one or two years as many believed he would.

Mr. Bäte’s appointment is not a surprise. He has been groomed for the job for almost two years. During that time, he had been chief financial officer of the Munich-based insurance company, before taking charge of the group’s operations in southern and western Europe, trading jobs with Dieter Wemmer.

It was a slightly unusual move for a rising star, but it meant Mr. Bäte could acquire operational experience running the company he will now take control of next May.

Colleagues say he is a brilliant analyst, a quick thinker, and grasps the complicated outreaches of the insurance industry quickly.

Although Mr. Bäte is Mr. Diekmann’s preferred successor, he is not made of the same mould. For a start, he is not an old-school insurance salesman. He never went door-to-door selling policies, unlike Mr. Diekmann, who spent his early career touting insurance products in the working-class neighborhoods of Hamburg.

Mr. Bäte was born in March 1965 in Bensberg, near Cologne. He started out as a trainee banker at the former state bank WestLB, leaving that job to do military service with the German air force at a base in Sardinia. He studied business in New York and Cologne, where he continues to teach business students.

After his studies, Mr. Bäte joined the global consulting firm McKinsey, where in the course of 15 years he worked his way up the ranks to head its European insurance and asset management sector. Mr. Diekmann brought him to the Allianz board in 2008.

It was a shrewd move. Mr. Bäte thrived at Allianz.

 

Oliver Bäte Source: DPA
Oliver Bäte, Allianz’s soon-to-be chief executive. Source: DPA

 

Colleagues say he is a brilliant analyst, a quick thinker, and easily grasps the complicated outreaches of the insurance industry. Insiders say he mastered his brief in the southern and western European division with flair.

Most analysts and shareholders have factored in the likelihood he would succeed Mr. Diekmann. His appointment was finally confirmed on Thursday.

The question now is what direction Mr. Bäte will take Allianz. Herbert Weinmann, a professor of banking and insurance at the Ludwigshafen University of Applied Sciences, told Handeslblatt that Mr. Bäte’s time in New York would make him well-placed to further expand Allianz into markets beyond Europe.

“I think he fits the international direction of Allianz,” Weinmann said. The next two years, he added, will be critical for Mr. Bäte as he battles a low-interest rate environment in Europe that has depressed revenue at insurers. But Allianz, he argued, has so far managed this situation better than most of its peers.

“There are challenges, but then who doesn’t have challenges to master these days?” Mr. Weinmann said.

While industry sources agree that Mr. Bäte is very ambitious and likely to have grand plans for Allianz, his critics worry that boldness is not necessarily the best attribute for the head of an insurance company

Mr. Bäte comes across well to the international community.  As chief financial officer, he was responsible for presenting financial results. He speaks excellent English and deals well with analyst questions.

While industry sources agree Mr. Bäte is very ambitious and likely to have grand plans for Allianz, his critics worry that boldness is not necessarily the best attribute for the head of an insurance company.

The shadow of Allianz’s disastrous acquisition of Dresdner bank looms over all discussions of growth. Allianz bought Dresdner Bank in 2001, with the aim of combining banking, investment banking and insurance businesses. But Dresdner came with €35.5 billion of problematic loans and its own too-expensive acquisition of corporate finance boutique Wasserstein Perella.

Allianz never managed to make the acquisition work and sold it to Commerzbank in 2008.

More recently, Allianz has struggled with upheaval at its U.S. fund management group Pimco.

Last week, Pimco said it lost $23.5 billion, or 10 percent of its of assets, in September, with the outflow spiking in the hours after chief executive, Bill Gross, announced his resignation and move to rival Janus Capital.

In January, Pimco’s co-chief executive Mohamed El Erian left the company, ostensibly to spend more time with his family. Allianz moved to reassure investors that the crisis at Pimco would have no affect on its 2014 profits target, but the turmoil has rattled Allianz’s board and its shareholders, and convinced many that Allianz needs a period of calm to steady itself.

Mr. Bäte, who has a reputation for confidence and a desire to make things happen, has already ruffled some feathers at Allianz. Five years ago, speaking in his role as chief financial officer at an investment conference, he suggested Allianz was being extravagant in having its headquarters in an exclusive part of Munich, which in turn led to higher salaries for staff who needed to be paid a premium for living in one of Germany’s most expensive cities.

But despite his outspokeness, Mr. Bäte is considered a convivial manager, who makes time for a quick chat and coffee with his colleagues. And in a few months, he will move into the comfortable offices he once criticized, about 3 kilometers from the Bavarian State opera.

 

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Kerstin Leitel is a correspondent for Handelsblatt in Frankfurt, covering markets and the financial sector. Meera Selva is an editor for Handelsblatt Global Edition in Berlin, and has covered markets and finance. To contact the authors: leitel@handelsblatt.com, selva@handelsblatt.com

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