Interview with Anil Berry, Allianz Trade by Igor Zaks, Tenzor Ltd

Thank you, Igor. Yes, very very recently we changed, so thank you for spotting that new update. So let's start with this, if we already started. So what is in the name? Why the change and why now? Well, as you know, Euler Hermes were purchased by Allianz many years ago and I must admit it's something I think has probably taken too long before we became a full fledged member of the Allianz family. So I'm really delighted that we're part of Allianz now and rebranded Allianz Trade. For me it means so much from a business point of view but I actually think more from the recruitment point of view. You know, when you're looking to recruit talent, the name Allianz really resounds well with people. I know from personal experience, if I said to my younger son would you like an Allianz logo t-shirt or Euler Hermes, he always goes for the Allianz. Exactly. I think particularly with us sponsoring the Olympics, we have the next eight years of the Olympics, so now we have the Allianz with the Olympic logo. But more important, when you're recruiting people, when they know they're coming into the Allianz family, they see much more opportunities and much more career opportunities, so it's easier to attract top talent. So I'm really pleased that we are using the Allianz brand name.

Look, when I joined the board back in June, we were coming out of the pandemic and although it was a bit patchy, the first priority that we had as a board was to really capture this what I call upswing in growth, capture the upswing in sales that was coming out of the pandemic. And we put together a strategy which was basically increasing our risk stance, increasing our commercial flexibility, and really capturing that growth. And we've been really successful. Q1 numbers are looking good in terms of our new production, our retention rate is pretty much an all-time high, so we're really pleased on that side of it. What's interesting is probably in the last three weeks we now have the Russia crisis, the Russia-Ukraine crisis, and there's been an enormous effort on the employee engagement side. We have teams there, but also as an organization, I'm proud that Allianz have donated over 10 million euros of funds, and even we at Allianz Trade, our employees have generated a significant sum as well that Allianz has matched. So I think looking at the people's side, that's really impacted our organization. But then also moving on to the trade side, I think we're going to see a significant impact in the short term as supply chain gets hit, as we see customers move away from trading in Russia, we have to deal with that impact as well. So there's the direct impact and then the indirect impact. Again, we're going to see inflation back to all-time highs and how's that going to have an impact on our business in terms of insolvencies? And we're already forecasting GDP will be down, I think it's about 0.8%, so we see it being around about 3.3%. And we do see with inflation there is going to be an increase in insolvencies for the first time in two years. So we see an increase in insolvencies of around about 4%, but we'll see how that goes depending on how the war crisis develops over the coming months.

And you know, when I look back at my career, I joined Trade Indemnity right in the middle of the global financial crisis. I then remember I moved to Dubai and we had the Dubai crisis. I was then fortunate enough to move to Asia and some people say we had the Asia China crisis. Then I moved to Paris some four or five years ago and now we've had the pandemic and this current crisis. So I don't know, I always thought crises should be every 10 years but it seems to be happening much more often. Maybe the crisis is following me or I'm following the crisis, I'm not really sure, but it keeps us busy and engaged. And it's strange, we didn't think it would happen so quick.

Exactly, so I think it's much more, it seems to be coming much more often. If I think it's going to be another 10 years, I think I'll be kidding myself and you as well. It seems as though we are constantly navigating crises within our business, but I think that's what we're there for as an industry, that's what we're there for for our customers. So I definitely think it keeps us in the news and keeps us engaged with our clients and partners.

Yeah, and I think just to go back to our strategy was to capture the upswing in trade and we felt that coming out of the crisis as the strongest and engaging with our customers. Even personally, I've been on the board to also go out to many countries, I've been to Italy, Spain, US, UK, Germany, even the Middle East, and getting out there engaging with our clients early to help them navigate and capture the upswing in trade. I still believe that we are going to see an upswing in trade in 2022 and the beginning of 2023, so I still think there's going to be opportunities. So it's vital that we're there to enhance the opportunity so our clients can capture that upswing in trade. I think our products also changed a lot in the last probably five or six years. Originally people maybe used our product more for bad debt protection and slightly growth, but now I'm seeing a big trend to use our product for finance. So again, we can help them reduce their lending, increase their sales, as well as offer insurance as a service. I see us much more engaged now with our clients.

Well, you see a lot of the market talking about how we can help SMEs and how we can help competitors, but when you actually look at the figures, the world growth has actually been at the multinational segment. Particularly, even when we look at the banks who are coming to fund the business, there's really been growth at the multinational segment. And I think they're trying to address that now with technology; you see a number of new online players coming to the market to try and make credit insurance simpler, more cost effective. But in terms of insurance companies insuring directly, as I said, I think the growth has been really the global clients, multinational clients. And again, I think we need to look back at SMEs and how do we focus on SMEs, how do we get our products across to them simpler, quicker, faster, more cost effective for them, and really working how they work. So much more engaging with them. Often when you're dealing with an SME, you don't have a dedicated credit manager, you don't have a dedicated individual looking after credit insurance. So how do we make sure our product is really quick, easy, and fast for them? And that's what I think we've got to focus on going forward. At the end of the day, SME is the foundation of our economy, so the more we can do for those SMEs, the better.

Yeah, having worked in many regions in the world, I have definitely seen a cultural difference in the way people buy insurance. We see in Asia, some cultures tend to have a very conservative approach and tend to like buying insurance, and maybe that's a cultural aspect. And then you see, I compare Spain which I think has the largest penetration of any market of credit insurance, it's more than five times that of the Americas, and significantly higher than even France and Germany where again credit insurance is a significant player. So I think there's cultural differences, but I also think you need to look at the product and account for that in the product. We know for example in the Americas, the XL non-can is much more preferred product. And I think as credit insurers, we need to adapt our product for the market. Euler Hermes launched a non-can XL offering probably 10 years ago and now we're one of the leaders in that segment, but we had to make an investment in people and look at the way we underwrite in that approach. So it's easy to blame the cultural aspects but we also need to look at our products and see how we can adapt our products for the given market. And again, certain markets have high SME penetration and the SME product maybe is different to a product for mid core large corporations. At Allianz Trade, we're looking at how we can segment our products and give the right product for the right market rather than the same product for all markets.

You know what was pleasing during the last pandemic is the way we as an industry came together to really explain our products to the regulators, to the associations, and really explain what credit insurance is. Maybe that's something we need to focus on. I know for example banking have much more direct dialogue with the regulators and I think we need to have that. There were important links made with a number of trade associations, important links made with governments. Actually, I think the way we came together with governments was really pleasing. So as a product, I think we need to explain it. We've made a big investment in explaining it to banks, we've made a big investment in explaining it to our insurance market, but we also need to look at trade associations, we need to look at governments, and really explain how credit insurance is the oil of industry. It does work and it does pay and we need to keep it going. So I think you know we see now that as we come out of the pandemic, those relationships will be maintained and we need to keep that so that we're in the focus and our product is supported by regulators.

Yeah, well firstly we definitely see more business going into e-commerce now. Particularly, you see a lot of clients who talk about having an omni-channel experience across their business, and then they get to the payment side of it and this is where we tend to get involved, but maybe sometimes they look at it too late. I would urge a customer: if you're looking at moving to omni-channel, when you move to e-commerce, you should start with the payment side of the business and start with the credit side of the business. You're right, we see a lot of entrants in the market in the buy now pay later market or e-commerce market, you see a number of fintechs, some of them are platforms, some of them are brokers, some of them want to be insurers as well. And I think it's slightly different risk; you really summed it up: it's not just credit risk, the real risk is the KYC, the ID fraud risk. And I always see it as bringing all those together at the checkout. Certainly Euler Hermes is a driver in this field, we have a transformation team who are working with key partners who are going to lead in this field, and we're looking at how we can put our services there, whether that be helping with the KYC, helping with insurance collections, bringing together all the tools that need to really go at the checkout to make it work. It's a fascinating area of our business and it's one of our pillars: how do we help customers move to the digital trade? I see different demands, I think you'll have different demands from platforms. Also customers will come to us and say we want to, we're a large player, we may go to a platform but at the same time we may create our own platform, and can you with your partners and your customers bring your services to that platform? So yeah, I'm excited about this development, I see it being a big area where Euler Hermes will lead. Certainly today I see its market leader in pushing our services to at checkout: that's what I like to think of it, all the services out to checkout.

Yeah, look, firstly a lot of our clients deal with us online and we give a lot of instant credit out, so we have a lot of the building blocks there. I was saying to someone the other day: we are going to be pulled into this space because our clients are in that space and they're pulling us in because we have those services. But as I said, it's about bringing it all together at the checkout. Whether that be with a partner, a platform, or as I said even with a large client saying I'm looking at an omni-channel experience, how do I deal with the B2B payout? There must be an alternative to the credit card, which I think is something that's evolved, or the trade credit card. What is the alternative? And as Allianz Trade, they should come to us first. We have a dedicated team looking at solutions, and hopefully watch this space, we'll share some with you in the near future.

Yep, we'll have fun doing your thing. And thank you for your support, and I look forward to seeing you soon.

Looking forward to going back to London. It's good to be back out in the market now. I do think one thing we've missed is the personal interaction. We talk about online, but that personal interaction is a must in our business. Absolutely, I can't wait to see everyone in London.