Allianz X raises the ante in digital investment

Allianz X announced on February 20th, 2019 the receipt of €570 million in additional funding from parent company Allianz SE. Now with a funding pool topping €1 billion, Allianz X takes its place amongst Europe’s biggest corporate digital investment firms.

Iván de la Sota, Chief Business Transformation Officer of Allianz SE avidly revealed that “we are very pleased with the progress Allianz X has made thus far and are committed to further invest and develop the next generation of digital growth companies related to Allianz’s core business”.

Any poker player will take notice if an opponent more than doubles the bet. Is Allianz bluffing or is their hand really that good?

Allianz X’s fund currently features 15 direct investments. These range from abracar in Europe, an online used car dealer, offering risk free vehicle sales to The Drone Racing League, the world’s only professional drone racing circuit, based in the US but with competitions worldwide.

The technology on show reads like a wish list for FinTech Santa Claus. From InsureTech innovator Lemonade’s artificial intelligent bot Maya, to nauto’s artificial intelligence-powered automotive technology and 1Qbit’s harnessing of quantum computing hardware, many of the Allianz X investments can be considered to be bleeding on the cutting edge.

The only Asia-Pacific direct investment is Go-Jek, an Indonesian on-demand provider of transport and other lifestyle services. While across Africa, BIMA serves over 30 million customers with insurance products via mobile technology, many of whom had never had access to insurance before.

Our digitalisation approach is multifaceted; Allianz X is a valuable addition — not only in meeting the changing expectations of our customers.” –  Iván de la Sota, Chief Business Transformation Officer of Allianz SE

This all appears, at first glance, to be quite an eclectic mix of markets, services and technologies. But what do drones, on demand services, quantum computing, AI bots and frontier markets have in common?

If Allianz X were an entirely standalone entity, this smörgåsbord of randomly shuffled investments would make little coherent sense. In addition, many of the start-ups on their investment portfolio will not return a profit for several years, if ever, so it is entirely reasonable to question the return on investment rationale.

However, viewed from the perspective of a business the size of Allianz, this pack of wildcards makes perfect sense. Allianz X allows the insurance behemoth to obtain access to the vital emergent technologies its various business entities need to grow and survive in an increasingly divergent world. Because the drivers for each acquisition are different, this leads to an overall impression of discombobulation for the portfolio as a whole.

This is no secret, as Dr. Nazim Cetin, CEO of Allianz X explains, “since shifting our strategy, we have built a great portfolio in which many companies have already developed successful partnerships with Allianz’s business units”.

We can see this in the strategic partnerships struck between members of the Allianz X investment portfolio and relevant Allianz SE entities. BIMA customers may now purchase digital insurance products issued by Allianz Guana, directly from the BIMA platform. Allianz Indonesia have teamed up with Go-Jek to offer Allianz policies. Another Allianz X investment, C2FO, the world’s first working capital marketplace, have released a new credit insurance product in cooperation with Euler Hermes, in which Allianz France have a controlling stake.

“We are very excited about raising our investment budget to €1 billion and will use the funds entrusted to us to both strengthen our portfolio and build strong, global platforms that create new businesses for Allianz.” – Dr. Nazim Cetin, CEO of Allianz X

Investing in new companies which provide value to the entire group or substantive parts of it, is a smart way to garner solutions to meet the challenges of our increasingly techno-centric marketplaces. (Read our white paper here about disruptors in insurance) This ‘hothouse’ approach also allows Allianz to easily divest and move swiftly on to the next shiny thing, without having to fold or reorganise internal business units.

While €1 billion is a sizeable amount of money, developing such a diverse range of technologies and solutions in-house would likely have cost much, much more. There is also a tacit recognition that large financial institutions are not necessarily the best incubators or accelerators of innovation.

Customers, of course, don’t notice this, nor should they need to, so long as the products it produces services their needs.

Despite a full house of a €1 billion digital investment fund, there is no indication that Allianz X will stop there. Allianz SE’s operating income exceeds €11 billion annually, so there is plenty of further funds which could be made available in the future.

As poker hands go, that’s pretty hard to beat.

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