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Allianz's local office rebrands, reorganizes with new products and global focus

Allianz's local office rebrands, reorganizes with new products and global focus

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A gleaming sculpture of a globe standing outside the Allianz Worldwide Partners office in Henrico County symbolizes what has become an increasingly global market for the company’s local operations.

With an improving travel economy helping to propel its sales growth, the company — best known in the U.S. as a provider of travel insurance — has made some branding and organizational changes and is rolling out new products.

“More and more, we are going to be moving away from just a domestic focus and more to a global focus,” said Mike Nelson, who has served as CEO of Allianz’s Americas operations from its Henrico office for four years.

With the changes, he now has become CEO of the company’s global travel insurance business, which puts him in charge of travel insurance operations in 34 countries.

Several other executives in the local office also are taking on more global responsibilities, and the company is expecting to hire people at a measured pace, Nelson said.

With about 700 employees in the Richmond region, Allianz has about 30 open positions that it is seeking to fill.

“The hiring is mainly due to the growth of our business here” in the U.S., Nelson said. “In the last four years, our revenue is probably up 75 or 80 percent. Our profits have quadrupled, so the business is just larger in terms of revenue and profitability than it was four or five years ago.”

Allianz partners with other businesses, such as airlines, travel agencies and the travel club AAA, to provide travel insurance that can cover everything from lost luggage to the cost of roadside assistance or canceled transportation tickets. As the economy has improved, so has demand for travel insurance, Nelson said.

“The dynamics for travel have been good the last few years,” he said. “Our partners are doing better than they have been in the past.”

The amount that Americans spend on travel protection increased from $1.58 billion in 2008 to $2.2 billion in 2014, according to surveys conducted by the U.S. Travel Insurance Association, a trade group based in Maryland.

About one-fourth of Americans said their travel plans were affected by medical conditions, natural disasters or transportation problems in 2014. Of those, 36 percent had purchased travel insurance to cover some of the loss, up from 22 percent the previous year.

Allianz’s business in the U.S. posted $670 million in revenue in 2015, a 19 percent increase compared with 2014 at a constant exchange rate. Its operating profit grew to $42 million, a 22 percent improvement compared with 2014, primarily on the strength of its travel insurance sales.

“That is 99 percent related to just the performance of the U.S. business unit,” he said.

***

The rebranding for Allianz Global Assistance means the company has adopted a new name — it is now Allianz Worldwide Partners. It also has a new logo.

The changes reflect a consolidation of three business units under a single umbrella. Allianz Worldwide Partners is based in France — its U.S. headquarters is in Henrico — and is part of Allianz AG, based in Germany and one of the world’s largest insurance companies.

The business units that were consolidated under the Allianz Worldwide Partners umbrella are Allianz Global Assistance, which provides travel insurance; Allianz Worldwide Care, which provides international medical assistance; and Allianz Global Automotive, which provides white-label automobile insurance, mostly in Europe.

More than a dozen companies in the U.S. alone offer travel insurance. While reliable market share data are not available, Nelson said Allianz is fairly confident it has become the top provider within the past few years.

The company has always been strong in sales, he said. Since Nelson started leading the Americas business four years ago, it has focused more resources on building its marketing and product development.

Travel insurance may seem fairly simple and limited in scope, but “in terms of the products we offer, many people would be surprised to hear that we sell 300 different products in the marketplace,” he said.

Its clients, such as airlines, may identify up to 30 customer segments, each of whom would need a different type of insurance.

“It could be based on the type of trip they are taking, the destination they are going to, or whether they are traveling with family or not. There are a bunch of different characteristics we look at.”

***

Nelson joined Allianz in 2012 as the top executive for its business in the Americas after a 23-year career.

His previous jobs included working as a financial analyst and manager for food maker The Pillsbury Co.; as controller and director of finance for the check printing company Deluxe Corp.; and in numerous management and executive roles for Orbitz Worldwide, which ran a website for planning and booking travel.

Before his time with Orbitz, “I had been in very traditional industries,” Nelson said. “I wanted to get into the new economy and, as I looked around, travel seemed to be the business that was best set up to succeed online. In retrospect, that seems to have been the right choice.”

Nelson is a native of St. Paul, Minn., with an undergraduate degree in accounting and a master’s degree in business from the University of Minnesota.

At Orbitz, he was a manager and executive for the company through “some good times and some bad times,” he said, including two initial public offerings, the bursting of the internet stock bubble, the attacks of 9/11, the economic downturn of 2008 and the sale of the company.

He held various positions, including managing technology operations, sales, and customer service and call center operations.

“Ironically, at some point, I ran pretty much every part of Orbitz except finance, which is where my original background was,” he said.

***

Since 2012, Allianz has been diversifying its portfolio of insurance offerings.

In June 2015, for instance, the company started offering college tuition insurance, a business that is part of the same unit that manages travel, event, race and conference registration insurance.

The insurance, which covers lost tuition and other fees if a student has to withdraw from school for sickness or other reasons, is not a new category, “but we are the first ones to raise the kind of awareness that needs to be raised for the category,” said Joe Mason, Allianz’s U.S. chief marketing officer, who is leading the company’s push into the tuition insurance business.

“We discovered there is about $500 billion a year spent on tuition, room and board and other fees for higher education,” Mason said. “People insure certain assets, whether it is a home or a car or their life, but when you look at the amount of money that is spent on tuition, people generally are not protecting the investment.”

Allianz is now selling tuition insurance in all 50 states, “which is a big deal,” Mason said, because insurance is regulated at the state level and the company had to get approval to offer it in every state.

The company is offering several types of plans. The most popular plan charges a premium of 1.35 percent of the total amount insured. So coverage for college tuition and fees costing $10,000 would cost $135 and cover 100 percent of the loss for withdrawal from school due to illness or injury and 80 percent of losses due to withdrawal for psychological disorders.

A more expensive plan — costing 6 percent of the total amount covered — also covers 50 percent of losses for withdrawal from school for “unforeseen reasons.”

As with its travel insurance, Allianz works with partners — in this case colleges and universities — to offer the insurance. Allianz has not disclosed specifics of its tuition insurance sales, but Mason said the response so far has been positive.

“We expect that the fall semester that is coming up is going to give us significantly more exposure than last year, when we were just entering the market,” he said.

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The company’s local office is in the Deep Run I building in western Henrico, which had been used for nearly two decades as the corporate headquarters for now-defunct consumer electronics chain Circuit City Stores Inc.

At that office, Allianz has added staff to support the tuition insurance business, including licensed agents, customer service representatives, and technology and marketing staff.

“We have made a significant investment in this,” Mason said. “We think that this is going to be a very common purchase as the years progress, and we are very optimistic on our outlook.”

In addition to tuition insurance, the company also has diversified in recent years into other types of insurance, such as providing coverage for people who buy event tickets for concerts, or public athletic events such as 10K runs.

“When you think about what we do well, it tends to be these low-severity but high-frequency risks,” Nelson said. “We are covering things like concert events and travel that may be anywhere from double-digit dollars, such as concerts or races, to things that are a few thousand dollars or a few tens of thousands, like travel and tuition.”

“That is why the type of company we have to build has to be a different type of company,” he said. “You need to have a price point that a consumer finds attractive because it is discretionary. You have to buy insurance on your house and car, but you don’t have to buy insurance on travel or your concert tickets.”

“So that is why product design, finding the right price point, marketing the right features and offering good service are so important to us,” he said.

“Allianz recognizes there is more we can do here in the United States to diversify,” Nelson said.

At the same time, “I am very bullish on the core business” in travel insurance.

“Even if we do nothing but grow the core business, then we will be successful,” he said.

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