Allianz boss Bäte: "Competence, integrity and stability"
Photo: Sven Hoppe / dpa
At the end of 2019, the »Handelsblatt« voted insurance manager Oliver Bäte as Manager of the Year. He not only delivered record profits, but also managed to turn the alliance upside down to digital and at the same time to preserve the core brand of the group - »Competence, Integrity and Stability«, it said in the laudatory speech. For Bäte, competence means only offering products and services that the company is really familiar with. For him, integrity means maintaining a balance between shareholder and customer interests. And stability is the foundation for customer trust.
Now one does not have to give too much to the praise of such awards.
Every supposed top manager makes mistakes, and prices are usually a very reliable counter-indicator.
Just think of all the Bankers of the Year who stumbled into some kind of scandal soon after being honored.
But the way in which Bäte has betrayed the so-called identity of the Alliance (competence, integrity, stability) over the past year and a half is remarkable.
The corona pandemic has disenchanted the success manager.
The current scandal - which would have been more of a scandal if it hadn't happened to Bäte of all people - is quickly told: Allianz, one of the largest asset managers in the world, has set up hedge funds that investors in the USA use in the wake of the turmoil on the stock exchanges Lost a lot of money at the beginning of the pandemic.
As a result, the first investors filed a lawsuit against Allianz last summer that they had deceived customers about the true nature of the funds.
lost trust
Of course, this is just as common a game as it is hypocritical: of all people, professional investors - and these were mainly the so-called "Structured Alpha Funds" of Allianz - are quick to complain if one of their bets goes wrong.
Anyone who is hungry for an excess return of ten percent, as Allianz promised, must be aware of the high risk.
But the case is obviously not that simple here.
The group is said to have deviated from its own investment rules set out in the fund statutes.
The allegations are to be taken seriously, now the US Department of Justice (DoJ) is investigating in addition to the American stock exchange regulator.
Allianz rejects the allegations, the outcome of the legal disputes is open.
It is already clear, however, that the alliance with Bäte at the top made mistakes.
Bäte has proclaimed the motto “simplicity first” for the alliance.
This is his way of translating Principle 1 of the brand essence ("competence") into one of his beloved Anglicisms.
The disputed funds are anything but simple, and the Allianz people may not have understood the product they were selling properly.
Certainly, however, the Allianz leadership around Bäte underestimated the problem.
Therefore, now that claims for damages are said to have accumulated over six billion dollars and a penalty by the DoJ cannot be ruled out, she had to issue a profit warning.
The share price plummeted, Brand Principle 3 (»Stability«) is in danger, and Bäte has lost the confidence of investors for the time being.
What weighs most heavily, however, is that Bäte and Allianz have raised doubts about their "integrity" (Brand Principle 2).
In the hedge fund affair, the impression arises as if the group wanted to downplay the matter in order to preserve the image of a group vis-à-vis the stock exchange that is able to navigate the corona pandemic robustly and without problems.
In doing so, Bäte has put the interests of the shareholders above that of the customers.
Because the tactic did not work, the alliance ultimately harmed its shareholders.
Bäte let the restaurateurs hang
The matter is made worse by the fact that it is already Bäte's second mistake in the corona pandemic. The first concerns the insurance business - and thus the very core of Allianz. When hundreds of thousands of restaurateurs had to close their businesses in the first lockdown after the outbreak of the epidemic, Allianz abandoned customers who believed they had taken out business closure insurance to protect themselves against such a catastrophe.
Under the leadership of Bätes, the insurance company negotiated a so-called "Bavarian solution" with the Bavarian Minister for Economic Affairs, Hubert Aiwanger. Insurers who joined the model did not recognize the claims of their customers, but "voluntarily" paid 15 percent of the damage. Around 70 percent of the failures have already been compensated for by state benefits such as bridging aid and short-time work benefits. The latter, however, flows to employees and not to companies.
Allianz then rolled out the model nationwide, thereby limiting its damage in the pandemic - to the detriment of customers. In fact, the claims of some insured persons may be legally controversial, courts have now passed very different judgments. Alone: This shows that it was first and foremost a failure of the insurer to sell products with sloppily formulated terms and conditions (“competence”). Allianz's approach was all the more shabby when, in an interview with SPIEGEL, shortly before the Bavarian solution, Bäte had given the motto to pay in cases of doubt ("integrity").
In the dispute over the business closure insurance, Bäte put the interests of the shareholders above those of the customers.
The Manager of the Year 2019, like many other CEOs nowadays, likes to talk about the stakeholder culture, a company management that takes into account not only the concerns of the shareholders, but also those of the customers, employees and society as a whole.
And how easy can it all seem to be brought under one roof, since even the largest investors in the world today demand "ESG" from companies, consideration for the environment, social issues and good corporate governance ( »Governance«).
How serious managers mean it is not evident in good weather phases such as before the pandemic, but in crisis situations.
Bäte did not pass the first endurance test.