top of page
  • Writer's pictureIshfaaq Peerally

How ALLIANZ Makes MONEY?


The most important news of the day is the finalized deal between $IBM and $RHT . $RHT is not currently being traded on the NYSE. The shares are going to be converted into cash soon. As you know, I've been trading Red Hat as part of my workouts over the last weeks. I still hold some shares and they will be liquidated soon by eToro.

Now, let's talk about Allianz. Allianz $ALV.DE is the largest insurance company in the world but it is actually more than just insurance. Before I tell you how Allianz makes money, it is important for you to understand how financial institution operates in the Anglosphere and in countries such as Germany or Japan. In the UK and the US, financial companies are more focused on the debts. If you want to start a business, you go to a bank, they will lend you money. In Japan and in Germany, banks tend to invest more in equities. That's why you have financial conglomerates such as Mitsubishi and Allianz. Mitsubishi is more than just a bank and Allianz is more than just an insurance company. In the US, financial institutions don't usually own any equity and hence do not transform into conglomerates. The exception is Berkshire Hathaway $BRK.B but it never actually started as a bank or insurance either.

Now, let's talk about Allianz, it became the largest insurance company after the fall of AIG $AIG during the 2008 financial crisis. The company is headquartered in Germany but has operations all around the world.

Allianz currently has 3 main business segments: 1. Property/Casualty insurance which is 41% of their total revenue. 2. Life and Health insurance which is 53% of total revenues. 3. Assets Management which is 5% of total revenues. Allianz is actually the largest asset manager outside the US with more than €1.9 Trillions as AUM.

But what really interests us are the investments of Allianz. Insurance companies usually make money not only from premiums but also from their own investments which Warren Buffett calls float. Warren Buffett used the float of Berkshire Hathaway insurance and reinsurance businesses to invest in multiple companies such as Apple $AAPL and Coca-Cola $KO . But as far as Allianz is concerned, they currently have an investment portfolio of €672 billions which is diversified between government bonds, corporate bonds and equities. Some of the equity investments they have include parts of Munich Re $MUV2.DE and Commerzbank $CBK.DE .

To conclude, we can say that Allianz is the closest thing to Berkshire Hathaway in Europe and it is currently at a good price. If it was an American company, I'm sure the market cap would have been well over $200 billions, that is, about twice as much as it is right now.

What do you think of Allianz?

Watch the full video on YouTube and Subscribe for one new video every day: https://www.youtube.com/watch?v=XM_kCFnyUHw&list=UUPO3uUyoXSaFWG-Ldq1mqEQ

Join my private investing group on Facebook for more: https://facebook.com/groups/IshfaaqInvesting/

8 views0 comments
bottom of page