A shareholder of Europe's biggest insurer Allianz SE arrives for the company's annual meeting in Munich, Germany, in this May 6, 2015 file photo

Allianz is to launch a joint venture with the Chinese search engine group Baidu and the investment group Hillhouse Capital in an attempt to set up an online insurer in China.

The joint venture will apply for a licence to sell insurance online throughout the country, and will target both individual customers and small and medium-sized businesses.

The trio behind the joint venture intend to offer a range of products including travel, health and internet finance insurance, according to people familiar with the situation.

The decades-long expansion of China’s middle class has led to rapid growth in demand for insurance products, as people have built up assets worth insuring and increasingly have the means to do so.

Allianz’s business in China only makes up a small share of its €122bn in overall annual revenues, but the German insurer is hoping to tap into the rapid expansion of the local market, where premiums are expected to quadruple over the next five years.

At an investor day on Tuesday at its headquarters in Munich, Allianz also unveiled a range of measures that should boost its earnings per share by an average of 5 per cent a year over the next three years.

In addition to finding €1bn a year in savings, which will be reinvested in technology and staff, Allianz also plans to reallocate capital from underperforming businesses to more promising fields of activity.

The plan is designed to ensure that Allianz achieves an adjusted return on equity of 13 per cent by 2018. Allianz also hopes to boost revenues by €6.5bn.

Allianz also said that it would no longer invest in companies that derive more than 30 per cent of revenue from coal mining or generate over 30 per cent of their energy from coal, in order to help combat global warming. The company has roughly €4bn of such investments, most of which are bonds.

The joint venture with Baidu is one of the first big moves by Oliver Bäte, the former McKinsey consultant who succeeded Michael Diekmann as the head of Germany’s largest insurance group in May.

It highlights the pressures that insurers are under to adapt their business models to the changing habits of customers, who are increasingly purchasing insurance online, rather than through traditional channels such as insurance brokers and banks.

Allianz plans to offer almost all its individual insurance policies online by 2018, and also plans to scale up its collaboration with fintech groups in an attempt to keep abreast of new ideas.

Mr Bäte said earlier this week that the move online was having a “big impact” on insurers, and argued it was important to make Allianz more focused on customers’ changing demands in response.

“If you look at innovative business models like the taxi service Uber or the flat-sharing site Airbnb, the technology behind it can be quickly downloaded from every app store,” he told the Süddeutsche Zeitung.

“What is new is that new services are being developed for customers that are simply better than what currently exists.”

Shares in Allianz closed down 0.9 per cent at €161.75 in Frankfurt.

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