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Staff writer

While deregulation of Japan’s financial markets is a welcome step, foreign firms hoping to capture a meaningful share of the market need to continue efforts to make themselves known here, according to the head of Allianz Fire and Marine Insurance Japan.

Christian Lutz, president of the firm, said in a recent interview that in many ways the financial liberalization now taking place was similar to the opening of the German insurance market in 1994.

Through the experience gained during that period, he said he believes that only those foreign companies ready to invest in the market by forming a corporation or by buying shares in a local company would be able to secure a major market share.

Lutz stressed that Allianz now firmly has its focus on the Asia-Pacific region, especially Japan, now that most of its acquisition activities in Europe and the United States have essentially been concluded.

“The more you want to penetrate a market, the wider you have to spread your organization,” he said, adding that in Japan, Allianz will first serve existing customers with its current operations and then gradually increase business until it finds a suitable partner or comes to the conclusion to set up its own network.

But such a scenario greatly depends on such factors as the extent to which domestic firms would be willing to cooperate with a foreign insurer, he said, noting that so far, only the weaker institutions have seemed to welcome any form of financial support.

The firm began business in April 1991, and to date remains the first and only subsidiary of a European nonlife insurer to obtain approval as a legally independent company in Japan.

Prior to that, the Munich-based Allianz had a representative office here, and Lutz said the firm chose to set up a local company rather than a branch office to demonstrate it had a long-term commitment to the Japanese market.

“We knew it could take some time to achieve that target, because in a regulated market in which all local companies are bigger, it is nearly impossible to achieve a market share which has some substantial size.”

“But for us, it was important to come here, to be here and watch developments in the market and be able to act when the times changed,” he said.

Although Allianz’s Japanese unit began selling private insurance policies in 1993, its core business is still industrial underwriting and the provision of coverage to its international clients’ Japan branches.

Premiums written by the Japanese subsidiary in calendar 1996, the most recent figures available, totaled about 44 million German marks, a figure that currently translates into 3.26 billion yen.

Because the firm’s strength lies in its business with the corporate sector, however, it faces the daunting “keiretsu” network of Japanese company ties under which firms maintain old relationships when doing business.

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