Profile of a chief executive:
Friedrich Caspers, R+V
This article by Andrew Bibby, in a slightly different form, was first published by ICMIF (International Cooperative & Mutual Insurance Federation) in Voice magazine, 2008
Wiebaden, the German city on the Rhine where insurer R + V has its headquarters, is a healthy sort of place. Its thermal springs and baths have been popular for centuries, and were certainly known to the Romans. From the fourteenth century onwards Wiesbaden 's spas began to pull in increasing numbers of visitors, including in more recent times some illustrious names. Goethe came here to take the waters, as did Dostoevsky, Brahms, and Wagner.
Wiesbaden seems to be a healthy place too for R + V, judging from its recent performance. The insurer is part of the financial services network of cooperative banks in the Volksbank and Raiffeisenbank movements in Germany, and – helped by direct links with these banks – it has managed to increase its turnover and profits in recent years, despite the very sluggish state of the general insurance market in Germany .
This is a performance which clearly delights Dr Friedrich Caspers, who has headed R + V since May 2006. In his first year at the helm he was able to announce a 10% growth in business, with gross premium income for the R + V consolidated group climbing to EUR 8.9 billion (USD 12.7 bn). Last year, the story was once again a positive one: gross premium income rose to almost EUR 9.3 billion (USD 13.3 bn), the number of policies written increased to over eighteen million, and profit went up by 15% to EUR 460 million (USD 660m). Friedrich Caspers talks of future expansion, with a possible new 500 sales jobs to be created to add to the 10,300 employees currently with the insurer.
He is clear about the reason for R + V's success. “It is our close cooperation with the cooperative banks,” he says. “Our marketing activities are primarily orientated towards our bank partners' customers. The banks also use R + V for their marketing activities, as a bank customer is also a potential customer for R + V.”
R + V was an offspring of Germany's strong cooperative banking network, tracing its roots back to the decision taken in Berlin in 1922 by the Raiffeisen movement to establish its own general insurer and life insurance companies. Today, R + V remains part of the broad cooperative network: 74% of its share capital is held by DZ Bank, the cooperative commercial bank which acts as central banker for around a thousand separate cooperative banks in Germany (DZ Bank is Germany's fifth largest bank). A further 16% of the shares are held by another cooperative central bank, WGZ Bank, which acts as central bank for the individual Volksbank and Raiffeisenbank institutions in the region of Rheinland and Westfalen. Individual banks themselves hold the majority of the remaining shares.
“The fact that R + V is owned by the cooperative network makes things a lot easier: we pursue the same objectives as our banking partners,” Friedrich Caspers says. It is, he adds, not simply a matter of product distribution. “We cooperate with the banks across the whole value-added chain. R + V aligns all our work systems to their particular requirements.”
R + V offers the full range of insurance products. “We cover all of our customers' personal and property insurance needs, from term life insurance and health insurance to buildings cover,” he says. Products are available for both individuals and for companies, with the latter able to use R + V to insure against business and credit risks as well as to arrange their occupational pension schemes. Caspers sees particular scope in the pensions market: “Private and occupational pension schemes offer a significant growth potential in my opinion. Due to the demographics in Germany, the current high level of the federal pension insurance will no longer be affordable in the long run. An increasing number of people will have to make provision for their own private pension schemes,” he predicts.
R + V also runs a reinsurance operation. “Our reinsurance business is our third main pillar. Though we are among the smaller reinsurers compared with the market leaders, our reinsurance business has developed successfully, and provides substantial growth potential,” Friedrich Caspers says. Reinsurance income grew by about 15% in 2007, and now contributes over half a billion euros (USD 720m) towards R + V's total gross income.
Dr Caspers comes originally from the Rhineland. He had a distinguished university career, studying business administration at university in Münster and gaining his PhD in 1982. Thereafter he worked as a business consultant with the international management consultancy company McKinsey and Company before moving to the German insurance giant Allianz in 1987. He remained with Allianz until the end of 2005, working first in Munich and then in Cologne, where he was head of Allianz's operations for the key German state of Nordrhein-Westfalen. In January 2006, however, he made the switch across to the cooperative insurance world, initially joining as a director of R + V and then – in May the same year – taking over as CEO on the retirement of Dr Jürgen Förterer.
He is convinced that change is a necessary feature of life for any insurer. “The market requires continuous improvement, quality and innovations,” he says. He argues that R + V must remain focused on its financial success, and one change he has overseen to help achieve this has been the recent implementation of a new performance-related pay system for R + V's non-executive employees. “Employees achieving good results for the company should be offered a corresponding financial benefit,” he says.
There is also the need to ensure that the products which R + V offers remain relevant to customers' needs. Here R + V's links with the cooperative banks clearly help enormously, with the banks participating directly in the development of new product lines. The banks provide much the most important distribution channel for R + V's products: indeed, Dr Caspers says that 90% of his company's life business is generated directly through the banks. R + V employs 4,500 agents, almost half its total workforce, to service this sales route. However, R + V does reach customers in other ways: it operates a network of around 500 general agents, exclusively tied to R + V, and also works with insurance brokers, who bring in around 10% of premium income.
In August this year, R + V established a new distribution channel, R+V24, selling motor insurance direct to customers over the internet. “We want to win new customers who have a strong affinity with the internet, and also to stop customers from moving to other direct insurers because of a lack of offers from R + V. I'm convinced that the internet will become an increasingly common procurement channel for insurance for young people, so we clearly need to get prepared for the future. However, we have started R+V24 carefully and not with an enormous budget,” Friedrich Caspers says. Only car insurance is being offered on-line.
Inevitably, planning for the future means taking account of the seismic shocks which have seized the US and European banking sector in recent months, though Dr Caspers says that R + V is well placed to ride out the storms. “The tense situation in the global financial markets has got worse with the insolvency of Lehman Brothers and with AIG the crisis for the first time has hit one of the world's biggest insurance companies. R + V aligns its capital investments according to the investment principles of safety and profitability, with a reasonable mixture and distribution of investments. It does not invest in securities carrying significant risk,” he says.
Wiesbaden may be an agreeable German city to work in, but Friedrich Caspers also enjoys the times when he gets to take a break from the pressures of the work. Now in his mid-fifties, he regularly trains to keep fit, and he says that downhill skiing is another of his passions. Travel is important, too: married with two children, he and his family enjoy their holidays, especially those which take them to far-away and less well-known destinations.
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