People

Against Acronyms: Allianz Life’s CFO

Gabrielle Matzdorff's ability to unspool tangled actuarial lingo has enabled her to pull herself up the corporate ladder at the insurer.
James RubinJuly 20, 2006

When the demanding executives at German financial services giant Allianz AG sit down with the senior managers of their U.S. subsidiary, Allianz Life Insurance Company of North America, they pepper CFO Gabrielle Matzdorff with questions about mortality and actuarial data. Undaunted, the 41-year-old Matzdorff has won hard-earned credibility for her clear, plain-spoken answers.

Bethany Hetland, Allianz Life’s vice president of audit and investigations says that Matzdorff is able to coolly analyze their company’s performance and projections for upcoming quarters for the parent firm’s CFO, Helmut Perlet, and Jan Carendi, the chairman of Allianz of America. “Every meeting, Germany may question the validity of her numbers, but she gets them to understand them,” says Hetland. “She exudes authority.”

Minneapolis-based Allianz Life is a fast-growing division of Allianz AG, which is headquartered in Germany. The life insurer’s chief executive officer, Mark Zesbaugh, has boosted sales and expanded the company through acquisitions, most recently buying the insurance brokerage firm Questar Capital in 2005.

The CFO job in the life insurance industry is particularly complex. Insurance policies and annuities can run over many years, so insurers must be forward-looking. To introduce a product and price it, they must make assumptions about future interest rates, mortality trends, and other factors. But because experience shifts yearly, the companies must regularly change their assumptions.

Thus, the finance chief must master actuarial data to help price products and assemble the company’s balance sheet. “You’re dealing with products that have a 30-year lifetime,” says Bob MacDonald, the chairman of Allianz Life. “Over that time, you have a lot of moving pieces. That’s what makes the job of the CFO challenging.”

For example, in her meetings with Perlet and Carendi, Matzdorff must explain the effect of underlying equity markets on Allianz Life’s products and therefore its future results. A decline in those markets can reduce Allianz returns substantially. Matzdorff says she must show how the price of products can “withstand” a downward trend. “’There are no surprises’ is a key phrase,” she says. “It’s all about providing context and transparency.”

Allianz Life has been among the parent company’s fastest-growing units. It has more than tripled total gross written premiums – a key measure of insurance industry success – from $4 billion to about $14 billion since 2000, the year after it merged with Minneapolis-based LifeUSA. Revenues have risen from $1.6 billion to $2.3 billion over this period. MacDonald says Allianz Life could not have maintained its strong growth without Matzdorff’s careful methods.

MacDonald, who was Allianz Life’s former CEO, says her crisp explanations to parent-company bosses have helped the company earn its yearly capital allocation. “She’s shown that the accounting is in place, the risk management is in place,” he adds.

In 2004, Matzdorff oversaw the launch of a new software system that has enabled Allianz Life to consolidate its actuarial data in one place. The system has helped her department’s staff spend more time analyzing data and fewer hours gathering and auditing it. Following the installation of the software, the company cut three positions from its actuarial department and reassigned other people to more analytical roles.

While the finance chief is gaining exposure that’s preparing her for more responsibility, she says she’s satisfied to remain CFO. Currently, she is attending what the firm calls “strategic dialogue” meetings with Perlet, Carendi, board members, and Allianz AG CEO Michael Diekmann.

At its latest meeting, the group decided to expand its business in New York. “We found that the New York office was underused,” Matzdorff says. The more visible role has led to other opportunities. She is, for instance part of a global Allianz AG team of 18 executives examining long-term strategies for improving the company and its stock price.

In her previous roles at the company, however, she had little contact with senior managers and wasn’t involved in such discussions. Her first big opportunity came in 1999. After assuming the top job at Allianz Life, MacDonald tapped the then 34-year-old Zesbaugh to be CFO. Matzdorff, also 34 at the time, was the surprise choice for controller, given that she had less experience than more seasoned executives who were available. She had, after all, been the low-profile director of Allianz Life’s mergers & acquisitions department.

As controller, Matzdorff impressed Zesbaugh with her ability to get managers from Allianz Life and LifeUSA to work together on consolidating the company’s financial operations despite different cultures and systems. MacDonald says that Allianz Life used to be more formally structured. Matzdorff decided to have accounting teams from both companies work in one location, although it meant uprooting Allianz Life employees. “It was important to sit with the people I was working with,” Matzdorff says.

In 2002, when MacDonald retired and Zesbaugh became CEO, Matzdorff was the logical selection for CFO. “Coming from the role of CFO,” I had a good vision of the skills and competencies” needed for the job, Zesbaugh says. MacDonald says Matzdorff possesses a solid understanding of how actuaries generate their numbers and “feed into the financial department.” “It’s arcane knowledge, very obtuse, but she’s comfortable dealing with Allianz’s chief actuary,” he adds.

She also had a knack for clarifying confusing insurance vernacular. Matzdorff avoids acronyms, sticking to a few themes whether addressing shareholders or other executives: what were the actuarial assumptions for pricing a product, how did conditions change, and what were the end results. “There is an acronym for everything in our business,” Matzdorff says. “If you overuse them, you lose 90 percent of your audience.”