The worldÆs second largest insurer has run afoul of derivatives rules in Taiwan. Allianz Life, the Taiwan subsidiary of GermanyÆs Allianz Group, has received a slap on the wrist from the Financial Supervisory Commission and fined NT$900,000 ($27,041) for selling investment-linked policies tied to long-duration structured credit.

In the aftermath of Lehman BrothersÆ collapse and the subsequent nationalisation of AIG in September, Allianz assured its Taiwanese policyholders that none of the structured credit product sold through investment-linked policies was related to Lehman Brothers, AIG or Merrill Lynch.

However, in a FSC review of all investment holdings of the local insurance industry, the commission discovered that Allianz sold structured credit with maturity of over 10 years to policyholders through investment-linked products.

The sales are forbidden by Article 146 of the islandÆs insurance law as well as article 10 of its rules related to derivative trading by insurance companies.

Separately, Bruce Bowers, CEO of Allianz Asia Pacific, maintains that the firm is confident about opportunities for its insurance operations in the region.

ôThere is no reason to be gloomy. I remain positive for our business in 2009,ö he says. ôMacroeconomic development across the region appears to be relatively robust, and we can leverage on this. We have invested extensively in distribution in Asia and anticipate this to provide uplift for the region.ö

Bowers acknowledges the financial crisis and contraction in capital markets have affected life insurance sales. But he maintains a rosy picture for the groupÆs regional business.

"These times offer opportunities. People look for a safe haven. The financial strength and the strong solvency of Allianz provide our customers with peace of mind, and we expect our business to benefit from this," he says. "Our customer base in Asia will continue to expand in 2009."

He notes Allianz has significantly scaled up its agency sales force and ties to bancassurrance operations in Asia recently. Allianz has increased in number of agents in China by 50% to 15,000 this year and the groupÆs Asia-Pacific customers now total 21 million. One in four Allianz customers reside in Asia.