Allianz sets out plan to generate €12bn of excess capital

Europe's biggest insurer Allianz has set out a series of measures intended to generate €12 billion of excess capital as it seeks to reverse a fall in its share price after a profit warning in August.

It also unveiled a deal with insurance consolidator Resolution Life and affiliates of investment group Sixth Street to reinsure $35 billion of liabilities relating to US annuities.

The company said the deal would separately free up $4 billion of capital from these older policies and improve its solvency ratio, a measure of how much capital an insurer has against the regulatory minimum.

Its share price rose 1 per cent to €200 on Friday morning, taking its fall over the past six months to 8 per cent.

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Allianz announced tougher profit targets for the next three years, including earnings-per-share growth of between 5 and 7 per cent, to deliver the €12 billion.

In addition it will offer a dividend payout of either a 5 per cent increase from the previous year or 50 per cent of net income, now adjusted for “extraordinary and volatile items”. The minimum solvency requirement for the payout has been lowered.

However, Allianz has yet to put a number on the anticipated financial impact from its legal and regulatory exposure around its so-called Structured Alpha funds in the US. The insurer is facing lawsuits from investors and regulatory probes over the performance of these funds during last year’s pandemic-related market ructions. – Copyright The Financial Times Limited 2021