Allianz German Unit Asset Risk on the Rise, Moody’s Says

Allianz SE (ALV), Europe’s biggest insurer, faces increasing investment risk to maintain earnings at its German unit, Moody’s Investors Service said.

“The high level of guarantees on liabilities, and more generally the intense competition prevailing in the German life market around rates credited to policyholders, places pressure on Allianz Deutschland to increase investment yield, and, therefore, to increase the asset risk,” the ratings firm said in a report dated Feb. 19.

To reduce costs tied to guaranteed returns, Munich-based Allianz is among German insurers that have introduced new life insurance products. That may help the company reverse a trend, which saw its German unit contribute less than 25 percent of group profit between 2009 and 2013 compared with as much as 30 percent in prior years, Moody’s said.

Compared with competitors, Axa SA (CS) in France and Aviva Plc (AV/) in the U.K., which “extract high profits from their domestic markets in spite of lower market shares,” Allianz’s “pricing power appears to be limited by high levels of competition and price wars,” the ratings firm said.

Allianz is scheduled to report full-year and fourth quarter earnings on Feb. 27.

To contact the reporter on this story: Oliver Suess in Munich at

To contact the editor responsible for this story: Frank Connelly at

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