Allianz SE, Europe’s biggest insurer, said it will shrink its administrative branch network in Germany as low interest rates and regulatory demands hurt industry profitability.
About 360 jobs, or about 1 percent of employees in Germany, will be affected, mainly in management and support functions, as Allianz reduces the number of branches to 60 from 88, the company said in a statement on Wednesday. The closings will be completed by January, it said. Allianz’s 8,400 agents in Germany are unaffected, it said.
The move will save about 40 million euros ($45 million) a year, with the money to be used to increase digitalization of its services, Allianz said.
Analysts at the International Monetary Fund, JPMorgan Chase & Co. and Barclays Plc have warned about insurers’ profits as the European Central Bank’s bond-buying program keeps interest rates at historically low levels. Lower rates and new capital rules will force insurers to allocate more cash to units that offer guaranteed returns for investors, JPMorgan said last month. The average guaranteed rate in Germany, where Allianz is the market leader in life insurance, is 3 percent.
Allianz fell 0.6 percent to 138.95 euros at 10:50 a.m. in Frankfurt, declining for the fifth day. The Bloomberg Europe 500 Insurance Index dropped 0.4 percent, also in its fifth day of declines.