Home / Corporate / APRA imposes $250 million condition on Allianz
19 August 2019
Allianz has to keep an extra $250 million in capital requirement until the business has finished the remediation work to improve its risk oversight and addressed lapses uncovered in a self-assessment test, the Australian Prudential Regulation Authority (APRA) says.
The prudential adjustment applies to the insurer’s prescribed capital amount and will take effect on September 1, an Allianz spokesman told insuranceNEWS.com.au.
He says the insurer has a “comprehensive program of work arising out of the [self-assessment test] and we will continue to work with APRA in relation to this”.
APRA statistics show Allianz had a prescribed capital amount of about $1.4 billion last year.
“By imposing this additional capital requirement, APRA is providing a financial incentive for Allianz to quickly and effectively implement its planned remediation work,” Executive Board Member Geoff Summerhayes said.
He says APRA also wants “to send a message to the broader insurance and superannuation industries that APRA expects the same high standards of risk management, including for non-financial risks, as we do for the banks”.
Allianz is the first insurer and fifth financial institution in Australia that APRA has imposed additional capital obligation on over increased operational risk concerns.
APRA had ordered the self-assessment tests on 36 financial services providers, including nine general insurers, to determine if they had governance issues similar to those that were uncovered by its prudential inquiry into the Commonwealth Bank of Australia (CBA).
Last month APRA imposed an additional $500 million capital requirement on three banks – ANZ, NAB and Westpac. In May last year, the regulator applied a $1 billion capital adjustment to CBA following its prudential inquiry.