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APRA removes additional capital requirement on global insurer

The prudential regulator has confirmed the move.

APRA has announced it has removed the remaining $150 million capital overlay it applied to Allianz Australia in 2019.

The prudential regulator initially imposed an additional capital requirement of $250 million on the global insurer in 2019 to address risk governance weaknesses following a 2017 inquiry.

The penalty was to remain in place until Allianz completed remediation work to strengthen its risk management and address the issues raised by APRA’s inquiry. However, that was lowered to $150 million in December 2020.

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Under a court enforceable undertaking (CEU) in March 2021, Allianz committed to rectify the issues that related to “to risk maturity, compliance, conduct and culture”.

On Thursday (14 July), APRA said it is “satisfied” that Allianz has completed transformation programs put in place by the CEU and has removed the additional capital requirement effective 12 July 2022.

“We are pleased to see the significant progress Allianz has made in addressing APRA’s concerns, although we have emphasised that these weaknesses should not have happened and we will not tolerate any recurrence,” APRA deputy chair Helen Rowell said.

“This episode, and similar penalties applied to other institutions over recent years, should send a message to all APRA-regulated entities that we expect continued high standards when it comes to risk culture, risk governance and risk management.”

At the time of the CEU, APRA said Allianz had undertaken to provide it with "greater assurance that these programs are complete and operationally effective" by assigning a responsible person to be accountable, providing written confirmation from the board that all components had been completed, and appointing independent reviewers to provide updates on the status of the programs.

"Allianz has acknowledged in the CEU that it took a narrow, legalistic view of compliance and had inadequate processes to escalate and address compliance issues. It also recognises that there was a lack of awareness of such matters at board and senior management level,” APRA said.

APRA removes additional capital requirement on global insurer
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Neil Griffiths

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.

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