APRA Removes Remaining $150 Million Capital Overlay Applied to Allianz

The Australian Prudential Regulation Authority (APRA) has removed the remaining $150 million capital overlay applied to Allianz Australia Limited (Allianz) to address risk governance weaknesses.

APRA initially imposed an additional capital requirement of $250 million on Allianz in 2019 in response to issues raised in a risk governance self-assessment that APRA asked Allianz to undertake following 2017's Prudential Inquiry into Commonwealth Bank of Australia (CBA).

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The capital penalty was to remain in place until the insurer completed remediation work to strengthen risk management and close gaps identified in its self-assessment, and was lowered to $150 million in December 2020 in recognition of Allianz's progress in addressing these issues.

APRA accepted a court enforceable undertaking (CEU) from the insurer in March 2021. Under the CEU, Allianz acknowledged its past weaknesses and committed to rectify them through a series of transformation programs related to risk maturity, compliance, conduct and culture.

Satisfied that Allianz has now completed the transformation programs in accordance with the commitments and timeframes set out in the CEU, APRA removed the remaining additional capital requirement effective 12 July 2022.  

APRA Deputy Chair Helen Rowell said:"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."

"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,"Mrs Rowell said.