AM Best has affirmed the financial strength rating of A+ (Superior) and the long-term issuer credit ratings of “aa” (Superior) of Allianz SE (Germany) and 22 of its rated subsidiaries, including Allianz Risk Transfer (Bermuda) Limited.

The rating actions follow the announcement on May 17 that Allianz Global Investors US LLC, a subsidiary of Allianz SE, has entered into settlements with the US Department of Justice and the Securities and Exchange Commission relating to criminal securities fraud.

AM Best said the settlement agreements highlighted deficiencies in the effectiveness of internal control measures and governance within AGI US.

As a result, AM Best has revised Allianz SE’s enterprise risk management (ERM) assessment to appropriate from the previous assessment of very strong.

AM Best expects the group to undertake decisive measures to address the identified shortcomings in its ERM framework.

AM Best said the settlement agreements with the DOJ and SEC, which were expected to result in total payments of approximately $6 billion, resolved uncertainty regarding the financial impact of this matter on the group.

Allianz SE had provisioned EUR 3.7 billion at the end of 2021 and EUR 1.9 billion at the end of the first quarter 2022, the agency said.

The group’s strong earnings have allowed it to absorb the financial impact of the settlements. AM Best expects the group to continue to benefit from strong earnings from its diverse operations, including its asset management units.

The outlook of these credit ratings is stable.

The ratings reflect Allianz SE’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, very favourable business profile and appropriate ERM.