Allianz warns over eurozone effect

“We expect further shocks before the situation finally calms down and therefore we remain very cautious,” chief financial officer Oliver Baete said.

“As a company with total assets of over 600 billion euros (£480bn), we hang on the (financial) markets.”

Political instability in Greece and the prospect that it might exit the euro sent European stock prices plunging this week.

“We are very concerned about the situation in Spain, particularly the coming recapitalisation of the banking sector, which must now succeed,” Mr Baete said.

Allianz wrote 77 million euros off the value of its stake in Spain’s Banco Popular, an Allianz partner in asset management and life insurance, in the first quarter.

Mr Baete said Allianz’s stake in Spain’s number five retail lender would fall to just under 5 per cent in the next two years, from over 7 per cent, due to Popular’s merger with rival Pastor.

The insurer benefited from a decline in financial market volatility in the first quarter, with unrealised losses on its portfolio of government bonds from the eurozone’s periphery states falling to 1.16 billion euros at the end of March from 3.71 billion at the end of December.

The decline was largely due to a rally in Italian government bonds.

Allianz is on its way toward its target of earning 8.2 billion euros, plus or minus 500 million, in operating profit this year.