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German insurance group Allianz has agreed to divest a majority stake in its Russian business for an undisclosed sum.

Interholding, which owns Russian property and casualty insurer Zetta Insurance, will buy Allianz’s stake.

Following the deal completion, which is subject to regulatory approval, the European insurance major will hold a minority 49.9% stake in the combined entity.

Allianz estimates that the divesture will have a negative impact of around €400mn on its profit and loss account.

The insurer said that the €400mn hit is largely due to the reclassification of negative foreign exchange impact from shareholders’ equity.

The transaction will not impact Allianz’s capitalisation and cash position, the insurer added.

Through the deal, which follows the insurer’s decision to scale down Russian operations, Allianz seeks to ensure continuity for employees and clients.

Zetta is present in over 150 Russian cities through more than 6,500 agents and operates over 120 points of sales across the country.

Allianz noted that Zetta caters to over one million customers and has built partnerships with 350 car dealers and 30 commercial banks in Russia.

Last month, media reports said that Allianz could fully exit Russia but the insurer denied those reports and said “however the situation further develops, continuity of operations for employees and clients of the company will be ensured”.

Allianz, which has also set aside €100m to deal with claims arising from the Ukraine crisis, operates in Russia via Allianz Insurance Company JSC and LLC IC Allianz Life.