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German insurance major Allianz is set to fully withdraw from Russia and the move may cost the insurer as much as €500m.

Allianz, which is among the largest insurers in the region by market value, has already paused new business and investment in Russia. 

“We need to go through the process, but I would define the likelihood [of exiting Russia] as very high,” Allianz CFO Giulio Terzariol told reporters.

The insurer’s net income attributable to shareholders for the Q1 2022 slumped to €561m from €2.57bn a year ago.

During the presentation of the results, Allianz said it could take a hit between €400m and €500m from the Russian exit.

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However, the insurer confirmed its operating profit outlook for the full year 2022 despite setting aside an additional $2bn for legal expenses related to continuing settlements with investors in connection with the Structured Alpha funds in the US.

Allianz SE CEO Oliver Bäte said: “Allianz has taken clear business decisions in response to the Russian invasion of Ukraine. Also, we worked hard to achieve fair settlements with investors in the Structured Alpha funds in the US and move toward a final resolution.”

Russia’s continued aggression toward Ukraine and the retaliatory sanctions are making it difficult for foreign firms to operate in Russia. 

Allianz has also set aside €100m in reserves for claims related to the Ukraine crisis, most of which are related to credit insurance. 

“Other companies might have a different kind of risk profile, we feel good with the reserving that we have set aside,” Terzariol said.