The Australian Prudential Regulation Authority (APRA) will reduce a $250 million additional capital requirement applied to Allianz Australia last year to $150 million, saying the insurer has made progress in “addressing issues”.

The remaining capital add-on will remain in place until Allianz fully completes remediation work to strengthen risk management.

APRA imposed the additional capital requirement on Allianz in August last year after 36 banking, insurance and superannuation entities were asked to “self-assess” against risk governance expectations.

This was in order to gauge whether governance weaknesses identified at the Commonwealth Bank also existed in other businesses.

APRA Executive Board Member Geoff Summerhayes said Allianz had shown “demonstrable progress on its remedial work program” though “removal of the entire charge will not be considered until Allianz embeds the required improvements across its business.”

In May last year APRA said it had uncovered “material weaknesses” in governance after it examined the 36 self-assessments, which included nine general insurers, four life insurers and three private health insurers. APRA strengthened its prudential expectations in response and raised its supervisory intensity for all regulated institutions.

The self-assessments were submitted at the end of 2018 after the prudential inquiry into the Commonwealth Bank of Australia uncovered operational and governance shortcomings.

The participating general and life insurers were Allianz Australia, Chubb, Genworth Financial Mortgage Insurance, Hollard, IAG, Munich Re, QBE (Australia), Suncorp, Swiss Re, AMP Life, Challenger Life, MLC and TAL Life.