Allianz to Trim Stake in Munich Re to 2 Percent

FRANKFURT (Reuters) - Allianz (ALVG.DE) is cutting its stake in reinsurer Munich Re (MUVGn.DE) to around 2 percent by repaying the rest of an exchangeable bond issued nearly three years ago, Europe's biggest insurer said on Monday.

"As a result of the redemption of this index-linked exchangeable bond, Allianz's stake in Munich Re will be reduced to approximately 2 percent," Allianz said in a statement.

Allianz said it did not expect the redemption of the three-year BITES bond, which was issued in February 2005 and has a market value of around 850 million euros ($1.3 billion), to affect Munich Re's share price.

Germany's banks and insurers have been cutting their once-substantial cross-holdings for years.

Allianz currently holds 3 to 5 percent in Munich Re, the world's second-biggest reinsurer, while Munich Re has a stake of nearly 3 percent in Allianz.

Allianz had already redeemed a first tranche of the BITES bond with Munich Re shares in March last year.

The number of Munich Re shares required to redeem the remaining 35.65 percent of the bond would be based on the averages of the DAX index .GDAXI and Munich Re's share price during a 20-day reference period, it said.

The reference period will start on Jan. 22 and end on Feb. 18, with delivery of the shares taking place on Feb. 27, it said.

(Reporting by Jonathan Gould; Editing by David Holmes)