UPDATE 1-CFO says Allianz adequately capitalised - report

(Adds detail, shares)

FRANKFURT Oct 23 (Reuters) - Insurer Allianz (ALVG.DE) does not need more capital, but all insurers have to decide whether to participate in the German government's financial sector rescue package, its finance chief has told a newspaper.

"Basically, the same is true for insurers as for banks. We have to sit down and see what results," Helmut Perlet told the Sueddeutsche Zeitung in an interview published on Thursday.

"I would like to add, however, that Allianz has sufficient capital and a sound insurance business. The insurers seem to be coming through the crisis better than the banks. As far as we know, not too many of these critical securities are on insurers' balance sheets."

Asked about rumours that Allianz itself was still sitting on a lot of toxic assets, Perlet said: "I reject that in the strongest possible terms. We are very clean."

Still, Allianz will feel some impact from the financial crisis, he said.

"We detect this, for example, in sales at the life insurance business. And we see intensified write-offs on our share portfolio that will affect our profits. On the other hand, it is true that people seek a safe ship when a crisis is blowing, and this helps us."

Perlet reiterated that Allianz's sale of its Dresdner Bank unit to Commerzbank (CBKG.DE) remained on track.

"Everything is going according to plan. You will not see any changes. The sale of Dresdner Bank will take place."

The sale of Dresdner will improve Allianz's capital flexibility and the insurer would look at potential acquisition targets coming onto the market but would not embark on a buying spree, Perlet said.

"In these times it is important to protect your own capital and not set off on a big hunt. Cash is king," he said.

Insurers such as Allianz are expected to examine parts of American International Group (AIG.N) that the U.S. insurer is selling after being hit by losses on credit default swaps it underwrote.

Asked if Dresdner Bank would take part in the government's 500 billion euro stabilisation package, he said: "Everyone has to at least look at the aid."

He criticised the rescue package's provision that companies accepting aid cannot pay out dividends.

"This is the wrong signal," he said, noting dividends were a key factor when investors decided whether to buy stocks.

Allianz's shares fell 1 percent to 68.19 euros by 0707 GMT, lagging a 0.6 percent decline in the DJ Stoxx index of European insurance shares .SXIP. (Reporting by Michael Shields and Jonathan Gould; Editing by Paul Bolding)