Allianz SE said a lack of political support prevents investors from contributing more money to infrastructure projects such as roads or power and gas grids.

“Politicians are still convinced infrastructure has to be provided by the government—we might need to build more business cases to make the advantage of public-private partnerships more tangible,” Maximilian Zimmerer, chief investment officer at Europe’s biggest insurer, said in an interview in London. “To be fair, it is changing already with countries like France doing more to facilitate investments than Italy or Germany.”

Zimmerer, 55, oversees 556 billion euros ($758 billion) in assets managed on behalf of insurance clients at Munich-based Allianz, which has said it plans to move more fixed-income assets into “real assets” such as infrastructure and renewables as they can offer higher returns. At the end of the first quarter, 89 percent of Allianz’s investments were in fixed-income securities.

Other insurers in Europe including Paris-based Axa SA and London-based Legal & General Group Plc have also said they would like to invest more in infrastructure projects to help them improve returns in the face of low interest rates.

Allianz has invested 4.6 billion euros in infrastructure debt and equity with projects including funding of a bypass in Marseille and of the M8 motorway in Scotland. In addition, the insurer has 1.7 billion euros in renewable energy assets such as wind parks in countries like Germany, France, Italy and Sweden, Zimmerer said.

Investment Shortage

As many countries in Europe are heavily indebted, “there is not enough state money for infrastructure investments,” he said. “It would provide most countries with a lot of growth if you initiate more of this kind of infrastructure investments.”

Allianz manages about 1.77 trillion euros at its Allianz Asset Management unit, which includes Pacific Investment Management Co. and Allianz Global Investors, which established a dedicated infrastructure debt team in 2012. Of that, 423 billion euros are managed for Allianz and about 1.34 trillion euros for third parties.

“Right now we have enough money to invest, but not enough infrastructure projects,” said Zimmerer, who joined Allianz in 1988 and served as chief financial officer of the German life insurance unit from 2000 until 2005. “We are interested in everything.”

Tighter Spreads

“Currently, you maybe achieve an investment in one of 10 projects because there are so many bidders, especially specialized infrastructure funds, offering more money than we would want to,” said Zimmerer, who was appointed a member of Allianz’s management board responsible for finance and global life in June 2012.

If its return requirements are met, Allianz could see increasing its infrastructure debt investment by as much as 2 billion euros, Zimmerer said, adding that “unfortunately spreads are getting tighter and tighter.”

In a setback to industry plans, insurance regulators in Europe haven’t been willing to relax rules designed to protect customers from risks in infrastructure investments. Gabriel Bernardino, chairman of the European Insurance & Occupational Pensions Authority, or Eiopa, said in an interview last month that such investments still lack the data to evaluate the underlying risks.

Norwegian Conflict

Allianz got a taste of such risks when the Norwegian government cut tariffs for the Gassled pipeline network, where the company is part of a group of investors.

“There is a lawsuit going on; we will not accept that,” Zimmerer said, adding that the measures will cut Allianz’s return on the investment by more than half.

“We won’t lose any money on the investment, but had we known that before, we would not have invested,” he said. “I would not again invest 800 million euros in just one pipeline. But the business case was so wonderful at the time.”

Allianz’s earnings on another infrastructure investment were hit after Chicago ordered its parking operator, in which the insurer is part of a group of investors, to remove meters from some street spaces, including those reserved for the disabled.

“There were also changes in between, but they were only minor, it’s a good investment for us, and I wish would have more investments like that,” Zimmerer said.

–With assistance from Sarah Jones in London.