Allianz SE, Europe's biggest insurer by market value, will stop selling new insurance contracts in Japan less than a year after entering the market, saying the cost to cover guarantees is too high.

Allianz Life Insurance Japan Ltd., which began selling variable annuity products through Nikko Cordial Securities Inc. in April, will stop marketing the product at the end of this month, until conditions change enough for it to cover costs, said Aki Toda, assistant manager at the unit. The company will not exit Japan's insurance market, she added.

The biggest market losses since the Great Depression have raised costs for insurers selling variable annuities, a type of plan linked to mutual funds that typically guarantees payouts to policyholders. Allianz came to Japan to tap the nation's ¥1.5 quadrillion in financial assets held by individuals.

Munich-based Allianz reported on Nov. 7 a net loss of 2 billion euro ($2.6 billion) for the third quarter, its first deficit since 2003. The company had losses related to the sale of its Dresdner Bank unit, as well as impairments on equities, debt securities and property.

The decision comes after Ichiro Miyake, president and chief executive officer of the local unit, said in November that the firm will seek more Japanese partnerships beyond Nikko Cordial, to boost sales as early as the fiscal second half through March.

"We made the decision to maintain our solid business strength and provide services for the longer term," Toda said Wednesday.