The company announced a 4.1 percent rise in the dividend to 7.60 euros per share after posting a 23 percent rise in its fourth-quarter net profit to 1.7 billion euros, beating the average of 1.54 billion euros forecast by analysts, according to a Reuters poll.

Net profit for the full year was up 4 percent at 6.9 billion euros, just ahead of the average of forecasts of 6.77 billion euros.

"In future, 50 percent of group net attributable income will still be returned to shareholders in the form of a regular dividend," the group said in a statement.

"However, Allianz no longer intends to link its budget for external growth to shareholder pay-outs in a three-year cycle.

"Rather, half of net income should be used as deemed appropriate to finance growth, or it will be returned to shareholders on a flexible basis."

The new 12-month buyback programme which is due to start on February 17 remains subject to the company maintaining a Solvency II capital adequacy ratio of above 160 percent of the minimum requirement, Allianz said in a statement, and represents 4.2 percent of the group's current market capitalisation.

"The year (2016) was filled with surprises, not all of them welcome, that challenged many assumptions, fuelled geopolitical uncertainty and market volatility, and that make 2017 difficult to predict," Chief Executive Oliver Baete said in a statement.

"Nevertheless, we feel confident enough to raise our operating profit target range," he said, referring to a target of 10.8 billion euros, plus or minus 500 million, in 2017.

Operating profit in 2016 rose 0.9 percent to 10.8 billion euros, which compared with an average of analysts' forecasts of 10.87 billion.

(Reporting by Brenna Hughes Neghaiwi; Editing by Greg Mahlich)