Allianz books $4.2 billion hit in funding fund case, says extra could come By Reuters

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© Reuters. FILE PHOTO: Allianz World Buyers brand is pictured on the firm’s headquarters in Frankfurt, Germany August 16, 2021. Image taken August 16, 2021. REUTERS/Tilman Blasshofer

By Tom Sims and Alexander Hübner

FRANKFURT (Reuters) -German insurer and asset supervisor Allianz (DE:) on Thursday mentioned it might put aside 3.7 billion euros ($4.20 billion) to cope with investigations and lawsuits ensuing from the collapse of a multi-billion-euro set of funding funds.

The supply resulted in a web loss attributable to shareholders of 292 million euros within the fourth quarter, the corporate mentioned. Analysts had anticipated a revenue.

Allianz mentioned that the end result of varied investigations and lawsuits “can’t be reliably estimated” and that it “expects to incur further bills earlier than these issues are lastly resolved”.

The problem centres round Allianz funds that used advanced choices methods to generate returns however racked up huge losses when the unfold of COVID-19 triggered wild inventory market swings in February and March 2020.

Buyers within the so-called Structured Alpha set of funds have claimed some $6 billion euros in damages from the losses in a slew of instances filed in america. The U.S. Division of Justice and the Securities and Trade fee have additionally been investigating the case.

The matter has forged a shadow over Allianz, one in every of Germany’s most beneficial firms. It’s also one of many world’s largest cash managers with 2.5 trillion euros in property underneath administration via bond big Pimco and its Allianz World Buyers, which managed the funds on the centre of the probes.

Allianz mentioned that it expects a settlement with main traders “shortly” however discussions with different traders, the DOJ and SEC “stay ongoing”.

The quarterly loss compares with a revenue of 1.8 billion euros a 12 months in the past. Revenue for the total 12 months at 6.6 billion euros was the bottom since 2013.

“Regardless of challenges in 2021, Allianz proved its resilience and flexibility,” Chief Govt Officer Oliver Baete mentioned.

The $15 billion Structured Alpha funds catered specifically to usually conservative U.S. pension funds, from these for labourers in Alaska to academics in Arkansas to subway employees in New York.

After the coronavirus despatched markets right into a tailspin early in 2020, the Allianz funds plummeted in worth, in some instances by 80% or extra. Buyers alleged Allianz strayed from its acknowledged technique of their lawsuits.

Allianz has publicly disclosed the SEC and DOJ investigations. It beforehand mentioned it meant to defend itself “vigorously” in opposition to the traders’ allegations. Baete has mentioned “not the whole lot was excellent within the fund administration”.

($1 = 0.8804 euro)

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