Allianz Says U.S. Investigation Could Materially Hurt Result

(Bloomberg) — Allianz SE said earnings could be materially hurt by a U.S. Justice Department investigation into its Structured Alpha Fund, which is facing a dozen lawsuits over losses at the start of the coronavirus pandemic in 2020.

Europe’s largest insurer said it’s cooperating with the DOJ and Securities and Exchange Commission, which started a probe last year. It has also started its own review of the matter.

The board of Allianz now sees a “relevant risk that the matters relating to the Structured Alpha Funds could materially impact future financial results of Allianz Group,” the company said in a statement Sunday.

However, Allianz said it is not feasible to estimate the “amount of any possible resolution including potential fines. Therefore, no provision has been recognized at the current stage.” It also said it can’t reliably estimate the amount of any possible resolution including potential fines.

Allianz Global Investors US LLC is defending itself from a dozen lawsuits by large pension funds and other investors challenging how the company managed assets during the Covid-19 market downturn, telling a Manhattan federal judge in February that the plaintiffs are sophisticated investors that chose high-risk private funds with their eyes open.

Read more: Allianz Dings Dozen of Investor Suits Claiming Big Covid Losses

The investors suing Allianz include a Milwaukee municipal pension fund, the Arkansas Teacher Retirement System, Blue Cross & Blue Shield, a Chicago Teamsters pension, New York City’s Metropolitan Transportation Authority, and Lehigh University.

AllianzGI last year rejected claims by the Arkansas pension fund that a “reckless strategy” led to $774 million in losses in a matter of weeks. The funds in the Structured Alpha portfolio “did not diverge from their investment strategy,” AllianzGI said in July 2020.

AllianzGI is the sister unit of Pacific Investment Management Co. Both firms are owned by Munich-based Allianz.

Allianz posted a 45% increase in first-quarter profit in May as it tries to make good on a pledge to restore earnings growth after a pandemic-wrecked 2020. It’s due to report earnings for the latest period on Aug. 6.

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