Allianz sets aside €3.7bn to pay for collapsed fund lawsuits, following talks with US authorities
German insurer and asset manager Allianz has set aside €3.7bn (£3.1bn) to settle lawsuits arising from the collapse of its Structured Alpha funds, following talks with US authorities.
Allianz, the world’s largest insurance company, said it had set aside €3.7bn in “anticipation of settlements with major investors.”
The comments come after the US Department of Justice (DoJ) launched a probe into Allianz, over the Munich firm’s Structured Alpha funds, after stock market volatility at the start of the pandemic saw the funds rack up massive losses.
In a statement, Allianz said “the total financial impact of the Structured Alpha matter cannot be reliably estimated” as it said discussions with plaintiffs, the US DoJ, and the US Securities and Exchanges Commission (SEC) are ongoing.
Allianz’ decision to set aside €3.7bn comes after at least 25 investors filed lawsuits against the Munich-based firm for around $6bn worth of damages.
The lawsuits were predominantly filed by US public pension funds, including funds for New York subway workers and city of Milwaukee employees.
Last year, analysts at German bank Berenberg said Allianz could be forced to pay between €3.5bn-6.7bn to settle its Structure Alpha lawsuits.
The forecasts come after the DoJ launched a probe into Allianz, over claims the firm misrepresented the risk profile of its Structured Alpha funds – which used complex options strategies to generate returns – to its clients, in September last year.
Allianz is also being investigated by the SEC after the regulator launched an investigation following the Arkansas Teachers Retirement System fund decision to file a lawsuit against Allianz, seeking to recover losses worth $774m.
Germany’s BaFin financial watchdog also launched an investigation into Allianz’ Structured Alpha funds last year, on the back of investigations by US authorities.