September 30, 2022

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Allianz has committed $3.7 billion to lawsuits related to US funds

In a note, Allianz announced a provision of 3.7 billion euros in relation to risks associated with US Alpha Structured Funds of its asset manager Allianz Global Investors. A note clarifies, that the provision will affect the results of 2021, as its net profit will decrease by 2.8 billion. The funds will be used to close disputes initiated by many investors in the funds, which incurred billionaire losses, following the outbreak of the Corona virus pandemic, the US authorities have also opened an investigation. “With regard to judicial and government actions in the United States relating to Alpha Structured Funds, Allianz expects to soon engage with major investors in those funds,” the statement read.

In view of this, and in light of ongoing discussions with the US government authorities, Allianz decided to record a provision of 3.7 billion euros in its financial results for the year 2021. These provisions will reduce the net profit of 2021 by 2.8 billion euros. At the beginning of 2020, close to the outbreak of the epidemic, regulated alpha funds recorded huge losses, in some cases exceeding 80%, infuriating many insurers – including some American pension funds – who invoked the Allianz ruling and paid Sec, Doj and also Bafin , the German Consob, to investigate the matter. The damages claimed by Allianz’s investors, who accused the German asset manager of failing to put in the expected protection against a market crash, exceeded $6 billion.

Allianz stresses that the transactions to be signed “are an important step in resolving many procedures.” “Discussions with the remaining plaintiffs, the US Department of Justice and the Securities and Exchange Commission and the timing and nature of any resolution to these issues are uncertain. For this reason, to date, the overall financial impact of the Alpha Regulatory case cannot be estimated with certainty and Allianz expects to incur additional costs before the issue is resolved. Final.” In the note, Allianz states that it increased its operating profit in 2021 by 24.6% to $13.4 billion, while profit attributable to shareholders decreased by 2.9% to 6.6 billion, and the second solvency ratio was 209%. Allianz will propose a dividend of 10.8 Euros per share after 9.6 Euros last year and today announced a new buyback program for 2022 amounting to 1 billion Euros.