Good news looks different. Allianz had to announce on Wednesday that it had to set aside a further 1.9 billion euros because of the Structured Alpha scandal in the USA. That brings the previous total burden from all the trouble to 5.6 billion euros, it could even be more. On the same day, it was announced that US prosecutors are considering filing fraud charges against individual managers at Allianz Global Investors.
All the more important for the group that CFO Giulio Terzariol was able to present good figures for the first quarter of 2022 on Thursday: Sales rose by 6 percent to 44 billion euros, operating profit fell only slightly by 2.9 percent despite high natural catastrophe burdens 3.2 billion euros. But the bottom line is that only 0.6 billion remained, precisely because of the high burden of the US scandal. Without them, it would have been 2.2 billion euros.
Allianz had made a special investment offer to large pension funds and other investors, thereby raising billions. Structured alpha should bring high returns, but be particularly crisis-proof. But in the stock market crash at the start of the pandemic in early 2020, investors suffered losses of at least $6 billion.
The major customers claim that Allianz broke its own investment rules. In addition, they were misinformed. They were sent Excel sheets with incorrect numbers. They’re asking for damages.
Allianz has now agreed on settlements with almost 20 pension funds and other major investors. But the demands of the investors are not everything: In the meantime, the securities supervisory authority SEC and the US Department of Justice, in its role as the highest public prosecutor’s office, are also investigating the processes. Fines for the alliance are very likely, with possible charges against former or current managers involved in the operation.
The Allianz share lost 3.5 percent on Thursday by the afternoon, significantly more than the Dax with 1.9 percent. CEO Bäte and CFO Terzariol are sticking to their strategy of winning back investors with the promise of steadily increasing dividends and share buybacks, which should not be reduced due to the burden of the US scandal.
Despite the war in Ukraine, the group will earn between 12.4 billion euros and 14.4 billion euros from operations for the whole of 2022, said Terzariol. Rising prices are helping in many insurance lines. The possible withdrawal from Russia could cost Allianz 400 million to 500 million euros, but according to Terzariol that should not call into question the overall result.