Because of the hedge fund dispute: Allianz is now also in the sights of BaFin

Status: 07.09.2021 2:05 p.m.

Allianz Versicherung has been under pressure in the USA for months due to high losses from speculative funds of its subsidiary AGI. Now the German financial regulator BaFin is also investigating the Munich-based company.

The Allianz subsidiary AGI has made heavy losses with speculative funds – which is why the US Securities and Exchange Commission has been investigating for a long time. Now the German financial regulator BaFin has started its own investigations into the case, as several people familiar with the matter told the Reuters news agency.

The background to this is the billions in losses suffered by American pension funds and other large investors with financial products that were sold to them by AGI. The funds launched under the name “Structured Alpha” collapsed in the first Corona crisis in the spring of last year. In the industry there is talk of claims of up to six billion dollars that the insurer could face.

Market value collapsed

The Allianz board of directors therefore warned at the beginning of August that the dispute related to the funds could have a considerable negative impact on the group result. As a result, the Allianz share price collapsed by up to ten percent and slipped below the threshold of 200 euros. The market value thus lost around four billion euros. Since then, the price has hovered around the 200 euro mark, after climbing over 220 euros in June. The news about investigations by BaFin has hardly influenced the price of the Allianz share.

In the US, not only is the SEC investigating, the Department of Justice has also intervened in the process. The products targeted by the authorities are hedge funds, which were offered by AGI specifically for the US market back in 2005. However, they make up only a fraction of the total assets managed by the Allianz subsidiary of 600 billion dollars. Ten billion dollars of this is said to be invested in structured alpha funds. The aim of the funds is to achieve a higher return than the market as a whole; in most cases the S&P 500 stock index serves as a benchmark.

What did the executives know?

At BaFin, several employees from different departments are busy with the topic, the insiders told Reuters. The officials checked whether Allianz executives outside the fund area knew about or were involved in the events that led to the billions in losses. The investigation at BaFin is still in the phase in which facts are being compiled. But they have picked up speed since Allianz announced the US investigations at the beginning of August.

Allianz stated that it was in regular contact with BaFin on all sorts of topics, including structured alpha funds. This is a normal process and there is nothing more to be said about it. BaFin declined to comment.

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