insurance group
US hedge fund debacle costs Allianz €5.6 billion
Losses by major investors in the US currently cost Allianz around 5.6 billion euros. Photo: Alexander Heinl/dpa
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Due to a dispute with investors that goes back to the early phase of the Corona crisis, Allianz again has to set aside billions. But shareholders are not reacting coldly.
Losses by major investors in the US currently cost Allianz around 5.6 billion euros. In the first quarter, the insurance group saved a further 1.9 billion euros, as it surprisingly announced on Wednesday.
The money is earmarked for compensating investors in certain hedge funds and settling with US regulators. In the annual financial statements for 2021, Allianz had already booked a charge of 3.7 billion euros. The Management Board now assumes that the provisions cover the financial risks for the Group as a whole.
The news was received positively on the stock exchange. The Allianz share increased in the morning and was one of the strongest titles in the Dax. The second provision comes earlier and is lower than expected, wrote industry expert Philip Kett from the analysis firm Jefferies. In addition, without the special charge, Allianz would have performed better than the market had expected. Since the turn of the year, the Allianz paper has now lost almost 5 percent in value.
In fact, the group had to accept a drop in profits to around 600 million euros in the first quarter, after having earned more than 2.5 billion a year earlier. The provision alone burdened the result with around 1.6 billion euros.
Investors have sued the Allianz fund subsidiary
The reason for the anger are losses that professional investors suffered at the beginning of the Corona crisis with the so-called structured alpha funds from Allianz Global Investors. Several investors, including pension funds, have sued the Allianz fund subsidiary for damages.
The allegations boil down to the fact that the managers of these hedge funds did not comply with their own guidelines and did not react appropriately to market developments. This is said to have caused high losses. The Allianz leadership has so far not wanted to comment on their view of things before the US authorities have presented their investigation results. As early as February, however, the group announced that it had reached settlement agreements with the majority of the plaintiffs.
Meanwhile, the group’s day-to-day business went surprisingly well in the first quarter. Operating profit fell from 3.3 billion to 3.2 billion euros year-on-year, but was higher than experts had expected. Allianz wants to publish the full quarterly figures on Thursday.