The insurer is setting aside 3.7 billion euros for possible settlements with major investors and fines in the USA. However, because the group has earned very well in its core business, it is still increasing the dividend.
According to its own estimates, the scandal involving billions in lost investor funds in the USA is costing Allianz at least 3.7 billion euros. The insurance company has set aside so much for comparisons with major investors and possible fines. Nevertheless, CEO Oliver Bäte is increasing the dividend for 2021 by 12.5 percent to EUR 10.80 per share because Allianz has achieved record operating profits.
The provision does not mean that the amount of the burden has already been determined. Some analysts had expected more than six billion euros. The subsidiary Allianz Global Investors (AGI) had sold so-called structured alpha funds to large investors in the USA, which should be particularly suitable for times of crisis. Buyers included the pension funds of teachers in Arkansas and subway drivers in New York.
In February and March 2020, the Corona crisis caused the stock markets to plummet. While most stocks soon regained their pre-crisis values, investors who are now suing lost around $6 billion (5.3 billion euros). They are suing AGI for damages, claiming that the Allianz subsidiary violated its own investment guidelines and deliberately misinformed them.
The US Department of Justice is investigating fraud in its role as chief prosecutor. With the 3.7 billion euros in reserves, the insurer wants to make provisions for possible compensation payments as well as for possible fines.
Some investors had expected better numbers
Nevertheless, Oliver Bäte was very satisfied with 2021. The group had demonstrated its resilience and adaptability: “We achieved record operating results.”
In fact, Allianz increased operating profit by 24.6 percent to 13.4 billion euros – despite natural disasters and Corona. This was due to strong price increases. That is why Allianz still earned 6.6 billion euros in 2021. Although that is EUR 2.8 billion less after taxes than it would have been without Structured Alpha, it is only marginally worse than the EUR 6.8 billion in 2020.
Nevertheless, some investors had expected better figures. To keep them happy, Allianz is increasing the dividend and buying back its own shares for at least one billion euros.