Probe into Allianz picks up pace
Frankfurt — German regulators have launched an investigation into the country’s biggest financial company, Allianz, after the demise of some of its US investment funds last year, people with direct knowledge of the matter say.
The move heightens the pressure on the insurer, which is already facing a slew of investor lawsuits over its Structured Alpha Funds and related investigations by the US department of justice and Securities and Exchange Commission (SEC).
The German insurer is one of the world’s biggest money managers with €2.4-trillion in assets under management through bond giant Pimco and Allianz Global Investors, which managed the funds at the centre of the probes.
The investigation by Germany’s financial regulator, BaFin, is across multiple departments of the institution, several sources said.
BaFin officials are examining the extent to which Allianz executives outside the fund division had knowledge of, or were involved in, events leading up to the funds racking up billions of euros of losses, the people said. An Allianz spokesperson declined to comment on the BaFin investigation.
The sources said the German investigation was in a fact-finding phase and involved multiple people, but had picked up pace since Allianz announced the probe on August 1.
The insurer said last month that it had reassessed the risks related to the funds after being approached by the department of justice and had concluded that the matter could materially hit its future financial results.
The various investigations and lawsuits relate to Allianz Global Investor’s Structured Alpha Funds, which catered to US pension funds for teachers and subway employees. The funds were also marketed to European investors.
After the coronavirus pandemic sent markets into a tailspin, the funds plummeted, in some cases by 80% or more.
The losses from bad bets on options were so extreme that Allianz closed two funds in March 2020 which were worth $2.3bn at the end of 2019. Losses at others caused some investors to withdraw what was left of their money.
Investors have lodged 25 lawsuits claiming $6bn in damages, saying Allianz strayed from its strategy of providing downside protection for market crashes.
Allianz’s lawyers have said the investors were sophisticated and aware of the risks.
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