Germany Probes Biggest Insurer Allianz Over Investment Funds Facing 25 Lawsuits In US: Report
Allianz Investors’ Structured Alpha Funds are at the center of lawsuits and investigations in the US following steep losses during the pandemic.
New Delhi: Allianz, the biggest financial company in Germany, is under investigation in the country after the closure of some of its US investment funds last year following steep losses, Reuters has said in an exclusive report, quoting people privy to the development.
Allianz has been under the scanner with several investors filing lawsuits against it over its Structured Alpha Funds, and the US Department of Justice and the Securities and Exchange Commission carrying out investigations in this connection.
Germany's financial regulator BaFin will now conduct an investigation across multiple departments of the company, the report said, quoting officials who did not want to be named.
Allianz is said to have 2.4 trillion euros in assets under management through Pimco, a bond giant, and Allianz Global Investors, which managed the Structured Alpha Funds.
In India, Allianz SE has a joint venture with Bajaj Finserv Limited, and the Bajaj Allianz General Insurance Company Limited is one of the largest private insurers in the country. It posted a revenue of Rs 2,494 crore for the first quarter of FY 2021-22, with a net profit of Rs 362 crore, according to the company website.
What The 26 Lawsuits Accuse Allainz Of
Allianz faces 25 lawsuits by investors who have claimed $6 billion in damages, the report said, adding that the insurer is accused of not providing downside protection for market crashes.
Allianz Global Investors’ Structured Alpha Funds catered to US pension funds, and also European consumers. The funds nosedived, by 80 percent or more in some cases, as the Covid-19 pandemic severely hit the markets.
Allianz closed two funds, worth $2.3 billion at 2019-end, in March 2020. Its other funds also faced losses, and the investors withdrew what was left of their money.
The company told a US federal judge in February this year that the investors are sophisticated and were aware of the risks.
On Monday, an Australian court fined two local units of Allianz SE a total of A$1.5 million in a civil case registered in September 2020 by the Australian Securities and Investments Commission. The company was accused of selling travel insurance to ineligible customers. It was also found guilty of not properly disclosing how it calculated premiums, Reuters said in an earlier report.
What Will The German Probe Look Into?
According to the report, BaFin is examining the extent to which Allianz officials outside the funds' division knew of or were involved in the events leading up to the losses to the tune of billions of dollars.
The sources told Reuters that the investigation was currently in a “fact-finding phase”, and that it involved “multiple people”.
On August 1, Allianz had said it reassessed the risks related to the funds after being approached by the US Department Of Justice, and that this could hit the company’s future financial results.
The BaFin probe had picked up pace after this, the Reuters report said.
Quoting an Allianz spokesperson, the report said the company was in regular contact with BaFin “on all matters”.
“This also relates to the issues around the Structured Alpha Funds. That is part of the normal process and there are no new developments,” a Bloomberg report also quoted an Allianz spokeswoman as saying.
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