Business information

Allianz CEO describes horrific week with US DOJ investigation

  • Decision on possible reservations
  • Faces $ 6 billion in investor lawsuits
  • Former and current US employees contacted by the DOJ
  • Exceeds second quarter earnings expectations
  • To buy back shares

FRANKFURT, Aug.6 (Reuters) – Oliver Baete, managing director of German company Allianz (ALVG.DE), on Friday spoke of a “horrible week” for him and the insurer, his first response to a disclosure made by the US ministry of Justice. was investigating the losses of his fund division.

Baete, making an unexpected appearance to reporters on a call after the company’s second quarter results, said the insurer would set aside possible reservations in case the timing is right and admitted that “everything was not perfect in the management of the fund “.

The problem, disclosed by Allianz on Sunday and which eclipsed better-than-expected earnings on Friday, is a blow to the reputation of one of Germany’s top-valued companies and its global operations which in recent years have remained out of the picture. Of actuality.

“It has been a horrible week for us and for me personally,” he said.

In March last year, Allianz closed two private hedge funds after heavy losses during market chaos sparked by the outbreak of the coronavirus pandemic.

This sparked a wave of litigation from U.S. investors claiming about $ 6 billion in losses from the Structured Alpha family of funds.

Investors, which include pension funds for truckers, teachers and subway workers, say the funds division, Allianz Global Investors, has deviated from a strategy of using options to hedge against a Short-term financial market crash.

Last year, Allianz revealed that the United States Securities and Exchange Commission was also investigating. He says he is actively cooperating with both organs and defending himself in the lawsuits.

“This event will leave its mark, but it will not change Allianz’s path,” Baete said.

Baete said he regretted that investors lost money. Shares fell sharply on Monday after Sunday’s disclosure. read more They were up 3.3% at midday Friday in Frankfurt.

Allianz, who has examined more than a million emails and documents as part of its forensic investigation into the case, also revealed on Friday that the DOJ had requested information from current and former U.S. employees of the fund management division.

The DOJ declined to comment on the matter.

Allianz posted a 46% increase in second quarter net profit better than expected and provided a more optimistic outlook for the full year as it emerges from business pressure caused by the coronavirus pandemic .

Net profit attributable to shareholders of 2.225 billion euros ($ 2.60 billion) in the three months to June, up from 1.528 billion euros a year earlier. The figure exceeds consensus forecast by 2.055 billion euros.

More optimistic about the outlook for this year, the company said it now expects operating profit in 2021 to be in the upper half of a range of € 11 billion to € 13 billion.

Last year, the insurer abandoned its profit target due to economic uncertainty resulting from the pandemic and recorded its first decline in operating income in nearly a decade.

Allianz, like other insurers, had faced customers making business interruption claims and canceling outage events, while demand for car and travel insurance declined.

Another sign of a return to normal for the insurance group, Allianz announced Thursday its intention to buy back up to 750 million euros of shares by the end of the year, after having canceled the last year a mid-term buyout due to the pandemic.

($ 1 = € 0.8457)

Reporting by Tom Sims and Alexander Huebner Editing by Riham Alkousaa, Shri Navaratnam and Anil D’Silva

Our standards: Thomson Reuters Trust Principles.

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