EXCLUSIVE Allianz under investigation in Germany on investment funds

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The Allianz SE insurer logo is seen in the company building in Puteaux, in the financial and business district of La Defense, near Paris, on the outskirts of Paris, France, on May 14, 2018. REUTERS / Charles Platiau / Photo File

  • German research has picked up pace in recent weeks
  • The research is done in several departments of BaFin
  • Allianz executives outside the fund division are focused
  • It follows SEC, DOJ investigations and investment lawsuits
  • Allianz says “an absolutely normal process”

FRANKFURT, Sept. 7 (Reuters) – German regulators have launched an investigation into the country’s largest financial company, Allianz (ALVG.DE), following the disappearance of some of its US investment funds. last year, people with direct knowledge of the issue told Reuters. .

The move increases pressure on the insurer, which is already facing a large number of investor lawsuits for its structured alpha funds and related investigations conducted by the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission. (SEC).

The German insurer is one of the largest money managers in the world with 2.4 trillion euros ($ 2.9 trillion) in assets managed through the bond giant Pimco and Allianz Global Investors, which managed the funds at the center of the probes.

The investigation of the German financial regulator, BaFin, is in several departments of the institution, said several sources, who speak on condition of anonymity, as the investigation is ongoing.

BaFin officials are examining the extent to which Allianz executives who do not belong to the fund division were aware of or participated in events that led to the funds accumulating billions of dollars in losses, according to people .

An Allianz spokesman said Tuesday that the company was in regular contact with BaFin on all matters, including Structured Alpha. “It’s an absolutely normal process,” the spokesman said.

Sources said the German investigation was currently in an investigation phase and involved several people, but that it had picked up pace since Allianz announced the DOJ investigation on August 1st. Read more

The insurer said last month that it had reassessed the risks related to the funds after being addressed by the DOJ and concluded that the matter could materially affect its future financial results.

The various investigations and lawsuits revolve around Allianz Global Investor’s structured Alpha funds, which catered to U.S. pension funds for workers such as teachers and subway employees. The funds were also traded to European investors.

After the coronavirus pandemic brought markets down, funds plummeted, in some cases 80% or more.

The losses from bad options bets were so extreme that Allianz closed two funds in March 2020, worth $ 2.3 billion at the end of 2019. The losses of others caused some investors to withdraw what was left of the your money.

Investors have now filed 25 lawsuits claiming $ 6 billion in damages, saying Allianz deviated from its strategy of providing downward protection for market crashes. Allianz’s lawyers have said investors were sophisticated and aware of the risks.

($ 1 = 0.8428 euros)

Tom Sims Reports; Edited by David Clarke and Louise Heavens

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