Exclusive-Allianz under investigation in Germany over investment funds By Reuters

By Tom Sims

FRANKFURT (Reuters) – German regulators have launched an investigation into the nation’s largest monetary firm, Allianz (DE:), after the demise of a few of its U.S. funding funds final yr, individuals with direct information of the matter informed Reuters.

The transfer heightens the stress on the insurer, which is already going through a slew of investor lawsuits over its Structured Alpha Funds and associated investigations by the U.S. Division of Justice (DOJ) and Securities and Change Fee (SEC).

The German insurer is among the world’s largest cash managers with 2.4 trillion euros ($2.9 trillion) in property underneath administration by bond big Pimco and Allianz World Buyers, which managed the funds on the centre of the probes.

The investigation by Germany’s monetary regulator, BaFin, is throughout a number of departments of the establishment, a number of sources stated, talking on situation of anonymity because the investigation is ongoing.

BaFin officers are analyzing the extent to which Allianz executives outdoors the fund division had information of, or had been concerned in, occasions main as much as the funds racking up billions of {dollars} of losses, the individuals stated.

An Allianz spokesperson declined to touch upon the BaFin investigation.

The sources stated the German investigation was at the moment in a fact-finding part and concerned a number of individuals, however had picked up tempo since Allianz introduced the DOJ probe on Aug. 1.

The insurer stated final month that it had reassessed the dangers associated to the funds after being approached by the DOJ and had concluded that the matter may materially hit its future monetary outcomes.

The varied investigations and lawsuits revolve round Allianz World Investor’s Structured Alpha Funds, which catered to U.S. pension funds for staff akin to academics and subway staff. The funds had been additionally marketed to European buyers.

After the coronavirus pandemic despatched markets right into a tailspin, the funds plummeted, in some circumstances by 80% or extra.

The losses from unhealthy bets on choices had been so excessive that Allianz closed two funds in March 2020 which had been value $2.3 billion on the finish of 2019. Losses at others induced some buyers to withdraw what was left of their cash.

Buyers have now lodged 25 lawsuits claiming $6 billion in damages, saying Allianz strayed from its technique of offering draw back safety for market crashes. Allianz’s legal professionals have stated the buyers had been refined and conscious of the dangers.

($1 = 0.8428 euros)