- Insurer Allianz, one of the world’s largest money managers, faces a German probe over huge losses at its US funds, Reuters reported Tuesday.
- BaFin is investigating the Structured Alpha Funds, which suffered billions of dollars in losses during the pandemic-led market rout.
- Investors have reportedly filed 25 lawsuits and are claiming $6 billion in damages from Allianz.
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German financial regulators are investigating Allianz after the insurance giant’s US investment funds took a painful hit during the pandemic, Reuters reported Tuesday, citing people with direct knowledge of the matter.
Allianz, which manages global assets worth around $2.9 trillion, already faces several other probes and US lawsuits related to the Structured Alpha Funds run by its Allianz Global Investors asset-management subsidiary.
BaFin’s investigators are looking into how much Allianz executives outside the fund division knew about the events there that preceded billions of dollars of losses.
AGI was created a decade ago when Allianz separated it from bond giant PIMCO. Its Structured Alpha Funds cater to US pension funds for workers such as teachers and subway employees, and they were also promoted to European investors.
The funds suffered heavy losses during the coronavirus-led March market rout, with some declining 80% or more. That forced the asset manager to liquidate two hedge funds, Structured Alpha 1000 and Structured Alpha 1000 Plus, both of which ran a derivates-based strategy, and were worth $2.3 billion at the end of 2019.
The regulator’s probe gained momentum after Allianz revealed an investigation by the US Department of Justice on August 1, according to the Reuters report. The insurer’s board said at the time that matters relating to the Structured Alpha Funds could materially impact its future financial results.
Allianz didn’t immediately respond to Insider’s request for comment.
Investors have filed 25 lawsuits against Allianz and are requesting $6 billion in damages, claiming that it deviated from a strategy of providing downside protection during crashes, according to reports.