Allianz announces an additional € 1.9 billion provision for the Alpha fund

German insurer Allianz announced on Wednesday that it would post an additional provision of € 1.9 billion in the first quarter, linked to losses in its Alpha-structured funds during the fall of financial markets in March 2020. The group had already announced provisions of EUR 3.7 billion for this purpose.

«Allianz considers that this provision is a fair estimate of the remaining financial exposure to the payment of investor compensation and payments made in all government proceedings.The insurer said in a statement. The losses in March 2020 from Allianz Global Investors’ managed funds on structured products triggered investigations by the US Department of Justice and the Securities and Exchange Commission (SEC), as well as numerous complaints from customers in the group.

Profit in the first quarter of 600 million euros

These funds had massively bet on options that would offer investors hedging in the event of a market reversal. This strategy was revealed to be paid for by the group before the onset of the health crisis. But in March 2020, stock markets fell and volatility reached record levels, resulting in heavy losses for the funds involved.

At its disposal on Wednesday it announced a negative impact of 1.6 billion euros net of the first quarter, Allianz said, adding that its net profit thus resulted in 0.6 billion euros over the period. Operating income for the first quarter reached 3.2 billion euros.

Following these announcements, the Allianz stock gained 2.5% to € 198.50 on the Frankfurt Stock Exchange.


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