Allianz Global Investors AG updates
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Allianz is likely to lose its asset management boss as the insurance company grapples with regulatory investigations into potential misconduct by US-based fund managers.
Jacqueline Hunt, a member of Allianz’s board of management in charge of Allianz Global Investors, Pimco and the group’s US life insurance business, is in talks about an early departure, two people familiar with the matter told the Financial Times.
Hunt’s exit would come at a delicate time, with Allianz facing investigations by the US Department of Justice and the Securities and Exchange Commission as well as several investor lawsuits over underperforming hedge funds in the US, the so-called Structured Alpha funds.
The Wall Street Journal first reported the talks over Hunt’s departure on Monday. Allianz subsequently issued a statement saying it was “considering an acceleration of its succession planning” for its management board, adding that these considerations “relate to the asset management division which is facing specific challenges at the moment because of the Structured Alpha matter in the US”.
The talks over Hunt’s departure began “many months ago”, said one of the people familiar with the matter. Hunt told the FT that it would be incorrect to link her potential departure with the Allianz’ legal woes in the US over the Structured Alpha funds. She declined to comment further.
Allianz shares closed down 3.6 per cent at €183.92 on Monday.
The funds — which had €13bn under management at their pre-crisis peak — suffered big losses during the severe market sell-off at the start of the coronavirus pandemic. According to materials from a lawsuit filed by Arkansas Teachers Retirement System against AllianzGI, the funds had placed bets against market volatility and by February 2020 stood to suffer heavy losses if US equity markets fell.
Last month, Allianz issued a profit warning, saying that the outcome of the legal battles and regulatory probes into the Structured Alpha Funds could materially hit earnings. On the subsequent day, Europe’s biggest insurer by market capitalisation lost about €7bn of its stock market value.
Investors who lost money on their Structured Alpha investments accused Allianz’s asset management division of employing a “reckless strategy”, claiming it abandoned risk controls designed to protect investors. AllianzGI was forced to liquidate two of the funds in March last year after they declined by as much as 87 per cent in the market rout, according to legal filings.
Allianz said on Monday that no final decisions about a board reshuffle had been made. The insurer’s supervisory board planned to discuss the management board’s succession plans at its next meeting on September 30, Allianz said.
The 10-member board of management also features Oliver Bäte, the chief executive, and Giulio Terzariol, the chief financial officer.
Hunt joined Allianz in 2016 after a spell at life insurer Prudential, where she was head of the UK and European business, and before that, CFO at its peer Standard Life. Two years ago, her contract was extended until the end of 2022.
Big US investors, including a pension fund for the Metropolitan Transport Authority, which operates New York’s transport system, have launched lawsuits against Allianz following the Structured Alpha episode.
Bäte said on a results call this month that Allianz was “deeply sorry” about the impact on investors, and that the company would book provisions relating to the dispute as soon as possible.
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