Allianz speeds up succession planning in light of Structured Alpha lawsuits

September 20, 2021

FRANKFURT (Reuters) -Allianz is considering speeding up succession planning for its management board, including for asset management head Jacqueline Hunt whose contract expires next year, following the closure of some of its U.S. investment funds last year.

Allianz is facing a slew of investor lawsuits over its Structured Alpha Funds and related investigations by the U.S. Department of Justice (DOJ), Securities and Exchange Commission (SEC) and Germany’s Bafin.

Allianz’ considerations regarding its management revamp also relate to the asset management division, the German insurer said on Monday, adding that the supervisory board will discuss the matter at its next meeting on Sept. 30.

The Wall Street Journal reported earlier on Monday that asset management head Jacqueline Hunt was in talks to depart.

Hunt’s contract and those of three further board members are due to expire in 2022.

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 marketed to European investors.

After the coronavirus pandemic sent markets into a tailspin, the funds plummeted, in some cases by 80% or more.

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

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

Allianz also said that the company’s internal review of the matters relating to Structured Alpha cover a review of risk and compliance proceedings related to the Structured Alpha funds.

The German insurer is one of the world’s biggest money managers with 2.4 trillion euros ($2.8 trillion) in assets under management through bond giant Pimco and Allianz Global Investors, which managed the funds at the centre of the probes.

($1 = 0.8538 euros)

(Reporting by Alexander Huebner; Writing by Arno Schuetze; editing by Kirsti Knolle and Bernadette Baum)

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