(Reuters) – Oliver Baete, CEO of Germany's Allianz, spoke on Friday about a "horrible week" for him and the insurer, his first response to a revelation that the US Department of Justice was investigating losses at the fund department.
Mr. Baete, who made an unexpected appearance for reporters in a conversation after the company's second quarter, said the insurer would set aside any reserves for the case when the time was right and admitted "not everything was perfect in fund management."  The issue, which Allianz revealed on Sunday and which overshadowed a better-than-expected result on Friday, is a blow to the reputation of one of Germany's most valuable companies and its global operations, which in recent years have stayed out of the headlines. [1
In March last year, Allianz closed two private hedge funds after heavy losses during the market chaos caused by the outbreak of the coronavirus pandemic.
It caused a wave of disputes from US investors demanding about $ 6 billion in losses from the so-called Structured Alpha family.
Investors, which include pension funds for trucks, teachers and subway workers, say the fund division, Allianz Global Investors, deviated from a strategy to use alternatives to protect against a short-term financial market crash.
Last year, Allianz revealed that the US Securities and Exchange Commission was also investigating. It says it actively cooperates with both bodies and defends itself in the trials.
"This event will leave its mark, but it will not change the way of the Alliance," Baete said.
Mr. Baete said he regretted that investors lost money. Shares fell sharply on Monday after Sunday's announcement. They increased by 3.3% in the afternoon in Frankfurt on Friday.
Allianz, which has reviewed more than 1 million e-mails and documents as part of its forensic investigation into the matter, also revealed on Friday that the DOJ had requested information from current and former U.S. employees in the fund management division.
The DOJ declined to comment on the matter.
Allianz showed a better than expected 46% jump in the second quarter's net result and gave a more rosy outlook for the full year as evidenced by pressure on business caused by the coronavirus pandemic.
Net shareholders' equity of EUR 2.225 billion ($ 2.60 billion) for the three months to June, compared to EUR 1.528 billion a year earlier. The figure beat a consensus forecast of 2,055 billion euros.
More optimistic about the outlook for this year, the company said it now expects operating profit in 2021 to be in the upper half of a range of 11 to 13 billion euros.
Last year, the insurer abandoned its profit target due to financial uncertainty due to the pandemic and reported its first decline in operating profit in almost a decade.
Allianz, like other insurance companies, had faced customers demanding business interruptions and suspended events from shutdowns, while demand for car and travel insurance fell.
In another sign of a return to normal times for the insurance group, Allianz announced plans on Thursday to buy back shares up to 750 million euros by the end of the year, after last year canceling a repurchase halfway due to the pandemic. Catalog