Chief Executive Officer Oliver Baete told reporters that management would see a significant impact on compensation from the hedge fund debacle. He has been tying to persuade investors that the company is strong enough to shoulder the extra legal and regulatory costs, boosting the insurer’s medium-term performance targets last year.
The firm hadn’t set aside reserves earlier because it couldn’t estimate the price tag. In a Feb. 8 note to clients, Berenberg analysts pegged the total cost at 5.8 billion euros, describing the unresolved disputes as the “main overhang” for the company.
Allianz warned in August that the hedge funds’ implosion could “materially impact” earnings, after the Justice Department launched its probe into the funds, joining the fray with the SEC and investors, who alleged losses of about $6 billion.
In October, Allianz appointed the CEO of its life-insurance unit, Andreas Wimmer, as the head of asset management, succeeding Jackie Hunt. Wimmer indicated in an interview last month that the company plans to push further into alternative asset classes and continue its focus on active fund management.
Senior executives have remained supportive of the unit that offered the funds, Allianz Global Investors, while pledging to take a close look at its product offerings. Of the roughly 450 active investment strategies that existed at the end of 2019 at the unit, about 140 were discontinued or merged with others in the past two years, Wimmer said in the interview.
Despite the debacle, AGI saw third-party clients add 9.5 billion euros in the fourth quarter. Its bigger sister unit Pimco recorded 11.1 billion euros in net inflows.
“It was a very isolated event at AllianzGI U.S. We are very comfortable with the current team and are happy with the trajectory the business is taking,” Baete told Bloomberg in a phone interview.
--With assistance from Stefan Nicola and Alexander Kell.
This article was provided by Bloomberg News.