FRANKFURT (Reuters) – Allianz said on Friday it would significantly cut bonuses to its chief executive and board members as the group faces a U.S. legal investigation in connection with the Structured Funds. Alpha” of its subsidiary Allianz Global Investors.
The insurance group also announced that it had reached an agreement with a “large majority” of investors who had lodged a complaint, without specifying which ones.
Pension funds have taken legal action in the United States against Allianz Global Investors, one of the world’s leading asset managers, which they accuse of having been unable to protect their investments during the period of instability in financial markets caused by the emergence of the coronavirus pandemic in early 2020.
Investors who consider themselves unclear are claiming a total of some 6 billion euros in damages through a series of complaints in the United States.
Allianz is still negotiating an agreement with other investors as well as with the US Department of Justice and the SEC, the stock market authority, which have opened investigations.
During a press conference on Friday, the director general, Oliver Baete, assured that this problem would have major consequences on his remuneration and those of the administrators, refusing to give more details.
In 2020, his compensation reached 6.39 million euros and that of the board of directors as a whole 32 million euros.
“Government affairs and ongoing litigation remain a sensitive stage,” said Oliver Baete.
Allianz announced on Thursday that it had made a provision of 3.7 billion euros to deal with litigation over the “Structured Alpha” funds.
Ingo Speich, head of sustainability and corporate governance at Deka, one of Allianz’s main investors, expressed relief after calling the issue a “massive setback” for the insurer.
According to him, the amount and timing of the provision are positive for Allianz and investors.
The insurance group, however, posted a net loss in the last quarter of 2021 and its full-year profit is the lowest since 2013.
On the Frankfurt Stock Exchange, the Allianz title fell 1.7% at midday.
(Report Tom Sims, Alexander Hbner, French version Lou Phily, said by Blandine Hnault)