By Ed Frankl
Allianz SE said Wednesday that it hoped to be able to give a firm figure by the end of the year for its provisions on investigations and lawsuits into its Structured Alpha fund losses.
The German financial major said it is working closely with the Securities & Exchange Commission and the U.S. Department of Justice, which launched probes in the summer into hedge funds that caused investors significant losses as the market took a downturn in the early stages of the pandemic in 2020.
Several large investors have also filed civil lawsuits against the Munich-based company.
"I could definitely imagine that by year-end we will be able to make a booking [for provisions], but I can't promise that now," Allianz's Chief Financial Officer Giulio Terzariol told a media conference at the company's third-quarter results, in which it said full-year profits would be at the higher end of its guided range, as it posted quarterly earnings that beat expectations.
Mr. Terzariol said, however, that he couldn't give a figure at the moment as the company couldn't reliably assess the impact.
"Clearly it is in our interest to find a solution as fast as possible, but we also need to ensure that we do find an economic solution that is reasonable," he added.
Mr. Terzariol called Structured Alpha issues a high priority, and said the company wanted to move on from the uncertainty.
Allianz has said provisions would be significant. Berenberg, a German bank that downgraded the stock from buy to hold in September, has put its worst-case scenario of settlement for claims and fines at EUR7.6 billion.
The Munich-based company said provisions wouldn't affect operating profits or have an impact on Allianz's dividend or share-buybacks.
This came after Allianz said 2021 operating profit would now be at the top end of its target range of EUR11 billion-EUR13 billion. After third-quarter results, the company has now posted operating profit of EUR9.9 billion in the year to date.
In the quarter to the end of September, net profit was EUR2.11 billion, compared with EUR2.06 billion a year earlier, the company said.
Quarterly operating profit rose 11.3% to EUR3.24 billion, driven by Allianz's asset-management and life/health business segments, even after higher claims from natural catastrophes in the quarter, the company said.
The figures beat analysts' expectations of net profit at EUR2.04 billion and operating profit at EUR3.05 billion, according to a company-compiled consensus.
Pimco and Allianz Global Investors recorded strong net inflows, while assets under management have reached a record level, Mr. Terzariol said.
Group sales in the third quarter rose 9.5% to EUR34.4 billion, driven by all business segments, the company said.
Allianz's solvency II ratio--a measure of an insurance company's financial strength and ability to meet its debts--was 207%, slightly down on expectations of 211%.
However, the good operational result will continue to be overshadowed by the expensive legal disputes in the U.S., DZ Bank says.
--Matthias Goldschmidt contributed to this story.
Write to Ed Frankl at firstname.lastname@example.org
(END) Dow Jones Newswires
November 10, 2021 10:44 ET (15:44 GMT)Copyright (c) 2021 Dow Jones & Company, Inc.