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Timid recovery for Allianz shares

After news of US investigation into one of its funds, which could ‘materially impact’ future financial results


Pete Carvill

Shares in Allianz have teased a small recovery since plummeting at the beginning of the week after an admission that it was under investigation by the US’s Department of Justice.

The fall comes as the US Department of Justice investigates the company over its Structured Alpha Funds. According to a statement from Allianz, the American investigation could ‘materially impact future financial results of Allianz Group’. The probes into Allianz’s business conduct have also reportedly drawn civil lawsuits and an investigation from the Securities and Exchange Commission.

Following the admission on 1 August, the price of individual shares within the company fell around 10% from €210.35 on the previous day to €189.50 by the early morning 5 August. However, preliminary data suggests that the value of each share has begun somewhat to recover, with later data from 5 August showing an increase to €192.64, before decreasing again to €191.86.

Not feasible

The DOJ probe comes following financial dealings during the early days of the pandemic.

According to the Wall Street Journal: “The Justice Department’s interest in the case raises the stakes for Allianz and the asset-management division whose stock-options trades racked up huge losses when the market swung violently in early 2020. Stocks soon recovered, but not before Allianz Global Investors moved to liquidate two of its funds, locking in losses for their investors.”

The fall in share price for Allianz, said the WSJ, could be the biggest of its kind since the early days of the pandemic.

Allianz’s statement on the matter was terse. After acknowledging the ‘relevant risk’ that the investigation could bring to its bottom line, it added: “However, it is currently neither feasible to predict how the SEC and DOJ investigations and the pending court proceedings may be resolved nor the timing of any such resolution. It is in particular not feasible to reliably estimate the amount of any possible resolution including potential fines. Therefore, no provision has been recognised at the current stage.”