Multiple Investors File to End Allianz Lawsuits Over Funds Collapse

FRANKFURT, Germany –– A number of big investors on Monday filed to end their lawsuits against Allianz after a settlement was reached over their losses in a multibillion-dollar trading debacle at the German asset manager’s funds arm.

The move marks an important milestone in the downfall of the $15 billion Structured Alpha funds, a saga that has dogged the German insurer and asset manager for two years.

But it isn’t over yet. Allianz is still bracing for the outcome of U.S. regulatory investigations by the Department of Justice and the Securities and Exchange Commission.

Allianz said earlier this month that it had settled with a number of investors, but didn’t provide details about who. At the time, it said that it set aside 3.7 billion euros ($4.15 billion) to deal with the lawsuits and investigations.

The sum pushed Allianz into a fourth-quarter loss and resulted in a cut in pay for its chief executive and other board members.

Monday’s filings in a New York court were from pension funds for various Blue Cross and Blue Shield entities and Raytheon Technologies Corp RTX.N.

The filings and Sean Gallagher, a lawyer for some of the plaintiffs with the firm Bartlit Beck, didn’t disclose financial details.

“We are happy to say that we reached a settlement with Allianz, which is good for our clients,” he said.

The Allianz funds used complex options strategies to generate returns but when the coronavirus pandemic sent stock markets into a tailspin in February and March 2020, they plummeted in value, in some cases by 80% or more.

Investors in the funds, which were predominantly U.S. public pension funds, then sued Allianz for a total of $6 billion in damages.

In their lawsuits, investors alleged Allianz had strayed from its stated investment strategy of hedging to limit potential losses.

Other pension funds that invested in the funds included those for laborers in Alaska, teachers in Arkansas and subway workers in New York.

Allianz declined to comment.