Germany's Allianz said on Wednesday it would set aside another 1.9 billion euros ($2 billion) as it braces for the outcome of U.S. regulatory investigations into a multibillion-dollar trading debacle at its funds arm.
Allianz aims for timely resolution with U.S. DOJ, SECFRANKFURT, May 11 - Germany's Allianz
The new provision comes on top of 3.7 billion euros the company set aside in February to cover litigation and U.S. regulatory investigations into the funds' demise. It brings the total to 5.6 billion euros.Allianz said Wednesday's booking hit its first-quarter net profit, which was 600 million euros, less than the 1.9 billion euros analysts had expected.
Allianz said the additional provision should cover the remaining costs it could incur. The sense of certainty suggests a settlement with the U.S. government could be in the offing. Analysts with Jefferies said the provision, coming earlier and smaller than expected, removes "a substantial overhang on the shares".
The issue centres around Allianz funds that used complex options strategies to generate returns but racked up massive losses when the spread of COVID-19 triggered wild stock market swings in February and March 2020.
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