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Allianz books extra $2 billion in legal expenses

AFP

The German financial giant said Wednesday it booked 1.9 billion euros, equivalent to about $2 billion, in legal provisions in the first quarter owing to further settlements with investors and continuing discussions with the U.S. government.

The figure, which comes on top of the €3.7 billion Allianz had already set aside, reflects the company’s remaining financial exposure related to payments to investors and potential penalties from the government, Allianz said. The legal hit isn’t unexpected; analysts had anticipated further provisions. In total, Allianz will have set aside €5.6 billion related to the matter.

As a result of the latest provision, Allianz’s first-quarter net income fell by €1.6 billion after tax, with net income attributable to shareholders totaling €600 million. Group operating profit in the first quarter was €3.2 billion, Allianz said. The company will release its first-quarter earnings on Thursday.

Allianz shares traded up 2.4% in early trading in Frankfurt. Analysts at Citigroup said Wednesday the legal provision should prove reassuring as “the unknown potential range of outcomes was a deterrent to some."

A group of funds managed by one of Allianz’s investing divisions, Allianz Global Investors, had bet on stock options that effectively sold insurance against a market selloff. The strategy had been profitable and steady during calm markets. When stocks fell and volatility reigned in March 2020, the funds notched catastrophic losses and the company shut two of the most aggressive strategies.

Investors in the funds, including the Blue Cross Blue Shield Association and the Arkansas Teacher Retirement System, sued Allianz. The Justice Department and U.S. Securities and Exchange Commission are also investigating.

Allianz Chief Executive Oliver Bäte declined in February to name the investors the company had settled with, but said they represented a substantial majority of its litigation exposure.

This story has been published from a wire agency feed without modifications to the text

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Dive Deeper:
Is Blue Apron Holdings a Buy After Announcing Capital Investment and Refinancing Moves?
Meal-kit company Blue Apron Holdings (APRN) announced capital investment and refinancing moves totaling $70.50 million last week, heightening investor interest…
TPG sees buying opportunities in declining market values
The private-equity firm, which went public in January, beat estimates as distributable earnings more than tripled
Morning Brief: Top Financial Stories Dominating on Wednesday, May 11
Reuters
Rakesh Jhunjhunwala held this public sector bank is a hot pick on markets post Q4 earnings
For the full year FY22, net profit climbed to ₹5,678.42 crore more than doubled from ₹2,557.58 crore in FY21. Net…
One subscription that gives you access to news from hundreds of sites
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Get all your news in one place