Allianz SE shares sank after the German financial giant said the Justice Department is investigating its hedge funds that caused investors significant losses during the pandemic-related market downturn early last year.
Allianz on Sunday said its future earnings could be materially hit by the current investigations, which include the DOJ’s inquiry as well as a probe launched by the U.S. Securities and Exchange Commission last year. The insurer said it couldn’t estimate the size of any potential fines and therefore hasn’t set aside provisions.
Shares in Allianz were down more than 7% early Monday. If sustained, it would be the company’s biggest one-day share price loss since the early days of the Covid-19 pandemic in March 2020, according to FactSet.
Allianz said it is cooperating with the DOJ and the SEC and has launched its own review.
The company’s Allianz Global Investors unit shut two of its Structured Alpha funds last March after they took heavy losses on stock-options trades. The funds, which managed nearly $2.3 billion, had been net buyers of puts, or options giving the holder the right to sell an asset at a predetermined price in the future.