Jubilee insurance buyer Allianz in the soup over US losses
German insurer Allianz which recently acquired majority stake in Jubilee insurance is under investigation by US and German authorities over loss of billions in investments in the US market.
Allianz, which operates Structured Alpha Funds with over Kes313 trillion ($2.9 trillion) assets, is being investigated by Germany’s financial regulator, BaFin, US Department of Justice (DOJ) as well as Securities and Exchange Commission (SEC).
The firm’s officials allegedly had inside knowledge on the events that led to loss of billions of dollars in the market roil up following the outbreak of the coronavirus pandemic.
Some of the funds plummeted over 80 per cent and clients rushed to salvage what was left of their money.
Reuters reported the losses from bad bets on options were so extreme that Allianz closed two funds in March last year that were worth $2.3 billion at the end of 2019.
Read also: Allianz Group share sale deal pushes Jubilee profit up to Sh4.5 billion
Investors have now lodged 25 lawsuits claiming $6 billion in damages, saying Allianz strayed from its strategy of providing downside protection for market crashes.
According to Allainz, however, the funds were sophisticated products with elite investors who understood the risks.
The giant insurer has noted the inquests may have an impact in future earnings.
Allianz Insurance Company of Kenya Limited was established as a greenfield operation in 2014, the company has sought to grow by acquiring the country’s largest health insurer, Jubilee, for a Kes10 billion deal including subsidiaries across the region.
The Nairobi Securities Exchange-listed insurer signed an agreement to offload stakes ranging between 51 per cent to 66 per cent in its general insurance subsidiaries in Kenya, Tanzania, Uganda, Burundi and Mauritius.
Jubilee will receive Kes7.75 billion in the deals with Allianz while Kes3 billion will be invested in the operating businesses in Kenya, Uganda, Tanzania, Burundi and Mauritius.
Jubilee insurance says it had received Kes2.07 billion as part of the proceeds from the sale which it expects to close by the end of the year.
