Alliance pays 140 million euros to close US unit after fraud

By Tom Sims and Alexander Hubner

FRANKFURT (Reuters) – Allianz said on Friday it had spent about 140 million euros to close a U.S. financial unit involved in a multibillion-dollar fraud.

In May, the German insurer agreed to close Allianz Global Investors as part of a plea deal for securities fraud and a $6 billion settlement with U.S. authorities and regulators.

The charge, revealed in the second-quarter balance sheet, is a relief from the fallout from a lawsuit that has tarnished the reputation of one of Germany’s most valuable companies for months.

Shareholder net profit of €1.706 billion in the quarter was below the consensus estimate of €1.846 billion and down from €2.225 billion a year earlier.

But the insurer’s target of an operating profit of between 12.4 billion and 14.4 billion euros in 2022 remained the same.

“We are well positioned to manage the impact of high inflation and economic pressures, particularly evident in Europe,” said CEO Oliver Pate.

Volatile markets hit Allianz in the quarter, leading to a write-down of 282 million euros and a 12% drop in operating profit in its life and health insurance division.

(By Tom Sims and Alexander Huebner)