German asset manager Allianz has set aside another €1.9bn (£1.6bn) to cover the costs of lawsuits arising from the multi-billion-dollar collapse of its Structured Alpha funds.
The extra sum brings Allianz’ total reserves to €5.6bn, after the Munich firm set aside €3.7bn to settle the lawsuits in February this year.
The move comes as Allianz faces a raft of investor lawsuits, after its $15bn (£12bn) Structured Alpha funds racked up huge losses due to stock market volatility at the start of Covid-19.
In a statement, the Munich firm said it had decided to set aside the extra sum in light of “progressing discussions” with US authorities, after the US Department of Justice launched a probe into the funds last year.
Allianz decision to set aside the cash comes after coalition of US pension funds lodged lawsuits against the firm, over claims Allianz downplayed the risk of investing in the options funds.
Investors including pension funds for New York Subway workers and city of Milwaukee employees filed at least 25 lawsuits against Allianz claiming some $6bn in damages.
German bank Berenberg later estimated the lawsuits would cost Allianz between €3.5bn-€6.7bn.
The upped provision come after Allianz chief executive Oliver Beate told investors last month Allianz was keen to resolve the lawsuits quickly.
In March, the Arkansas Teacher Retirement System pension fund secured a $624m settlement for losses incurred through the Structured Alpha funds.