The group said the additional provision, equivalent to US$2 billion, would cover legal liabilities related to the “Structured Alpha” hedge fund, housed in the group’s US subsidiary Allianz Global Investors (GI), one of the largest asset managers globally.

Allianz had already put aside €3.7 billion in February to compensate investors in the fund who incurred heavy losses during the coronavirus pandemic.

The Munich-based firm has also been cooperating with an investigation by the US markets watchdog, the US Securities and Exchange Commission (SEC), and a criminal inquiry by the US department of justice, which opened in August.

Since its last announcement, Allianz had “achieved additional settlements” while its discussions with government authorities were “progressing”, it said in a statement.

The extra cash reflected “a fair estimate of its remaining financial exposure in relation to compensation” of investors and the conclusion of the government investigation, it said.

Allianz said it would share details of a resolution, “once an agreement with the authorities has been reached”.

The decision would depress Allianz’s net profits in the first quarter by €1.6 billion to €600 million total, the group said.