For years, Allianz , one of the world's biggest investors, piled billions into property, wind farms and even London's sewage system, but now it is moving to shun such 'alternative' investments for plain vanilla bonds, people with knowledge of the matter said.
For Allianz, the repositioning also coincides with efforts to restore its reputation after paying some $6 billion inannounced last year for fraud in the United States. This resulted in part of its U.S. asset management business agreeing to a guilty plea for the conduct, something its own lawyers said was the equivalent of a "death penalty".
One of the people noted that Allianz's solvency ratio - a measure of financial strength - had suffered in the wake of the funds debacle and that the new investment approach could help restore it.Giulio Terzariol, Allianz's chief financial officer, shed light on the company's rethink in November when he told analysts on a conference call: "The value proposition of fixed income is much more compelling compared to a few years ago ... it's a different game".
Since then, Allianz has increased its alternative investments by 350% to more than 200 billion euros, while fixed income investments rose 40% and equities 30%, based on Reuters calculations using Allianz financial statements. Among the big buys were the stake in London's new sewage tunnel, and wind farms from the United States to Finland.
Real estate, which makes up the bulk of Allianz's alternative investments, included around 700 million euros in stakes in New York's
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