German blue-chip invests in insurer’s cover fund
GERMANY - The Pensionsfonds of Europe's third-largest truck maker, Man AG, has invested €220m of its assets in German insurer Allianz Leben's cover fund.
Munich-based Man has allocated €220m, around a seventh of its pension assets, to the cover fund (Sicherungsvermögen) - a fund set up to secure the liabilities of an insurer - on February 11, Man and Allianz said in a joint statement.
Frank Lutz, senior vice-president of finance at the DAX-listed company, told IPE this morning: "A part of it is just investment of our pension assets: we fully funded our pension liabilities last year, so the money has to be invested in one way or another."
He added: "We are following our strategy of making both active and passive investments in fixed income as with equity, so we thought the Allianz product was fairly attractive and adds good mixture to our portfolio, which also corresponds to our risk aspects."
The Man pension fund currently invests 75% of its assets in fixed income, along with 20% in equity and 5% in real estate but Horst Grögler, chairman of the Man Pensionsfonds - set up last year within its contractual trust arrangement (CTA) - commented in a statement the investment in the cover fund creates "the potential, to reach, in total, a higher return".
Allianz Leben, the life insurance arm of Allianz, said the fund offers a choice between various investment horizons, while guaranteeing a yearly minimum investment return of 2.25%.
Additionally, there is a further, variable, return, which is based on the total return of Allianz Leben.
Man officials say adding the cover fund to its portfolio will effect value growth as well as protecting investment returns already reached, while reducing the downside risk - the prospect risk returns are lower than expected - of the total portfolio.
"In this way, other parts of the portfolio can be invested in a more risk-orientated way," commented the firm.
According to Allianz, the firm will invest the pension fund's assets "according to the legally required regulations for insurance companies".
Andreas Gruber, executive director of Allianz Investment Management, also said: "Compared to fixed income securities, you can expect higher returns with lower volatility. Because of the yearly interest allocation, steady and predictable asset growth follows."
A spokesperson told IPE Allianz Pensionsfonds, Bosch Pensionsfonds and group internal CTAs also invest in the cover fund.
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