$119 Million Pulled Out of PIMCO in Holocaust Protest

An influential Los Angeles foundation has withdrawn $119 million of its funds from PIMCO, a large Newport Beach money management firm owned by Allianz AG, a Germany-based insurer that has been under fire for its handling of claims by survivors of the Nazi Holocaust.

Jack Shakely, president of the California Community Foundation, said the group had no choice but to withdraw its money because Allianz has refused to comply with a California law enacted in 1999 that requires it to disclose information on all the policies it wrote between 1920 and 1945.

On May 5, Allianz purchased 70% of Pimco Advisors Holdings--PIMCO’s parent company--for $3.3 billion. The purchase made Allianz the world’s sixth-largest money manager, with $650 billion in investments. Allianz, which also owns Fireman’s Fund, already was the world’s second-biggest insurer.

The foundation’s decision to withdraw the funds marks the first time a foundation has stopped doing business with a financial institution because of the controversy over Holocaust reparations.

The $119 million represents more than 20% of the foundation’s $540 million endowment, Shakely said, adding that the foundation regretted having to make the move because it had had a positive 25-year relationship with PIMCO and considered the firm a good money manager. The foundation, founded in 1913, is the second-oldest community foundation in the nation and awards grants to a variety of groups in Southern California.

Allianz wrote about 1.5 million policies between 1920 and 1945 but has told insurance regulators that it would provide information on 150,000 of them, at most. More complete disclosure would be excessively burdensome and expensive, the company said.

Allianz, along with other insurers, has also challenged the state’s disclosure law in federal court.

Advocates for Holocaust victims say public disclosure of insurance company lists of policies is critical because in many cases survivors of the Holocaust or their heirs may not otherwise know whether they have a valid claim.

Organizations representing Holocaust survivors also say that Allianz has a special responsibility for full disclosure because company officials had close ties with officials of Hitler’s government.

“The refusal of Allianz to comply with both the tenets and the spirit of California’s Holocaust Victims Insurance Relief Act is in direct opposition to the core values and practices of the California Community Foundation,” Shakely said in a May 23 letter to William S. Thompson, PIMCO’s chief executive.

Shakely said in an interview that he believed that Thompson wanted Allianz to comply but was unable to persuade Allianz executives. After a meeting with PIMCO and Allianz officials two weeks ago, Shakely said, he concluded that “there is a cultural gap on this issue that is 5,000 miles wide.”

PIMCO issued a statement saying the foundation’s decision was “very disappointing news.”

PIMCO’s statement noted that Allianz was one of five European insurers participating in an international commission created in 1998 in response to allegations that some European insurers had failed to honor valid claims on policies written in the Holocaust era.

“We remain confident that Allianz’s continued role” in that international process “will bring fair and prompt resolution to any remaining insurance issues relating to this tragic chapter of history,” the PIMCO statement said.

An Allianz spokesman said the firm remains committed to the international commission.

Documents from the international claims commission obtained by The Times this spring revealed that the insurance companies participating in the claims settlement process had rejected three of every four of the first batch of claims presented to them under the commission’s fast-track process.

Arthur Stern, a Holocaust survivor and a member of the executive committee of the California Holocaust Insurance Settlement Alliance, said the group was delighted by the foundation’s action. “It is in the interest of Holocaust survivors and the California law,” he said.