Outside experts to review AIMCO investments and $2.1-billion loss

Alberta’s government-owned investment manager is enlisting outside experts to investigate its recent $2.1-billion loss during the economic downturn triggered by COVID -19.

The board of directors of the Alberta Investment Management Corp., or AIMCO, stated Thursday that accounting firm KPMG will conduct an independent review “to identify lessons learned and corresponding enhancements to AIMCO’S investment and risk-management processes.”

Barbara Zvan, former chief risk and strategy officer of the Ontario Teachers’ Pension Plan, will advise the board throughout this process.

“We deeply regret this result and are determined that the lessons from this experience will improve the Corporation’s management processes and prevent any similar occurrences,” the statement said.

A report is expected by mid-june and will be shared with AIMCO’S clients and the government.

The statement comes after reports that the Edmonton-based fund manager lost up to $4 billion during the recent global economic collapse by betting on contracts that pay off only if stocks remain stable.

In an April statement, AIMCO CEO Kevin Uebelein confirmed that the losses to date were $2.1 billion, but said actual losses won’t be finalized until the volatile trading strategy is completely “wound down,” expected by mid-june.

The board, led by chair and former Enbridge Inc. chief financial officer Richard Bird, said in Thursday’s statement that “no other investment strategies could generate substantial losses in very unusual circumstances.”

The loss amounts to roughly two per cent of AIMCO’S $119-billion portfolio. The fund manager controls investments for 375,000 members of provincial public retirement programs, including the $18-billion Heritage Savings Trust Fund and $50 billion for the Local Authorities Pension Plan (LAPP), with 275,000 members, including health-care, city and school employees and retirees.

In his April statement, Uebelein said AIMCO takes full responsibility for the investment strategy that led to the blow and committed to “making any and all changes to ensure AIMCO is stronger and that we avoid a repeat of this outcome, regardless of market turmoil.”

The independent Crown corporation is set to take over the investment management of roughly $18 billion in assets under the Alberta Teachers’ Retirement Fund (ATRF) in 2021 after the UCP government passed a bill in November.

On Tuesday, Alberta Teachers’ Association president Jason Schilling renewed his call for the government to keep teachers’ pensions out of AIMCO’S management.

“Time to listen to teachers’ concerns and repeal this decree,” he wrote on Twitter.