AIMCO chief stepping down early after $2.1B losses
Alberta fund seeks culture change from `unsatisfactory' volatility strategy
Alberta Investment Management Corp. (AIMCO) chief executive Kevin Uebelein will step down early, most likely by July 2021, once the $119-billion public asset manager concludes a freshly launched search for his replacement.
Uebelein has been CEO since the beginning of 2015, and assets managed by the Crown corporation have grown by nearly 42 per cent during his tenure.
But he was also at the helm when a volatility trading strategy caused $2.1 billion in losses as the coronavirus pandemic roiled markets earlier this year, which prompted the board of directors to conclude in June that risk management controls were “unsatisfactory” and that a culture change was needed at AIMCO.
In an interview with the Financial Post, Uebelein said he and the board concluded that AIMCO needs a leader with a fresh perspective and a horizon of several years as it faces down “long-term pivotal issues.” These include how to deal with the economic turmoil and recovery from the pandemic and the impact it will have across various asset classes and geographies, and on long-term liabilities.
“We decided now was the right time,” Uebelein said, acknowledging that a mid-2021 transition would be before his contractual obligation to AIMCO is set to expire.
It's “a very modest acceleration” of the succession timeline, he said, adding that he believes his successor will also have a key role to play in the evolution of AIMCO'S relationships and collaboration with clients.
“When we think about the challenges presented to long-term investors like pension funds, sovereign wealth funds, or insurance companies … it calls for ever-increasing and improving collaboration between those clients and organizations like AIMCO,” he said.
Mark Wiseman, chair of AIMCO and also of the board committee overseeing the hunt for a new CEO, said Uebelein was not asked to leave and will remain in charge of implementing the 10 recommendations contained in the board's report on what went wrong with the VOLTS volatility trading program. Those recommendations broadly target risk-management across the organization.
“We have full confidence in him to implement all those recommendations,” said Wiseman, who was CEO of the Canada Pension Plan Investment Board between 2012 and 2016.
“Obviously the VOLTS situation is one that's regrettable (that) we don't want to repeat,” Wiseman said.
In June, Uebelein said the volatility program had been completely wound down and some AIMCO employees had left the organization since the losses were incurred over several days in March.
“The Volts-specific changes are already done and dusted,” he said this week.
Wiseman declined to say whether the change in leadership is also intended to prepare AIMCO for a possible influx of money if Alberta goes ahead with an idea under consideration to remove the province's contributions from the Canada Pension Plan and instead invest them through the provincial asset manager.
In September, the Alberta government began accepting bids for a contract to study the pros and cons of opting out of CPP and setting up a provincial retirement plan — including the cost and structure of the potential Alberta Pension Plan.
“We leave policy-making to politicians and policy-makers. This is a decision for the Alberta government to make,” Wiseman said.
Under a controversial bill passed by Alberta's United Conservative Party late last year, AIMCO is already taking on investment management duties for the Alberta Teachers' Retirement Fund. Combined with other public investment funds being tucked into AIMCO, this amounts to more than $30 billion in additional assets under management.
Uebelein said the recent addition of three clients — the Alberta Teachers' retirement fund, the investment portfolio of Alberta Health Services and the investment portfolio of the province's workers' compensation board — would boost AIMCO'S assets under management by over 25 per cent.
“To be honest, we have to scale regardless,” Wiseman said. “There is a strong belief that I and the entire board share in the power of a strong public asset manager and in that regard, irrespective of what takes place around the potential for Alberta to split from CPP or not, Alberta needs, deserves, and should have a world-class public asset manager.”
AIMCO'S board is being transparent about the search for a new CEO and timing of the leadership changeover because, though it might have been preferable to wait until a successor is found, “you can't do a search process in this day and age without it becoming public,” Wiseman said.
It will be a broad international undertaking, with candidates both inside and outside the asset manager considered for the top job, he said.
Wiseman and Uebelein worked together previously at the Canadian Coalition for Good Governance, an institutional investor rights group, and they said AIMCO is intent on creating the kind of smooth and well-thought-out CEO transition plan that the CCGG pushes corporations to adopt.
“The world is changing fundamentally … for us and our clients,” Wiseman said. “This is all about looking forward. (AIMCO) can and will be even better in the decades ahead and it'll grow from the strong foundation Kevin has helped put in place.”