Aon Investments USA Inc. has had a tough two years.
The Chicago-based investment consulting unit of Aon PLC, London, is dealing with a lawsuit filed in September 2020 by Blue Cross and Blue Shield Association's national employee benefits committee that alleges Aon did not provide adequate investment advice regarding three Structured Alpha hedge funds managed by Allianz Global Investors in which its national retirement trust invested.
The AllianzGI funds incurred high losses in February and March of 2020, causing a loss of about $2 billion to the trust, according to the Blue Cross/Blue Shield lawsuit.
The size of the Blue Cross/Blue Shield retirement trust could not be learned.
Aon's consulting unit also is facing potential litigation from the $75.1 billion Pennsylvania Public School Employees' Retirement System, Harrisburg, over inaccurate investment return calculations.
The Blue Cross/Blue Shield lawsuit was filed in New York District Court on Sept. 16, 2020, and named Aon Investments USA, Aon Hewitt Investment Consulting Inc. and Allianz Global Investors U.S. LLC as defendants, according to the court filing.
The suit alleged that in addition to AllianzGI's role in the investment losses the national trust experienced from the collapse of the hedge funds, Aon also was "to blame" for the loss because it did not "conduct active, ongoing monitoring" of Allianz or "identify any forward-looking risks that could impact performance."
Allianz Global Investors U.S. reached a settlement with Blue Cross/Blue Shield in February regarding its losses. The size of the settlement was not available.
"The (Blue Cross/Blue Shield) litigation in no way compromises our ability to serve clients,'' said Robert Elfinger, a spokesman for Aon Investments USA, in an email.
"In the ordinary course of business, the firm and its subsidiaries are subject to lawsuits and proceedings that arise. We intend to vigorously defend ourselves against these claims," Mr. Elfinger said.
Aon filed litigation on May 17 in New York District Court suing five Blue Cross executives, including Jamey Sharpe, the association's now retired chief investment executive. The lawsuit alleges that Mr. Sharpe encouraged the committee that oversees pension investments to commit more to the Structured Alpha funds.
At one point, the trust's investment in the AllianzGI funds totaled $2.9 billion, the Blue Cross/Blue Shield lawsuit said.
Mr. Sharpe denied Aon's allegations, saying the lawsuit is "baseless."
Aon Investments USA is not the subject of any other litigation about the Allianz Structured Alpha funds, said Steven Voss, senior partner of Aon Investments USA, in an interview.