German insurer Allianz has added another €1.9bn to provisions for payouts over a scandal at its US asset management business, taking the total amount to cover fines and other costs to €5.6bn.

In February, the Munich-based group set aside €3.7bn to pay for settlements with investors who put money into hedge funds managed by its asset management arm Allianz Global Investors. At the time, it said the costs were likely to rise.

The extra €1.9bn booked in the first quarter will cover additional settlements with investors and will reflect “progressing discussions with governmental authorities in the US”, the group said in a statement on Wednesday.

“Allianz SE believes that this provision booked is a fair estimate of its remaining financial exposure in relation to compensation payments to investors and to payments under any resolution of the governmental proceedings,” it added.

Shares in Allianz were up 2.3 per cent in early trading in Frankfurt on Wednesday. When Allianz first disclosed the US Department of Justice investigation last summer, its stock fell more than 8 per cent, wiping out about €7bn in stock market value.

The Allianz funds at the heart of the scandal, known as “structured alpha”, were touted to clients as safe but suffered heavy losses during the early stages of the coronavirus pandemic in spring 2020. Investors have accused Allianz of employing a “reckless strategy”.

The DoJ and the Securities Exchange Commission are investigating the collapse. Allianz said on Wednesday it was seeking “a timely resolution to the governmental proceedings in ongoing discussions” with the DoJ and the SEC, adding that it would disclose more details “once an agreement with the authorities has been reached”.

The new provision would dent profits in the first quarter by €1.6bn after tax, the group said.