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The chief executive officer of Alberta’s $119-billion, government-owned fund manager is departing in the wake of a $2.1-billion loss this year that was traced to flaws in the Crown corporation’s risk management and corporate culture.

Kevin Uebelein, CEO of the Alberta Investment Management Corp. since 2015, will leave by the end of June, 2021, the Edmonton-based fund manager said Wednesday. AIMCo director of communications Dénes Németh said: “This decision is Kevin’s. His natural term ending date is in the not-too-distant future, and accordingly he believes that the board should begin the search for his successor now.”

AIMCo invests on behalf of 31 clients, including pension plans for provincial government employees and Alberta’s $17-billion Heritage Savings Trust Fund. The fund manager lost $2.1-billion on trading strategies linked to market volatility in the spring and early summer. The investments performed far worse than expected as stock markets plunged, then rallied as the pandemic hit North America. AIMCo significantly underperformed peers during this period.

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An independent audit commissioned by AIMCo’s board subsequently concluded the fund manager’s investment and risk management systems were at fault. In a report, the board said: “The breadth and depth of risk governance controls, collaboration and risk culture, while evolving and improving over the past 2-3 years, are still unsatisfactory.”

AIMCo appointed a new chairman in June: former Canada Pension Plan Investment Board CEO Mark Wiseman. Shortly thereafter, AIMCo vice-president of public equities Peter Pontikes and portfolio manager David Triska departed. Both oversaw the volatility trading strategy.

In October, AIMCo recruited a new chief risk officer, Andrew Tambone, the former chief investment officer of the Workers’ Compensation Board – Alberta. The fund manager also created a new role, a chief investment strategy officer who reports to the CEO, and hired Bank of Montreal veteran Amit Prakash, who oversaw alternative asset strategies as a managing director at BMO Global Asset Management.

The executive is turning over as Alberta Premier Jason Kenney moves forward with plans to bring the independently run, $18-billion pension plan for provincial teachers into AIMCo, a move the teachers’ union opposes. Mr. Kenney’s government has also begun a study into moving Alberta’s contributions to the Canada Pension Plan into a new provincial pension, and AIMCo has been discussed as a potential operator of such a plan.

“AIMCo faces several important inflection points, including the integration of important new clients and responding to and recovering from a tumultuous global economy,” Mr. Uebelein said in an internal e-mail to AIMCo staff and clients on Wednesday. “These factors, and others, will take years to fully address and accomplish. For this reason, I believe that now is the right time for identifying the next chief executive.”

Mr. Uebelein’s compensation totalled $2.8-million last year, making him one of the best-paid civil servants in Alberta. Public filings from AIMCo clients show the fund manager was one of Canada’s worst-performing pension plans in the first three months of 2020, and has consistently missed performance benchmarks.

The $3-billion Special Forces Pension Plan for police officers, an AIMCo client, reported in early June that its fund was down 12.2 per cent in the first quarter of this year, compared with a 6.7-per-cent decline in their benchmark. AIMCo posted a 10.2-per-cent loss on a $50-billion portfolio belonging to its largest client, a fund for health care and municipal workers called the Local Authorities Pension Plan, or LAPP. The average Canadian pension plan lost 8.7 per cent of its value in the first three months of this year, according to consulting firm Mercer.

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In addition to losses on volatility-linked strategies, filings from clients show AIMCo turned in poor results in the first three months of the year in stock, bonds, real estate and private equity investments. Last year, LAPP said AIMCo’s results fell short of the pension plan’s value-added expectations for 46 consecutive quarters, or 11 years 6 months.

In April, Mr. Uebelein apologized for the losses on volatility trading, and said in an open letter: “Let me be clear, the performance of this investment is wholly unsatisfactory, and AIMCo’s board and management share the frustration and disappointment of our clients, their beneficiaries and all Albertans.”

With a report from Jeffrey Jones in Calgary

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