CEO leaving AIMCo in wake of $2.1-billion investment loss

The CEO of the Alberta Investment Management Corporation is leaving the organization by the end of June 2021 in the wake of AIMCo's heavy investment losses earlier this year.

Kevin Uebelein, who has held the top AIMCo post since 2014, has agreed with the board to "begin now the process of CEO leadership transfer," AIMCo spokesperson Denes Nemeth said in an email Tuesday.

"AIMCo remains in very capable hands with Kevin continuing at the helm until that date and he has the full support of the board and management as he continues to advance the many priorities before us," Nemeth wrote.

Uebelein was paid $2.8 million in compensation in 2019 and $3.4 million in 2018, according to AIMCo's annual reports.

AIMCo, a provincial corporation, manages the investments of several provincial government funds, including the Heritage Savings Trust Fund. It also invests money in the pension funds of more than 300,000 Alberta public sector workers.

AIMCo has been under scrutiny since the spring, when investment managers lost $2.1 billion on a risky investment strategy known as VOLTS. The strategy cost the Heritage fund $411 million, and was partly responsible for Alberta's nest egg hitting its lowest value in eight years this spring.

The losses prompted AIMCo's board to order an external review, and the corporation pledged to improve.

In June, the reviewers found internal challenges to investment decisions, risk controls, collaboration and risk culture within the organization were "unsatisfactory."

Senior leaders at AIMCo didn't have enough information, fast enough, about the potential risk to their investments, the reviewers concluded. They said AIMCo needed a culture change to prevent future losses.

AIMCo could manage future provincial pension plan

The corporation has been under additional public and political scrutiny since the United Conservative Party government passed a bill in 2019 requiring the Alberta Teachers' Retirement Fund to use AIMCo as its investment manager. About 83,000 current and retired teachers are affected by the change, which is expected to be complete in 2021.

Bill 22 also required three large public sector pension plans to use only AIMCo as their investment manager. It also gave the government the right to reject potential nominees to pension plan boards.

Finance Minister Travis Toews has said the moves would allow AIMCo to add substantially to the $119-billion worth of assets it manages, which would bring economies of scale. He said teachers and taxpayers would save investment management fees if AIMCo took charge of the investing.

The government is also exploring the option of creating a provincially run public pension plan and pulling Alberta out of the Canada Pension Plan (CPP). An Alberta-run pension plan could be managed by AIMCo.

In September, the government issued a request for proposals for a contractor to study the potential risks, benefits and requirements of establishing a provincial pension plan. If the benefits outweigh the risks, the government has said it would put the question to a provincial referendum in 2021.

The moves have generated pushback from the public and sparked campaigns advocating government stay away from pensions. NDP labour and immigration critic Christina Gray tabled a private members' bill earlier this year that sought to stop the moves, but it was dismissed by the government.

On Tuesday, Gray said Uebelein's departure raises questions about the advice AIMCo has given the government about consolidating more assets under AIMCo's control.

In July, Gray and her caucus colleagues delivered to the premier's office a list of 36,000 names signed on petitions advocating a halt to the pension changes.

"Albertans are so concerned about retirement security, about being forced to use AIMCo, and about this government's move toward leaving the Canada Pension Plan, which has been stated by the government, involves AIMCo," Gray said.

Gray said AIMCo should be more transparent about the causes and consequences of the $2.1-billion investment loss.

The future of AIMCo

Nemeth said AIMCo's board is immediately starting an international search for a new CEO, and will consider candidates inside and outside the organization.

Nemeth said Uebelein's departure was his decision, not the board'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 successors now," he wrote.

He did not provide a date for the end of his term, or information about any potential severance payments.

Uebelein hasn't indicated his future plans, he said.

There have been other changes to AIMCo's executive team since the losses first became public in April. Two other senior leaders left the company in June, and the names of three other executives have disappeared from AIMCo's senior team page on its website. This month, the corporation announced a new chief financial officer, new chief risk officer and the promotion of a vice-president of responsible investment.