Lobo will be responsible for all AEFA’s risk management policies and procedures, and will oversee and recommend investment strategies.
AEFA had 11% of its roughly $32 billion portfolio invested in junk bonds and high-yield collateralised debt obligations when it discovered the extent of its losses. It has taken steps to reduce that to 7%, which it said is in line with industry averages. About $403 million of the charge reflected the effect of higher default assumptions on the value of its CDOs, $344 million reflected losses taken on bonds sold to rebalance its portfolio and the remainder represented losses on related investments.
The second-quarter loss came on the heels of a $182 million first-quarter pretax charge, also taken to cover the write-down and sale of high-yield investments.