(Reuters) — Allianz announced on Friday big bonus cuts for its CEO and board, and a settlement with a “vast majority” of investors, as it braces for the outcome of U.S. regulatory investigations into a multibillion-dollar trading debacle at its funds arm.

The collapse of a $15 billion set of investment funds during the pandemic market turmoil in early 2020 has cast a shadow over Germany's most valuable financial company and one of the world's largest asset managers.

A €3.7 billion ($4.2 billion) provision announced on Thursday to deal with a slew of investor lawsuits goes some way to resolving the issue, but investigations by the U.S. Department of Justice and Securities and Exchange Commission are ongoing. Allianz said further costs were likely.

The issue has worried Allianz's top shareholders and harmed its reputation with pension funds that provide a source of business for one of Germany's best-known brands.

Speaking at a news conference, a contrite CEO Oliver Baete apologized for investor losses and promised a “significant impact” on compensation for himself and all board members for the past year.

“We want to demonstrate we are taking this matter extremely seriously and we regret really the losses,” he said, declining to quantify the cut.

Mr. Baete's pay package in 2020 totaled €6.39 million,  and the entire board's was €32 million.

Mr. Baete also said the German insurer and asset manager had settled U.S. lawsuits with the “vast majority of investors,” without giving details of the agreement.

But the fallout continues, and some investors remain cautious.

Reiner Kloecker, a fund manager with Union Investment, one of Allianz's largest shareholders, said the provision was a step in the right direction but warned significant additional losses would mean “management's credibility would suffer again.”

The issue centers around Allianz funds that used complex options strategies to generate returns but racked up massive losses when the spread of COVID-19 triggered wild stock market swings in February and March 2020.

Allianz, with €2.6 trillion of assets under management, said Thursday the provision plunged it to a fourth-quarter loss. Its 2021 profit was the lowest since 2013.

Investors in the so-called Structured Alpha set of funds have claimed some $6 billion in damages from the losses in cases filed in the United States.

The set of funds catered in particular to normally conservative U.S. pension funds, from those for laborers in Alaska to teachers in Arkansas to subway workers in New York.

After the pandemic sent markets into a tailspin early in 2020, the Allianz funds plummeted in value, in some cases by 80% or more. Investors in their lawsuits alleged Allianz strayed from its stated strategy.

Mr. Baete declined to specify which investors had settled.