Allianz Says Asset Management Unit Profit Fell 29% on Pimco (1)
2014-05-14 06:43:27.265 GMT
(Updates with CFO comment on 2014 profit target in fifth
paragraph, pension revaluation in 11th.)
By Oliver Suess
May 14 (Bloomberg) -- Allianz SE, Europe’s biggest insurer,
said profit at its asset management unit, which includes Pacific
Investment Management Co., slid 29 percent on client
withdrawals, fueling a decline in total earnings.
Net income in asset management dropped to 406 million euros
($557 million) in the first quarter from 568 million euros
reported a year earlier, the Munich-based insurer said in a
statement today. Pimco had net outflows of 21.7 billion euros,
while Allianz Global Investors had net inflows of 1.9 billion
euros.
Michael Diekmann, 59, Allianz’s chief executive officer,
had to defend Newport Beach, California-based Pimco at the
insurer’s annual general meeting in Munich last week against
shareholder criticism over declining returns and management
infighting. Pimco has been a very profitable investment since
the German insurer took it over in 1999, Diekmann said.
Pimco’s performance fees in the first quarter of last year
were boosted by non-recurring carried interest from “certain
private funds,” Allianz said in February.
“As expected, the results in asset management came in
lower, but the business is in line with our target for the
year,” Allianz Chief Financial Officer Dieter Wemmer said in
the statement. “Given its solid performance and the
outperformance of both of our insurance segments, we remain on
track to achieve our operating profit outlook.”
El-Erian
Allianz targets operating profit of 9.5 billion euros to
10.5 billion euros this year. The asset management unit’s
contribution to the earnings increased to about 31 percent in
2013 from 12 percent five years ago, helped by expanding assets
under management and lower payouts of profit participation
rights for the firm’s senior management, granted as part of
Pimco’s acquisition by Allianz.
As Pimco struggles to navigate rising interest rates and
client withdrawals, the unexpected resignation of CEO Mohamed
El-Erian amid reports of clashes with founder Bill Gross spurred
an overhaul of top management.
Investors including Union Investment, Allianz’s ninth-
biggest shareholder according to data compiled by Bloomberg,
used the firm’s annual general meeting on May 7 to highlight
deteriorating fund performance and asked whether Allianz plans
to change a hands-off approach toward Pimco, as assets surged to
almost $2 trillion under its ownership.
Pimco Acquisition
Allianz acquired a majority stake in Pimco in 1999 for $3.3
billion. Pimco managed about $256 billion at the time. The
insurer gave the fund manager, which Gross co-founded in 1971,
greater independence in 2011 by separating it from its other
asset managers, which are combined in the Allianz Global
Investors unit.
El-Erian, who had shared the role of co-chief investment
officer with Gross, has continued to work for Allianz as chief
economic adviser. Since El-Erian’s resignation, Pimco named six
new deputies and Gross has said his firm is now in better shape
than before.
Net income at Allianz’s property and casualty insurance
unit, typically the most important in terms of earnings, fell 37
percent to 645 million euros in the first quarter from a year
ago. Lower non-operating realized gains and “a one-off effect
from inter-segment pension revaluation recorded in the non-
operating administrative expenses” contributed to the decline,
the insurer said in its quarterly report.
Profit at the life- and health-insurance division was
little changed at 629 million euros.
Allianz reported last week that first-quarter operating
profit fell 2.9 percent to 2.72 billion euros. The shares lost
6.4 percent this year, valuing the company at 56 billion euros.
That compared with a gain of 0.8 percent for the Bloomberg
Europe 500 Insurance Index.
For Related News and Information:
Allianz CEO Defends Profitable Pimco Amid Shareholder Criticism
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Allianz Confirms Profit Target After Profit Beats Estimates (2)
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El-Erian Says Pimco’s Gross Is One of World’s Best Investors (3)
NSN N4I2Y36JIJUQ<GO>
Allianz Enlists Automakers in Car Insurance Earnings Revival
NSN N44NOQ6S972F<GO>
Allianz Agrees to Buy UnipolSai Assets for 440 Million Euros
NSN N2J6NU6K50XY<GO>
Allianz Fourth-Quarter Profit Misses Estimates; Shares Drop (2)
NSN N1NNEW6K50Y5<GO>
To contact the reporter on this story:
Oliver Suess in Munich at +49-89-244478-804 or
osuess@bloomberg.net
To contact the editors responsible for this story:
Frank Connelly at +33-1-5365-5063 or
fconnelly@bloomberg.net
Mark Bentley
2014-05-14 06:43:27.265 GMT
(Updates with CFO comment on 2014 profit target in fifth
paragraph, pension revaluation in 11th.)
By Oliver Suess
May 14 (Bloomberg) -- Allianz SE, Europe’s biggest insurer,
said profit at its asset management unit, which includes Pacific
Investment Management Co., slid 29 percent on client
withdrawals, fueling a decline in total earnings.
Net income in asset management dropped to 406 million euros
($557 million) in the first quarter from 568 million euros
reported a year earlier, the Munich-based insurer said in a
statement today. Pimco had net outflows of 21.7 billion euros,
while Allianz Global Investors had net inflows of 1.9 billion
euros.
Michael Diekmann, 59, Allianz’s chief executive officer,
had to defend Newport Beach, California-based Pimco at the
insurer’s annual general meeting in Munich last week against
shareholder criticism over declining returns and management
infighting. Pimco has been a very profitable investment since
the German insurer took it over in 1999, Diekmann said.
Pimco’s performance fees in the first quarter of last year
were boosted by non-recurring carried interest from “certain
private funds,” Allianz said in February.
“As expected, the results in asset management came in
lower, but the business is in line with our target for the
year,” Allianz Chief Financial Officer Dieter Wemmer said in
the statement. “Given its solid performance and the
outperformance of both of our insurance segments, we remain on
track to achieve our operating profit outlook.”
El-Erian
Allianz targets operating profit of 9.5 billion euros to
10.5 billion euros this year. The asset management unit’s
contribution to the earnings increased to about 31 percent in
2013 from 12 percent five years ago, helped by expanding assets
under management and lower payouts of profit participation
rights for the firm’s senior management, granted as part of
Pimco’s acquisition by Allianz.
As Pimco struggles to navigate rising interest rates and
client withdrawals, the unexpected resignation of CEO Mohamed
El-Erian amid reports of clashes with founder Bill Gross spurred
an overhaul of top management.
Investors including Union Investment, Allianz’s ninth-
biggest shareholder according to data compiled by Bloomberg,
used the firm’s annual general meeting on May 7 to highlight
deteriorating fund performance and asked whether Allianz plans
to change a hands-off approach toward Pimco, as assets surged to
almost $2 trillion under its ownership.
Pimco Acquisition
Allianz acquired a majority stake in Pimco in 1999 for $3.3
billion. Pimco managed about $256 billion at the time. The
insurer gave the fund manager, which Gross co-founded in 1971,
greater independence in 2011 by separating it from its other
asset managers, which are combined in the Allianz Global
Investors unit.
El-Erian, who had shared the role of co-chief investment
officer with Gross, has continued to work for Allianz as chief
economic adviser. Since El-Erian’s resignation, Pimco named six
new deputies and Gross has said his firm is now in better shape
than before.
Net income at Allianz’s property and casualty insurance
unit, typically the most important in terms of earnings, fell 37
percent to 645 million euros in the first quarter from a year
ago. Lower non-operating realized gains and “a one-off effect
from inter-segment pension revaluation recorded in the non-
operating administrative expenses” contributed to the decline,
the insurer said in its quarterly report.
Profit at the life- and health-insurance division was
little changed at 629 million euros.
Allianz reported last week that first-quarter operating
profit fell 2.9 percent to 2.72 billion euros. The shares lost
6.4 percent this year, valuing the company at 56 billion euros.
That compared with a gain of 0.8 percent for the Bloomberg
Europe 500 Insurance Index.
For Related News and Information:
Allianz CEO Defends Profitable Pimco Amid Shareholder Criticism
NSN N57R836JTSEE<GO>
Allianz Confirms Profit Target After Profit Beats Estimates (2)
NSN N57CA36S9738<GO>
El-Erian Says Pimco’s Gross Is One of World’s Best Investors (3)
NSN N4I2Y36JIJUQ<GO>
Allianz Enlists Automakers in Car Insurance Earnings Revival
NSN N44NOQ6S972F<GO>
Allianz Agrees to Buy UnipolSai Assets for 440 Million Euros
NSN N2J6NU6K50XY<GO>
Allianz Fourth-Quarter Profit Misses Estimates; Shares Drop (2)
NSN N1NNEW6K50Y5<GO>
To contact the reporter on this story:
Oliver Suess in Munich at +49-89-244478-804 or
osuess@bloomberg.net
To contact the editors responsible for this story:
Frank Connelly at +33-1-5365-5063 or
fconnelly@bloomberg.net
Mark Bentley