Pimco client outflows will hit profit: Allianz
By Jonathan Gould and Kathrin Jones
FRANKFURT/MUNICH (Reuters) - Outflows of customer funds from U.S. investment manager Pimco will hurt earnings this year - and it is not yet possible to predict when flows might turn positive again, owner Allianz (ALVG.DE: Quote) warned on Wednesday.
Pimco - which contributes more than a fifth of the German insurer's operating profit - saw record outflows and management turmoil last year, including the acrimonious departure of its leader Bill Gross, known as the "Bond King".
Investors have continued to withdraw money this year, albeit at a slower pace, and Pimco's flagship Total Return Fund has lost its title as the world's biggest bond mutual fund.
"In asset management, the outflows from last year will burden the result in 2015," Michael Diekmann told Allianz's annual shareholder meeting on his last day as chief executive of Europe's largest insurer.
Diekmann said client outflows were unavoidable with a prominent change of leadership such as the departure of Gross, who was the well-known public face of Pimco - the firm he had co-founded in 1971 - before he quit to join Janus Capital Group JNS.N in September.
"It is unfortunate but more important is that we have the right set-up for the future and are not dependent on individuals," said the outgoing CEO, who is being replaced by Oliver Baete.
Allianz expects its asset management business to deliver between 2.2 billion euros ($2.5 billion) and 2.8 billion in operating profit this year, compared with 2.6 billion last year and 3.2 billion in 2013. Pimco represents the vast majority of the business, which also includes Allianz Global Investors.