Financial Results

Allianz Asset Management Profit, Revenues Nosedive

Stephen Little, Reporter, London, 11 August 2014

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Allianz, the German financial services and insurance group, has revealed that operating profit at its asset management arm fell 16 per cent to €675 million for the second quarter, while operating revenues fell 11.5 per cent to €1.61 billion.

Allianz, the German financial services and insurance group, has revealed that operating profit at its asset management arm fell 16 per cent to €675 million ($904 million) for the second quarter, while operating revenues fell 11.5 per cent to €1.61 billion.

Allianz said in a statement for the second quarter that without these effects, operating revenues would have declined by 5.8 per cent, while operating profit would have decreased by 9.7 per cent.

“These developments include the negative impact of a transfer of entities to other business segments and unfavourable foreign exchange effects,” Allianz said.

However, while its asset management took a hit for the quarter, overall group profit at Allianz climbed 17.1 per cent to €2.77 billion, with total revenues rising 10.0 per cent to €29.46 billion, driven by higher earnings in the life and health insurance segment, as well as a fall in natural disaster claims.

Total assets under management at Allianz Asset Management rose 4.4 per cent to €1.8 trillion at the end of the second quarter of 2014 from €1.7 trillion at the beginning of 2014. Over the same period, third-party assets under management grew 3.3 per cent to €1.4 trillion.

The development in assets under management was supported by market value increases, which outweighed third-party net outflows of €17.2 billion in the second quarter of 2014, compared to third party net inflows of €6.0 billion in the previous year’s second quarter.

While Allianz Global investors saw inflows of €3.2 billion, operating profit was slightly down from a year ago at €89 million, compared to €95 million last year.

In contrast, Pimco, the US-based asset management subsidiary of Allianz, suffered outflows of €20.4 billion and saw its operating profit plummet 14.7 per cent to €597 million. The Pimco performance is especially weighing on overall group results after investors withdrew money last year following the departure of chief executive Mohamed El-Erian, who left as part of the firm’s reorganisation of its leadership structure.

Investors have been withdrawing money from Pimco’s Total Return Fund, the world’s largest bond fund, following weakening performance and to position themselves for an interest rate rise.

Despite this, chief financial officer Dieter Wemmer said that asset management had “performed within expectations".

"With €3.2 billion, Allianz Global Investors recorded the highest quarterly third-party net inflows of its history, while outflows at Pimco continued to slow. The key for future results is the investment performance, which is at a very high level: 89 per cent of Pimco’s assets under management outperformed their benchmarks on a three-year basis,” said Wemmer.

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