August 12, 2022
Allianz affected by outflow from PIMCO Fund branch

Germany’s Allianz has reported €34bn in net outflows as its Pimco Fund arm was hit by withdrawals in the second quarter amid a selloff in the bond market.

The Munich-based company said on Friday that investors pulled out €29bn from California-based credit manager Pimco in the three months to the end of June.

Citi analysts said in a note that Pimco’s outflow was “much higher than expected”.

Investors are closely watching the fortunes of PIMCO, the world’s largest credit-focused manager, as the boom in the 30-year bond market runs out of steam.

Allianz, which focuses on insurance and asset management, reported operating profit of €3.5bn, just ahead of analysts’ expectations. Net income fell slightly behind forecast due to a decline in group investments. Allianz’s share price was down 2 per cent in early trade on Friday.

Chief Executive Oliver Bate said the group’s profits and balance sheet “prove to be resilient against increased volatility and a fundamentally weak economic environment”.

The group’s property and casualty department posted strong results due to lower bills from natural disaster claims and rising commercial insurance prices. This helped offset the underperformance of the asset management division.

PIMCO and its partners are trying to navigate an environment where the highest level of inflation in a generation is reducing the value of their bond holdings. The sell-off in the bond market also reflected concerns about the impact of Russia’s war in Ukraine on global economies.

Pimco, a leader in active bond trading, is also struggling with the expansion of cheap index-tracking funds run by the likes of BlackRock and Vanguard, which has led some investors to question the fees paid to active managers. inspired to take up.

Pimco Chief Executive Emmanuel Roman and Chief Investment Officer Daniel Ivasin have turned to alternative strategies to diversify fund managers. These include direct lending, aircraft leasing, real estate and pop song catalogues.

Allianz’s overall third-party assets under management fell €109bn during the quarter to €1.8tn as a result of market and currency movements and investor withdrawals.

The company did not make any further provisions for the €6bn settlement it had agreed with US authorities earlier this year over a scandal in its US funds business. This involved a securities fraud that caused billions of dollars in losses to investors.

Net income attributable to shareholders for the first six months of the year halved to €2.3bn as a result of the settlement.

Analysts at Jefferies described the results as a “moderate, albeit low quality” profit beat, but noted a decline in assets under management, and lower life and health income.

Leave a Reply

Your email address will not be published.