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Categorized | Insurance

Pimco enjoys inflows as Allianz reports robust profits


Posted on November 11, 2016

Allianz said that its US bond fund manager Pimco recorded net inflows for the first time in more than three years, as the German insurer reported better than expected third-quarter results.

In the three months to the end of September, Europe’s largest insurance group reported a net profit of €1.86bn, up 37 per cent from the same period a year earlier. Analysts had forecast €1.58bn, according to a Reuters poll. Revenues came in at €27.7bn, up 0.5 per cent from the same period a year earlier.

Shares in Allianz were up 3 per cent at €156.70 in morning trading in Frankfurt.

“Efforts to develop our business in a very difficult environment are paying off,” said Dieter Wemmer, chief financial officer.

Like other insurers, Allianz has had to struggle with record-low interest rates, as well as the challenges of digitalisation. Mr Wemmer said that despite this, the group remained “on track” to hit its full-year operating profit target of €10-11bn.

Allianz’s asset management arm, which houses both Pimco and Allianz Global Investors, reported a profit of €604m, up marginally from a year earlier.

Pimco has suffered sustained outflows in recent quarters as investors have moved out of fixed income securities and into other asset classes, a trend that was compounded by the uncertainty surrounding the bond manager after founder Bill Gross left abruptly in 2014.

However in the third quarter its fortunes turned, with Pimco recording €4.7bn of net inflows from third parties, the first time since the second quarter of 2013 that it did not suffer outflows. AGI had €1.5bn of inflows.

Thorsten Wenzel, an analyst at DZ Bank in Frankfurt, said that the results were a “positive surprise”.

“Operating profit and net profit are clearly better than expected and all segments contributed to this. However, the most positive news in our view is that asset management and in particular Pimco has stopped net outflows.”

Mr Wemmer said the inflows showed Pimco’s products were still attractive.

At Allianz’s dominant property and casualty insurance arm, operating profit rose 4.3 per cent to €1.4bn, helped by a relatively low incidence of natural catastrophes and large loss claims.

Allianz’s life and health business reported €1.1bn in operating profit, up 53 per cent in comparison with the third quarter last year, when Allianz recognised losses in South Korea.

Mr Wemmer said that Allianz had had “great success” shifting its business mix toward capital efficient products. “Life results benefited from a stronger investment margin in the quarter despite the historically low interest rates seen today,” he added.