Pimco Profit Rises to the Highest Since Bill Gross Quit Firm

(Bloomberg) -- The turnaround at Pimco is nearing completion.

The bond manager owned by German insurer Allianz SE on Friday reported a fourth-quarter operating profit of 546 million euros ($684 million), the highest since co-founder Bill Gross quit the firm in the third quarter of 2014. His exit followed record redemptions from his Pimco Total Return Fund and returns that trailed competitors.

Pacific Investment Management Co.’s revival came in part because of group Chief Investment Officer Daniel Ivascyn’s reputation as a star trader, which has helped draw capital from around the world. The money-management firm’s profit was driven by strong net inflows to its U.S. Income Fund as well as strategies including long duration and income.

Pimco’s performance was “spectacularly good,” according to Trevor Moss, an analyst at Berenberg in London. "It’s going to be a more challenging year for them in 2018 in many ways, but it’s macro-related more than company-related.”

Following Gross’s departure, Allianz in 2016 hired Jackie Hunt as head of asset management and recruited Emmanuel “Manny” Roman from Man Group Plc to lead Pimco. The bond manager has hired more than 500 employees over the last two years, including 113 investment professionals, and plans to add 200 more people in the next year.

Pimco Profit Rises to the Highest Since Bill Gross Quit Firm

Pimco’s performance contributed to record third-party inflows last year at Allianz’s asset-management unit, which also includes Allianz Global Investors, the insurer said.

Operating profit at the unit rose about 8 percent in the fourth quarter to 697 million euros from a year earlier, driven in part by strong performance fees at AGI. That’s the highest level in four years.

Pimco had about $15 billion of third-party inflows in January as retail and institutional investors in Asia and the U.S. allocated money to its funds, Allianz Chief Financial Officer Giulio Terzariol said in a Bloomberg TV interview on Friday.

Other comments by the CFO of Europe’s largest insurer:

  • Allianz is interested in making acquisitions in property and casualty and asset management, but not in life insurance
  • CFO wouldn’t comment on reports it is in talks with XL Group, the Bermuda-based insurer
  • On buybacks, the CFO said that if the firm can’t deploy capital above cost, it will return it to shareholders

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