Allianz's Asset-Management Unit Sees Profit Soar on Inflows

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(Bloomberg) -- Allianz SE’s asset-management business saw earnings soar on the back of increased inflows at the German firm’s Pimco unit.

Operating profit at the unit, adjusted for foreign-exchange effects, increased by a “remarkable” 16.3 percent in the first quarter, Europe’s largest insurer said in a statement on Tuesday. External managers allocated almost 21 billion euros ($25 billion) to the firm, most of it at Pimco, which has profited from Chief Investment Officer Daniel Ivascyn’s reputation as a star trader.

The inflows are “a sign of customer confidence,” following the 150 billion euros that came in last year, Allianz Chief Financial Officer Giulio Terzariol said in the statement. The insurer’s shares were little changed in Frankfurt trading as of 10:12 a.m.

Active managers have been luring back investors as market volatility rises and creates more trading opportunities. The industry has been battling falling fees and underperformance following the rise of cheaper passive-investment strategies.

A lower cost-to-income ratio helped improve operating profit at the asset-management division, which is overseen by Jackie Hunt. Operating profit at Pimco, whose full name is Pacific Investment Management Co., rose 24 percent when adjusted for currency. Investors were drawn to strategies including income, enhanced cash and long duration. Without adjusting for currency, assets under management at the Newport Beach, California-based unit were little changed.

Global Investors

Allianz Global Investors, the insurer’s other asset manager, saw assets increase by just 1.1 percent from a year earlier and performance fees dropped. Inflows totaled 2 billion euros.

On the insurance side, the devastation wrought by last year’s U.S. hurricanes is boosting demand for property and casualty policies. More customers are opting for coverage and premium income is also growing after the storms and California wildfires contributed to a record year for insurance losses. That led to “strong internal growth” of 4.9 percent in the first quarter at the property coverage unit of Europe’s largest insurer.

Other key numbers:

  • Net income rose to 1.9 billion euros from 1.8 billion euros a year earlier
  • Gross premiums written in property and casualty rose 1.1 percent from a year earlier to 17.9 billion euros

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