Worst Pimco Outflows Since Gross Exit Add to Allianz Misery

(Bloomberg) -- Pacific Investment Management Co., the bond giant owned by German insurer Allianz SE, saw its worst outflows in five years when the onset of the coronavirus pandemic sent retail clients fleeing.

Pimco’s third-party investors pulled 43 billion euros ($46 billion) in the first quarter, Allianz said Tuesday. That’s the most since the first quarter of 2015, when clients withdrew 68.3 billion euros in the wake of co-founder Bill Gross’s surprise departure. The withdrawals were bigger than expected, Citigroup Inc. wrote in a note.

“March was a tough month,” Chief Financial Officer Giulio Terzariol said in an interview with Bloomberg Television. The outflows were “about retail investors going to the sidelines.”

The outflows, in a business Allianz counts on as a source of diversification and stability, add to a multitude of hits the insurer is already facing from the pandemic. The outbreak hit the industry “like a meteorite,” Allianz Chief Executive Officer Oliver Baete said last month, with business disruptions across industries fueling claims while chaotic markets cause investment values to tumble.

Allianz fell as much as 3.2% in Frankfurt trading and was down 3% at 12:59 p.m. in Frankfurt trading.

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Pimco had been a source of steady inflows over the past years as the firm rebounded from outflows following Gross’s departure in September 2014, which triggered several successive quarters of redemptions. But with markets in free fall during March, not even marquee names were safe from redemptions.

BlackRock Inc., the world’s largest asset manager, saw net outflows from its long-term investment products for the first time in five years during the quarter, with $19 billion pulled, led by fixed income funds. Most of BlackRock’s assets are in passive exchange-traded funds.

Munich-based Allianz has been sticking to active asset-management strategies, which attract higher fees but were under pressure even before the pandemic as investors flocked to cheaper index funds. Pimco’s smaller sister unit, Allianz Global Investors, saw 3 billion euros withdrawn in the quarter.

Stable April

Total assets overseen for outside clients fell to 1.56 trillion euros from a record 1.69 trillion euros at the end of last year. Terzariol said flows stabilized in late March and April.

Allianz in April withdrew its earnings forecast for the year due to uncertainty caused by the pandemic. It had previously expected operating profit of 12 billion euros, plus or minus 500 million euros. Operating profit fell to 2.3 billion euros from 3 billion euros a year earlier, the Munich-based company said Tuesday.

Despite European regulators calling on insurers to preserve capital, Allianz last week followed through with its proposal to pay a dividend, while suspending part of a buyback program. BaFin, the German regulator, has said it’s against a blanket dividend ban.

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