(Bloomberg) - Pacific Investment Management Co. saw outside clients add money in the first quarter, after a year of withdrawals fueled by a global bond market rout.
The giant fixed-income manager recorded €14 billion ($15.3 billion) in inflows, parent company Allianz SE said on Friday, after outflows of more than €75 billion last year. Allianz group operating profit rose 24% to €3.7 billion in the first three months, driven by its insurance businesses.
The inflows cap a challenging period for Allianz’s asset management operations, which suffered a double whammy when the turmoil in the bond market compounded the self-inflicted woes from the implosion of a group of hedge funds in the US. Allianz’s Chief Executive Officer Oliver Baete last year agreed to a $6 billion settlement to put an end to the case.
While appetite for bonds is rebounding as central banks appear to near the end of their rate hike cycle, the inflows have yet to stabilize, Allianz’s Chief Financial Officer Giulio Terzariol said in an interview.
“We might have some choppiness,” he said by phone, adding that the inflows at Pimco occurred mostly in the beginning of the year, with the last two months flat.
First-quarter operating profit in property-casualty insurance rose by 23% from a year earlier, helped by price increases, while life and health insurance earnings jumped 64% on higher results in the US. Asset management profit was down by about 13%, reflecting the impact of last year’s outflows.
Allianz shares fell 0.5% at 09:58 a.m. in Frankfurt trading. Despite a strong start to the year, an elevated cost-income ratio in asset management is a concern, analysts at Jefferies said in a note. They also pointed to expected losses tied to the disposal of Allianz business operations in Lebanon.
Allianz Global Investors, the other asset manager owned by Allianz, saw clients add about €800 million in the first quarter. The performance of competitors has been mixed. DWS Group pulled in €5.7 billion, while Amundi SA posted surprise outflows of €11.1 billion.
Allianz confirmed its target for operating profit this year, which is roughly in line with last year’s €14.2 billion. It announced a new share buyback program of as much as €1.5 billion this week, after earlier raising its dividend.
(Adds CFO interview in fourth paragraph, shares and analyst comment in seventh.)
Stephan Kahl
With assistance from Sam Unsted
