Allianz hit by outflows from Pimco fund arm

Germany’s Allianz reported a net inflow of 34 billion euros, with its Pimco funds arm hit by second-quarter drag on the bond market selloff.

The Munich-based company said on Friday that investors had withdrawn 29 billion euros from its California location Pimco credit manager in the three months until the end of June.

Citi analysts said in a note that Pimco’s flows were “significantly higher than expected.”

Investors are closely watching the fortunes of Pimco, the world’s largest credit-focused manager, during a 30-year bond market boom running out of steam.

Allianz, which focuses on insurance and asset management, reported an operating profit of 3.5 billion euros, just ahead of analysts’ expectations. The net profit fell slightly from the forecasts due to a decrease in the group’s investments. Allianz’s share price fell 2% in early trading on Friday.

The CEO, Oliver Bata, said that the group’s earnings and balance sheet “proved to be resistant to increased volatility and a fundamentally weak economic environment.”

The group’s property and casualty division presented strong results thanks to a lower price from natural disaster claims and the increase in commercial insurance prices. This helped offset the weak performance of the asset management division.

Pimco and his peers are trying to navigate an environment where the highest level of inflation in a generation is eroding the value of their bond holdings. The bond market sell-off also reflects concerns about the impact of Russia’s war in Ukraine on global economies.

A pioneer in active bond trading, Pimco also has to contend with the proliferation of cheap index-tracking funds run by firms such as BlackRock and Vanguard, which has led some investors to question the fees they pay active managers.

Pimco CEO Emmanuel Roman and Chief Investment Officer Daniel Ibshin have moved to alternative strategies to diversify the fund manager. These include direct lending, aircraft leasing, real estate and pop song catalogs.

Allianz’s total third-party assets under management fell by €109 billion during the quarter to €1.8 billion, as a result of market and currency movements and investor withdrawals.

The company did not make an additional provision for A settlement of 6 billion euros It settled with US authorities earlier this year over a scandal in its US funds business. It involved securities fraud that left investors with billions of dollars worth of losses.

Net profit attributable to shareholders in the first six months of the year was halved as a result of the settlement, to 2.3 billion euros.

Analysts at Jefferies described the results as a “modest, albeit low-quality” profit pace, but noted the decline in assets under management and lower profits from life and health.

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