Allianz sees 2015 operating profit at top of range

Europe’s biggest insurer Allianz expects to reach the top of its operating profit target range this year, and Chief Executive Oliver Baete said asset management unit Pimco was picking up after two years of investor defections.

Allianz had previously said its target for operating profit in 2015 was 10.4 billion euros, plus or minus 400 million depending on claims and financial market developments.

There were net outflows from total AuM of €88bn in the first six months of 2015. That was a clear beat of the forecast EUR1.83 billion in a Dow Jones Newswires analyst poll.

Operating profit-Allianz’s main yardstick-rose 2.6% to €2.84 billion, falling short of the forecast rise to €2.92 billion as the improvements in property and casualty insurance weren’t enough to offset the weaker contribution from its asset management and life and health insurance operations.

Gross, known as the “Bond King” for his long tenure delivering stellar returns, shocked investors last September when he quit Pimco, the firm he co-founded for smaller rival Janus Capital.

Nonetheless, there is no light at the end of the tunnel yet.

“On the positive side, net profit is clearly above expectations, economic solvency at a strong level and the guidance was slightly adjusted upwards”, he said in a note to clients. This exodus was slower than in the first quarter, when €68.3bn rushed out.

He said in a separate interview with Bloomberg that the Pimco funds planned to “get close to break-even” in the current quarter.

According to the group figures, Pimco and AGI combined had third-party net outflows of EUR22.5 billion in the second quarter, still marking a 31% increase from EUR17.2 billion in the same quarter a year ago.

Total assets under management (AuM) remained nearly flat at €1,811bn ($1,974bn) at the end of the second quarter. But they were little changed from the end of 2014 and from the second quarter of 2014. Over the same period, third-party assets under management increased by 0.8% to €1,323bn because of favourable foreign exchange effects.

Apart from a major decline in major claims, Allianz earnings between April and June were mainly helped by completing the sale of US personal insurer Fireman’s Fund to ACE.