Allianz SE’s asset-management unit, struggling to contain outflows at Pacific Investment Management Co. over the past three years, reported a 17 percent decline in first-quarter earnings as outflows at PIMCO continued.
Operating profit at the unit, which also includes Allianz Global Investors, fell to 463 million euros ($527 million) from 555 million euros a year earlier, the Munich-based insurer said in a statement on Wednesday. Third-party assets under management fell by 34 billion euros to 1.24 trillion euros during the quarter.
“Net outflows were driven by third-party net outflows at PIMCO, while Allianz Global Investors again recorded third-party net inflows,” Allianz said in the statement.
PIMCO, the Newport Beach-based company that Allianz acquired in 2000, is trying to reverse redemptions that have reduced its assets under management to $1.5 trillion from a peak of $2 trillion in 2013. Outflows have peaked following the resignation of Chief Executive Officer Mohamed El-Erian and the ouster of Chief Investment Officer Bill Gross.
As a manager focused on fixed-income assets, PIMCO is struggling to attract clients as interest rates remain at low levels. It also faces growing competition from passively run funds with lower fees.
In an unscheduled report last week Allianz said that net income for the whole company gained 21 percent to 2.2 billion euros in the first quarter, beating analysts’ estimates. Earnings were helped by gains from selling investments.
Allianz has lost 13 percent in Frankfurt trading this year, while the Bloomberg Europe 500 Insurance Index has lost 15 percent.
As part of a plan to cut costs, Newport Beach, California-based PIMCO reduced the number of investment professionals by about 7 percent last year to 720 people globally while cutting total staff by roughly 5 percent to 2,300 people. Allianz expects PIMCO to reverse redemptions this year and reduce expenses further as the business stabilizes, the company said in February.